Walmart Loses Lengthy Trademark Infringement Lawsuit

"Walmart's Backyard Grill mark at the center of trademark infringement lawsuit"

Walmart’s recent trademark infringement lawsuit loss demonstrates the importance of trademark owners understanding their branding risk tolerance during the naming stage. In this case, Walmart had a high branding risk tolerance that will likely end up costing it millions of dollars.

In about 2011, Walmart Stores went down the path of launching a new line of barbecue products. The new mark it decided to adopt was BACKYARD GRILL. According to the most recent decision from the U.S. District Court for the Eastern District of North Carolina, Walmart instructed its trademark attorneys to conduct a trademark clearance search for this new mark. It’s trademark attorneys warned Walmart of a potential conflict with a prior registered mark THE BACKYARD (in standard characters) for “retail store services in the field of lawn and garden equipment and supplies” owned by Variety Stores, Inc.

Walmart made the decision not to follow its trademark attorney’s advice and filed an intent-to-use trademark application for:

Mark Image

in connection with a variety of goods and services including “barbecues and grills” and “retail store services featuring a wide variety of consumer goods of others.” With such a broad identification of goods and services descriptions, Variety Stores’ THE BACKYARD mark should have been cited against the registration of Walmart’s pending application. Surprisingly, Walmart’s BACKYARD GRILL mark sailed through the examination phase and was published for opposition where Variety Stores promptly opposed its registration.

The dispute did not stop there, nor did it deter Walmart’s plans to use the BACKYARD GRILL mark. A little over three years after the opposition proceeding commenced, it was suspended for a lawsuit filed by Variety Stores against Walmart alleging trademark infringement.

In 2016, Walmart lost the lawsuit and was ordered to pay Variety Stores $32.5 million dollars. This amount was a disgorgement of the profit Walmart had earned on its BACKYARD GRILL products. However, this award was reversed by the Fourth Circuit Court of Appeals on the ground that the case should have gone to the jury. The case was retried in front of a jury in October 2018 and the jury found that Walmart willfully infringed Variety Stores’ THE BACKYARD trademark. Now the case moves into further proceedings to determine Variety Stores’ monetary compensation.

Consumers likely to confuse Complimentary Goods Wine and Cigars

"Alec Bradley Star Insignia cigars complimentary goods to wine"

Joseph Phelps Vineyards, LLC won its appeal before the United States Court of Appeals for the Federal Circuit, and its case was remanded to the Trademark Trial and Appeal Board. This time the Board granted Joseph Phelps Vineyards’ petition for cancellation finding that wine and cigars are complimentary goods.

Fairmont Holdings, Inc. sought to register the mark ALEC BRADLEY STAR INSIGNIA (in standard characters) for, among other goods, “cigars.” The Trademark Office approved the registration of the ALEC BRADLEY STAR INSIGNIA mark and party, including Joseph Phelps Vineyards, opposed the registration of the mark. A little over a year after the mark registered, on May 17, 2013, Joseph Phelps Vineyards petitioned to cancel the ALEC BRADLEY STAR INSIGNIA registration. The proceeding lasted almost 6 years – Yikes!

There is a lesson here for trademark owners. Getting the registration does not mean you are safe. A registration remains vulnerable to a likelihood of confusion claim for five years following the registration date.

With respect to the relatedness of the goods factor, Joseph Phelps Vineyards offered several Web pages that advertise or promote cigar bars, cigars, wine bars, wine stores, and events featuring wine and cigars. It also offered evidence of flavored cigars infused with wine. Because the evidence showed that wine and cigars are used together, the Board found they are complimentary goods. This is consistent with the Board’s prior decision finding cigars and different spirits to be complimentary goods.

Joseph Phelps Vineyards mark consists solely of the word INSIGNIA and while Fairmont Holdings mark was the composite phrase ALEC BRADLEY STAR INSIGNIA it was not limited to any particular presentation and could be depicted with the word INSIGNIA larger than the word STAR. Joseph Phelps Vineyards argued that INSIGNIA in fact appears larger than STAR on the cigar labels and Fairmont Holdings’ specimen of use confirmed this.

INSIGNIA was not descriptive, generic, or diluted. Therefore, Fairmont Holdings could not avoid a likelihood of confusion by adopting Joseph Phelps Vineyards’ entire mark and adding subordinate matter. There is another lesson for trademark searchers. Unless your search reveals that the common element among the marks at issue is diluted, it is best to steer clear of the mark.

WeWork is Expanding its Current Family of Marks

"WeWork sign on building that is part of a family of marks"

WeWork announced that a rebrand will follow the latest investment by Soft Bank in the company. Following the investment, WeWork will change its name to THE WE COMPANY. In a blog post, the company said:

“The We Company’s guiding mission will be to elevate the world’s consciousness. Living a conscious life means choosing to live proactively and with purpose. It means being a student of life, for life, where we accept that we are always growing and in a constant state of self-discovery, self-growth, and change.”

This sounds like a great mission statement although it is not entirely clear how THE WE COMPANY conveys this better than WeWork. The more likely reason for the rebrand is the company is growing its divisions and THE WE COMPANY better conveys this change in their business, which is a smart change.

THE WE COMPANY is creating a family of WE marks. WeWork operates individual and enterprise office. WeLive are residential living communities. WeGrow are early education schools. Additionally, WeBank, WeSleep, and WeSail are in the works. “A family of marks is a group of marks having a recognizable common characteristic, wherein the marks are composed and used in such a way that the public associates not only the individual marks, but the common characteristic of the family, with the trademark owner. Simply using a series of similar marks does not of itself establish the existence of a family. There must be a recognition among the purchasing public that the common characteristic is indicative of a common origin of the goods.”

