Legal departments sometimes get a bad reputation for saying “no” too often. A “no” from legal is particularly hard to stomach when you think the potential legal risk is farfetched. In this dispute, Wal-Mart must have decided that there was no way a competitor could own the basic word BACKYARD for grills and grilling accessories. However, after some discovery and a motion for summary judgment, Wal-Mart was left holding a tab for $34 million in damages, costs, and attorney’s fees. Thankfully for Wal-Mart, the Fourth Circuit just issued a decision vacating the award and the grant of summary judgment.

The plaintiff is Variety Stores, Inc., a regional retail chain in the southeast that sells lawn, garden, and grilling products. The company owns a registration for THE BACKYARD for tail store services and has also used variations of the mark such as BACKYARD and BACKYARD BBQ for grilling products. One of their advertisements is included below.

 

About 20 years after Variety’s first use, Wal-Mart decided to develop an in-house line of grilling products. During the clearance search for potential names like BACKYARD BARBECUE and BACKYARD BBQ, Wal-Mart’s in-house legal group identified Variety’s prior registration and advised the business team that Variety’s registration could pose a problem. Wal-Mart decided to go with BACKYARD GRILL, filed an application to register the mark with the US Patent and Trademark Office, and began selling products, like the ones below.

At the district court, Variety prevailed on for summary judgment. In evaluating the likelihood of confusion factors, the district court concluded :

  • Wal-Mart intended to create confusion because Wal-Mart moved forward with the name despite the legal department’s concerns;
  • Variety’s mark was strong because of large numbers of sales and advertising expense, the court declined to give any weight to Wal-Mart’s evidence of dozens of third-parties using variations of BACKYARD with grilling products;
  • The grilling products were competitive;
  • The two marks – BACKYARD GRILL and BACKYARD (or BACKYARD BBQ) – were nearly identical; and
  • That Wal-Mart’s consumer surveys regarding the absence of confusion were faulty and should be given little weight.

The court concluded that the infringement was willful and awarded $32.5 million in profits and $1.5 million in attorney’s fees.

The Fourth Circuit viewed the evidence differently. Because Wal-Mart did not appeal the district court’s findings with respect to all of the likelihood of confusion factors, the court affirmed the decision with respect to some of the factors. Instead, Wal-Mart appealed the court’s findings on the most important factors: the strength of the plaintiff’s mark (often considered “paramount” by the Fourth Circuit); the similarity of the marks; the defendant’s intent; and the presence or absence of actual confusion.

In reviewing the strength of the mark, the Fourth Circuit concluded that Variety’s BACKYARD marks were “conceptually weak,” but that there was a material dispute as to whether the mark had commercial strength.  The court also concluded that a jury could conclude that the marks were dissimilar in light of the design features and the greater visual emphasis on GRILL. With respect to intent, the court noted that the jury could conclude that Wal-Mart intended to avoid confusion by not pursuing the specific names rejected by the legal department (“Backyard Barbecue” and “Backyard BBQ”) and instead choosing “Backyard Grill.” Finally, the court concluded that the district court improperly rejected Wal-Mart’s survey evidence, noting the district court improperly weighed the evidence at the summary judgment stage. As a result, the court vacated the grant of summary judgment and the monetary awards.

Will Wal-Mart prevail at trial? The Fourth Circuit’s analysis certainly suggests Wal-Mart may have the conceptual weakness of Variety’s BACKYARD marks. It seems like the case is ripe for settlement, but it Variety may have an unreasonably high demand, given the district court previously awarded $34 million. Given that us Minneapolitans are going to hit the 70s today (just weeks from a historic April blizzard), I’m comfortable waiting this one out in my own backyard. Let’s just hope we get an answer before the snow returns.

–Dan Kelly, Attorney

I have generally enjoyed Geico’s commercials over the years, having gone so far at one point as to actually become an auto-insurance customer (but not currently).  Geico’s commercials can be viewed on its website here, and the vast majority of them end with the same tagline–one that I have heard frequently enough that it is pretty well etched into my brain:  “Fifteen minutes could save you fifteen percent or more.”

With a tip of the cap to Mark Shea, the sheer emptiness of this tagline has never occurred to me before.  It has always registered in my mind as a promise of sorts that Geico’s rates are on average fifteen percent cheaper than those of other insurers.  Obviously, when you look at it, it is no such thing.  It is a highly specific non-commitment.  The specifics of “fifteen minutes, fifteen percent” have always lodged in my brain, but not the lack of commitment that I “could” save.  Well, I could not save, too.  Very clever.

