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).

KFC’s Unique Brand Extension: a Fire Log

"KFC brand extension into a fire log"

Kentucky Fried Chicken a/k/a KFC took its brand to a whole new level with the KFC fire log. Now, you can have the smell of KFC’s fried chicken not just at dinner time, but all day long. At least you could have had that smell if you were lucky enough to get your hands on one. Apparently, the KFC fire log sold out in hours.

KFC’s decision to launch a fire log under its well-known KFC brand is a bold, but helpful brand extension. It is helpful because brand extensions increase the strength of the mark. The more opportunities consumers have to encounter a mark, the more likely they are to associate the mark with a single source.

It is also a common misconception that a trademark must be used at all times otherwise the trademark rights are abandoned. A trademark must be continuously used, but that use needs to be consistent with the nature of the goods or services being offered for sale. In this case, KFC is offering the logs for a limited time. So long as KFC repeats this activity in 2019, it will be able to maintain its trademarks rights for KFC in a fire log.

Another good example of this are businesses at county or state fairs. There are several businesses that exist solely to sell their goods for a limited time during a state or county fair. But they do this every year and don’t lose their trademark rights when the fair closes for the year.

What is also interesting about the article is KFC’s statement that “[t]he smell of the Colonel’s Original Recipe fried chicken is unmistakable.” This statement suggests a non-traditional trademark in the form of a smell. The definition of a trademark in the Trademark Act is extremely. It says that anything can function as a trademark provided it is capable of distinguishing and indicating the source of goods or services. If the smell of the Colonel’s fried chicken is unmistakable, then pursuing non-traditional trademark protection may be worth considering. These types of trademarks generally require for effort to protection, but they are a great addition to any trademark portfolio.

Branding Cooperation Key for a Successful Franchise

"Boy eating french fries outside a McDonald's franchise"

A franchise relationship is a trademark license relationship that has crossed the control line into turn-key business. A franchise relationship exists when: (1) there is a trademark license; (2) a fee; and (3) the trademark owner provides significant control over the operation of the business. This control element exceeds the quality control requirement of a trademark license, which is to monitor only the quality of the goods or services, and marketing collateral bearing the mark to ensure a certain standard is maintained. In some cases, a franchise relationship is the best way to scale a business and building unity between the franchisor and franchisees is key to success.

A franchisee is the franchisor’s presence in a given geographic area. In other words, the franchisee is the eyes and ears of the company. The United States is not a homogeneous market. What is important to consumers in Midwest about about a good or service may not be the same to consumers in, for example, the Northeast and so on and so on. A strong relationship between franchisor and franchisee can result in this information exchange and more targeted branding.

One aspect of a targeted branding strategy is the use of different taglines. A house mark (i.e., the trademark that appears across product and service lines) or product mark (i.e., the trademark that appears on a specific product or service) cannot change by the market. There needs to be consistent use of these trademarks for many reasons. A house mark or product mark also does not have to tell a prospective consumer everything about your goods or services. Other marketing collateral can be used convey this type of information including taglines.

A tagline can indicate source just like a house mark or product mark, so they should be protected and searched like a house mark or product mark. But the luxury of a tagline is that it can be more targeted to the geographic market it is being used in. This is not to say that franchisors should not also have a national tagline for the business. What this means is that a business should recognize that consumers can and will identify with their business through multiple trademarks. So the franchisor should develop a trademark portfolio accordingly by working with its franchisees on what taglines resonate with consumers in their particular geographic markets.

Interworking of the Similarity of the Marks Factor

"Cartier watch and two rings are jewelry that was the subject of a case involving similarity of the marks"

A recent Trademark Trial and Appeal Board decision is a good example of how the similarity of the marks, relatedness of the goods or services, and strength factors work together. Tai Fook Jewellery Company Limited sought to register the mark T MARK (in standard characters) for, among other goods, jewelry. The Trademark Office refused registration of Chow’s trademark application on the ground that its mark was likely to cause confusion with a prior registered mark TJ MARC & Design also for jewelry. .

Chow made the same losing argument about the sophistication of the consumers claiming that jewelry is personal; therefore, consumers will exercise care when making a purchasing decision. However, the Trademark Trial and Appeal Board said what it was said numerous times before that if the restriction does not appear in the goods or service description, then it will not read a limitation in to the description. Accordingly, the Board found the goods are legally related.

When goods or services are legally related, the channels of trade and classes of consumers are deemed to overlap. Moreover, less similarity between the marks at issue is required in order for a likelihood of confusion to exist.

Chow also made the common losing argument about the strength factor. Chow introduced a table of six third-party registrations – four shy of the 10 we believe is the minimum required to establish a weak mark – and then only one third-party registration containing the letters TJ and covering jewelry. Therefore, the rights in the TJ MARC & Design were not limited to a close representation of its mark.

