Cliff Banks - The Banks Report

TrueCar Files Trademark Lawsuit Against Sonic Automotive

September 4, 2013 — We’re still working on the details but we do know in August TrueCar filed a lawsuit against the SonicAutomotive Group alleging trademark infringement.

Sonic has been implementing a one-price, no haggle program for all of its stores. Earlier this year, Sonic came
up with True Price as the name for the program. It even filed an application with the U.S. Patent and
Trademark Office for rights to the name.

I first heard the True Price name during Sonic’s second quarter earnings call with investors. Because of the
name similarities, I thought Sonic possibly was working with TrueCar on its program.

Obviously, that is not the case. And apparently, TrueCar believes the name True Price moniker is too close to
its TrueCar brand.

TrueCar has invested a lot of money and effort in building its brand the last two years. Despite a couple of
publicized disagreements with dealers on its program, TrueCar has built an impressive brand that’s starting to
resonate with consumers. TrueCar founder Scott Painter confirmed to TBR that it has filed a lawsuit against Sonic saying the company will not back down when defending its brand.

Other sources tell us Painter offered to license the TruePrice name to Sonic provided it signs a majority of its stores on the TrueCar program — a deal Sonic turned down.

Sonic’s one-price initiative is proving to be a bit of a headache for the Charlotte-based public dealer group. A
rougher than anticipated roll out (our words) of the program is one of the reasons Sonic executives gave
during its call with investors for why it barely missed its earnings forecast in the second quarter.

The company is in the midst of training its employees on the new program which was in all but two of its stores
by June. Despite the slight decline in profitability, Sonic says its customer satisfaction scores are the highest
in five years. The one-price program is part of an overhauled customer experience initiative Sonic plans to roll
out at all of its stores by mid-2014.

With this lawsuit, we’ll see if Sonic will have to rebrand its True Price program. Our bet is that Sonic is going to
have to come up with a new name.

Wilson Sonsini Goodrich & Rosati is the law firm handling the suit for TrueCar.

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