The more widespread approach to avoiding false advertising liability seems to be to avoid specifics.  Here in the upper midwest, the classic example is the home improvement store Menards.  Menards’ tagline is “save big money,” which it relentlessly repeats in its jingle (example here).  Steve has commented before both on “Save Big” promises and the Menards jingle here.  Interestingly, the jingle does commit, “you’ll save big money when you shop Menards,” but “big money” is a relative, non-specific thing.  Another example is Wal-Mart’s “always low prices.”  Also a non-specific, unmeasurable commitment.

The Geico approach of specific non-commitment has its limits.  What if Geico said, “fifteen minutes could save you fifty percent or more”?  The magnitude of a fifty percent savings highlights the issue: if it could be proved that no customer has ever saved that much, then the claim is probably misleading, if not false. (Or is it?  Just because no customer has ever saved that much does not mean that no customer ever could. Nevermind the difficulties in trying to prove the matter, which would almost certainly have to be a detailed statistical analysis.) My guess is that many Geico customers have saved “fifteen percent or more,” so the claim that you could save that too is probably neither false nor misleading. So go ahead, you could save.

Someone who is in the business of repairing Volvo brand automobiles has the right to say so, in advertising, and elsewhere — without obtaining advance permission from Volvo — provided consumers aren’t likely to understand the advertisement or communication to mean that the repair services and/or the business providing them is authorized by, affiliated with, or otherwise connected to the Swedish automobile manufacturer. So, as is often the case, the devil is in the details of the advertisement or communication and how it is likely to be perceived by consumers.

Indeed, over the years, there has been much litigation over the trademark fair use right and defense of independent repair shops, but suffice it to say, for our limited purposes here, using the Volvo logo on signage or in advertising would most likely cross the fair use line. (Interesting history of the Volvo logo, here). Doing so takes more than necessary to communicate the simple truth and probably implies authorized status. Of course, other activities that fall short of logo use may too, but activities simply and truthfully representing that one repairs Volvo automobiles, without more, should be fair use — nominative fair use of a trademark, that is.

Over the last year and a half, we have written a lot about trademark fair use, both classic fair use and nominative fair use doctrines (Levi’s Double Arcuate Design, Corvette Shape, Rapala-Google Billboard, Google Fortune Kit, 3M’s Post-it Note, Wal-Mart Gift Cards, Match.com For Car Lovers, Cars.com/Twins Fans BillboardSummit Beer/Twitter Billboard), nevertheless, it is probably worth repeating the necessary elements of a successful nominative fair use trademark defense here:

(1) The product cannot be readily identified without using the trademark;

(2) Only so much of the trademark is used as is necessary for the identification; and

(3) No sponsorship or endorsement of the trademark owner is suggested by the use.

So, given these key elements of a successful nominative fair use defense, imagine my surprise each time I hear the ad — from a Relevant Radio sponsor on AM 1330 in Minneapolis — refraining from use of the two syllable Volvo brand name in the ad; instead, using precious airtime to read this cumbersome mouthful: "We Repair Automobiles From Sweden Starting With The Letter V," or something similar to that effect. This may very well define the need for the first element of the defense in being not "readily identified without using the" Volvo trademark.

Given that, each time I hear it, I’m left wondering why? As a trademark type, I’ll have to admit, it’s a bit annoying, since this extra verbiage is totally unnecessary and not legally required. So, here are a few ideas on the possible reason for the mysterious and puzzling substitution for the Volvo brand name:

  1. Engage (and hopefully not annoy some) consumers by communicating with a verbal puzzle;
  2. Avoid a possible unfortunate enunciation and unintended meaning [warning, graphic Urban Dictionary definition, I just discovered] of the Volvo brand name; and/or
  3. Serious misunderstanding of trademark nominative fair use principles.

Other possible explanations?

And, how many of you believe overzealous lawyers are responsible for this unnecessary verbiage?

Putting aside, for now, the unsettled question of who currently owns the iPad trademark, and Dan’s perspective on Apple’s trademark clearance strategies, from last week, look at what our finely-tuned e-mail spam filter just snagged:

It is a similar story to my previous Free Dell XPS Laptop Spam Scam? blog post from last December. Here, however, the Apple, iPad, and the (possible) iPad configuration trademarks, are the newest form of brand bait for what appears to be an ongoing type of spam e-mail scam. They’re fast. It only took about two weeks after Apple’s announcement of the iPad for these folks to bait their electronic hook with the newest branding lure.