When it came to the similarity of the marks factor, the Board stated that marks must be considered in light of the fallibility of memory. The proper focus is on the recollection of the average purchaser who normally retains a general rather than specific impression of trademarks.

Because the goods were legally identical, the fact that the marks began with the letter “T” and ended with the word MARK or MARC made the marks more similar than dissimilar. The crown design element and use of TJ instead of just the letter “T” were insufficient to distinguish the two marks because the TJ MARC & Design trademark was not weak, and consumer focus on the literal elements of a trademark before any design element (although this is debatable).

Using Sans-Serif Font Makes a Bland not a Brand

"Brandless website showing sans serif brand"

A recent Fast Company article identified displaying a trademark in sans-serif font as the hottest branding trend in 2018. If you were part of this trend, the article labeled your trademark a bland not a brand. According to the article, blanding occurs when the trademark lacks any meaningful differentiation from its competitors. Even a coined trademark is incapable of being a brand if it is not accompanied by something that makes is visually pop. The author says “[t]he point is differentiation; by definition, that’s what branding is.”

We have the large tech companies:  Apple, Google, Aribnb, and Uber, to thank for this trend. Because of the nature of their businesses and market status, just the word in sans-serif font functions as a brand not a bland. Their success has spawned a legion of imitators who can’t do the same thing. “The problem is that the blands haven’t earned the branding they ape.”

The article alludes to differentiation occurring through more than just sight, which is absolutely true. All the messaging done through advertising and public relations ultimately is embodied in the trademark, and that is what consumers recognize when they see a trademark even if it is just the word. If your brand strategy is to use the trademark in a sans-serif font, that is perfectly okay so long as you are using other collateral to differentiate your business and to tell your brand story. The experience consumers have with your business will influence the differentiation in the marketplace more than any visual cues your trademark may possess.

For example, look at the evolution of the Google trademark. The color placement and font style has changed over the years, but that is pretty much it. Starting out, the GOOGLE trademark could have been considered a bland not a brand by the article’s standard. Over time, Google has clearly become a well-known brand that consumers trust regardless of how the GOOGLE term is presented.

The question for young companies is whether you need eye-catching branding to begin with or if can build the differentiation you need other ways. What is important for young companies to keep in mind is that it takes time to build a brand and is something that can’t be rushed. Patience is key and so is the commitment to sticking with the brand strategy.

Assessing Trademark Strength at the Search Stage is Critical

"Snap & Pour logo the SNAP does not lack trademark strength"

Trademark strength is an extremely important likelihood of confusion factor even if it is not generally a dispositive factor like the similarity of the marks or relatedness of the good or services factors. When the trademark strength of a particular term used in connection with certain goods or services is improperly assessed it generally leads to unintended consequences. These can include spending unnecessary money prosecuting a trademark application or getting into a dispute with another party. We say the former happen in a recent Trademark Trial and Appeal Board decision.

Gabor Alex Stibinger filed a trademark application to register the mark SNAP FUNNEL (in standard characters with FUNNEL disclaimed) for “funnels; household utensils, namely, specialized funnels with a small diameter inner bottom opening and a larger diameter bottom outer ring specifically adapted to stabilize the utensil to various size bottles that also acts as a pour spout; household utensils, namely, silicone funnels; pouring spouts for household use.” As a preliminary matter, we have to ask why Mr. Stibinger would settle on this description. It does no good to include an extremely broad description like “funnels” along with the narrow description that describes the funnel in detail. A trademark application is not like a patent application. There is no benefit to writing a goods or services description like claims in a patent application.

The Trademark Office refused registration of the SNAP FUNNEL mark based on a prior registration for SNAP & POUR  for a “funnel which snaps onto plastic containers, including automotive fluids and household cleaners and detergents.” Mr. Stibinger appealed the Trademark Office’s refusal to the Trademark Trial and Appeal Board.

In his brief, Mr. Stibinger cited 61 third-party registrations that included the SNAP term. However, none of the registrations were for funnels. In fact, the Board found that none of the third-party registrations were for goods related to funnels. Accordingly, none of the third-party registrations established the SNAP term lacked trademark strength when used in connection with funnels.

If Mr. Stibinger was aware of these 61 third-party registrations during the trademark search stage and a proper trademark strength assessment was made, then maybe a decision could have been made to avoid the refusal based on the SNAP & POUR mark. We know that when a term lacks trademark strength, adding another weak or even generic term like FUNNEL could be enough to avoid a conflict. But when there is no conceptual weakness, then adding a more distinctive term is necessary to avoid a conflict.