Marketed the right way, a family of marks increases the conceptual strength of a trademark, which is a good thing. As trademark searchers, it is also something we need to be aware of. More often than not, it is a good idea to avoid adopting a mark that may be misconstrued as being part of another party’s family even if the goods or services appear to be unrelated to the family.

J/P HRO Nonprofit’s Rebrand to CORE

"cancer fundraising with lollipops example of a nonprofit rebrand"

Following the disaster in Haiti, Sean Penn started an organization to help the devastated country. He named his organization J/P HRO. Nine years later, J/P HRO is getting a new name: CORE. According to an article in the Hollywood Reporter, in addition to continuing to help Haiti, the organization will also focus on helping other communities facing disasters in the Caribbean.

Unlike some of the rebrand examples that made the worst list in 2018, Sean Penn’s organization decided to shed its acronym for a word that better represents the organization’s image. The move was a good one. CORE is a better name than J/P HRO, but is it available?

Protecting the service mark rights of a nonprofit that performs its actual service in a foreign country can be tricky. Because trademark rights are territorial, use of a trademark in foreign country cannot support United States trademark rights. But some activities of this type of organization occur in the United States such as fundraising. Using a service mark in the United States to raise money for the organization can be protected.

Unfortunately, CORE, by itself, may not be available for fundraising services. The Silicon Valley Common Core Initiative has registered its mark for the broad description “charitable fundraising and charitable fundraising services.” This description is broad enough to cover raising money for Haiti and other Caribbean countries and the CORE word is encompassed in its entirety in the prior registered mark.

In situations like this, it would be wise for Sean Penn to make a couple changes. First, consider adding some words to CORE. Preferably, the added words will be inherently distinctive not descriptive or generic. But even descriptive and generic words are considers when assessing the overall commercial impression of a mark.

Second, be more specific about the type of fundraising the organization is doing and the cause it is supporting. This is an important first step in avoiding a potential dispute with the prior registered mark.

Acronym, Nickname & Abbreviation Rebrands Top 2018 Worst List

"picture of an acronym, nickname, and abbreviation"

AdAge ended 2018 with its list of the worst rebrands of 2018. The unremarkable list included:

  • XANDER – short for Alexander Graham Bell – AT&T’s advertising unit
  • DUNKIN’ – abbreviation of DUNKIN’ DONUTS
  • FIG – abbreviation of FIGLIULO & PARTNERS
  • CAPRI HOLDINGS – new name for Michael Kors Holdings
  • M/H VCCP – acronym for agency Muhtayzik Hoffer
  • RTW RETAILWINDS – new name for New York & Co. Inc.
  • REFINITIV – Blackstone’s financial and risk business
  • KONTOOR BRANDS – VF Corp’s jean brands and outlet business
  • VMLY&R – name of merged entity comprising VML and Y&R
  • WW – acronym for Weight Watchers
  • Tribune Publishing – reversal of acronym TRONC, which stood for TRIBUNE ONLINE CONTENT

About 64% of the rebrands on the list involve an acronym, nickname, or abbreviation. Generally, naming professionals will say that a name should be easy to read, say, and spell. You would think that an acronym, nickname, or abbreviation would check all the boxes for a good name, but as you can see that it not always the case and why working with a professional is important.

Whether you are moving to a similar acronym or an entirely new word or phrase, you will have to spend some significant money to educate the market about your new name. Distinctiveness is an important characteristic of any new name. In the naming context, distinctiveness lets you stand out from the crowd. And in the legal context, distinctiveness provides broader protectable rights.

Consideration of an abbreviation, nickname, or acronym is a must when assessing the similarity of the marks confusion factor. And to adopt an abbreviation, nickname, or acronym of the long form for an otherwise problematic mark is not an acceptable work around. The Trademark Trial and Appeal Board has held on more than one occasion that “the users of language have a universal habit of shortening full names – from haste or laziness or just economy of words.” In re Abcor Development Corp., 588 F.2d 811, 200 USPQ 215, 219 (C.C.P.A. 1978).

Petition Started Over Disney’s HAKUNA MATATA Trademark

"Disney Hakuna Matata t-shirt"

Using a foreign word in the United States as a trademark is a common naming practice. Sometimes, the foreign word possesses a cache that its English counterpart does not. Depending on the word, this practice can have some negative consequences.

In August of 2018, we saw the outrage from Hawaii when a Chicago-based restaurant chain tried to tell a single location Hawaiian restaurant it could not use the word ALOHA as part of its business name. And as 2018 was drawing to a close, we saw the same outrage against Disney manifested in a petition posted on the Change.org website. The petition was started by Shelton Mpala and has 178,813 supporters.

The problem, as Shelton Mpala sees it, is that “Hakuna Matata” is a Swahili phrase that translates to “no trouble” in English. It is a word that has been used by most Kiswahili-speaking countries and Disney’s trademarking the word is stealing a portion of African culture.

Disney has trademarked the phrase HAKUNA MATATA for t-shirts. But Healthy Pride Supplements has trademarked the same phrase for “multi-vitamin preparations; vitamin supplements; dietary and nutritional supplements” and another company has trademarked the phrase for wedding planning.

Trademarking a foreign word does not mean the word cannot be used in any context or any purpose. What it means is that in a commercial context on certain goods and services, prospective purchasers have the right not to be confused between the goods or services being offered in the marketplace. After all, trademark law is a consumer protection law.

In the case of Disney, that does not even mean that HAKUNA MATATA can never be used on a t-shirt by anyone. A purely ornamental as opposed to a trademark use of the phrase HAKUNA MATATA is allowed despite Disney’s trademark rights.

Nevertheless, while the Chicago-based restaurant may have had a better argument regarding the use of ALOHA by another restaurant, companies choosing to adopt foreign words as their trademark in the United States need to consider the non-trademark backlash that may result because of the general misunderstanding of trademark rights.