By the way, how is it that these folks can make the free offer before Apple’s iPad tablet is even available to the public? As of today, Apple still has a notify me page, if you’d like to "be among the first to receive iPad." So, doesn’t the present unavailability of the iPad add to the misleading nature of the above advertisement because it seeks "testers" for this "new" product?

What do you think, misleading advertising, fair use of Apple’s intellectual property?

This story also appears related to the topic covered in my previous Is Wal-Mart Giving Away Free $1,000 Gift Cards? blog post too.

What do these unsolicited e-mail programs have in common? Well, besides the fact that they all appear to originate from Canada (for reasons unknown to me), they use well-known, if not famous brands to attract attention online and convince you to supply them with your e-mail address. Really, would anyone pay even an ounce of attention to any of these e-mail spam solicitations without the unauthorized use of these popular brand names and images?

In an apparent attempt to avoid misleading anyone and confusion, of course, as was the case with the Free Dell XPS offer and the Wal-Mart $1,000 Gift Card offer, the Apple iPad ad offers a purported disclaimer:

The advertisers in this email are not affiliated with any of the above brands.

This is a third party advertisement sent to you by the list owner. If you no longer wish to receive email from this advertiser, please write Reward Group 191 7 West 4th Avenue, Suite 279 Vancouver, B.C. VJ6-1M7 or visit our email removal site by click here.

If you do not wish to receive correspondence from the list manager you will need to follow the unsubscribe instructions provide by the list manager on how to remove you from their list.

Who are the advertisers? Who is the list owner? It says the advertisers are not affiliated with any of the brands, so does that mean the list owner is? Does this disclaimer do the job with claims relating to likelihood of confusion as to source, affiliation, sponsorship, and approval?

Even in the unlikely event it does, what about claims for initial interest confusion? Where is the disclaimer for that additional type of unlawful trademark confusion? And, since there is a reasonable claim of trademark fame for many of these brands, is it even possible to have a disclaimer that avoids a state or federal dilution claim concerning a famous mark?

Same drill as yesterday. Another email spam scam? More trademark fair use abuse?

Is it just me, or is the branded email spam coming out of the virtual woodwork, or what?

It appears that spam email — complete with fully branded solicitations — is becoming more and more aggressive, both from legal and technology perspectives.

We have a pretty aggressive email spam filter, but this one, like the one I blogged about yesterday, slide right through our screen, just like butter.

From the legal and trademark perspective, don’t these advertisers pay attention to the limitations of the nominative fair use defense?

With respect to the purported disclaimer, if you were to scroll all the way down to the bottom of your computer screen, before you hit the CLICK HERE icon, you’d find it is virtually identical to the one from yesterday, only the mailing address has changed:

The advertisers in this email are not affiliated with any of the above brands.

This is a third party advertisement sent to you by the list owner. If you no longer wish to receive email from this list owner, please write Gift Sponsors 7B-871 Victoria Street North, Suite #105, Kitchener, Ontario N2b 3S4 or visit our email removal site by click here.

If you do not wish to receive correspondence from the list manager you will need to follow the unsubscribe instructions provide by the list manager on how to remove you from their list.

Now, at least one website suggests that Wal-Mart is the one actually behind these kind of free gift card offers, here, but I find that really, really hard to believe.

What do you think? What do you know?

Under Consideration’s Brand New Blog has on two recent occasions commented about the trend in using white as the color for product packaging of consumable goods. Wal-Mart was the first to use this color packaging for its private label brand and the European community appears to be following suit. Using a white background has its marketing appeal, but consumers are unlikely to rely on the color white to distinguish between two different consumable goods. Additionally, it is unlikely that the user of a white background will be able to obtain a federal trademark registration for this color. However, product packaging backgrounds can be another way for companies to distinguish their products from their competitors, and it is possible to obtain a federal trademark registration for the product packaging background.

Background designs can be registered as trademarks even if they are to an extent ornamental and aesthetically pleasing. The key is whether a background design creates a commercial impression separate and apart from the other elements that appear on the product packaging. If the background design creates a separate commercial impression, it can be registered as a trademark. In fact, a background design can be inherently distinctive. In other words, consumers can immediately rely on the background design to distinguish between two sources of goods.

Unless business reasons dictate using an ordinary background, why waste an opportunity to connect with your consumer. Therefore, keep in mind that the background design of your product packaging can function as a trademark and help you further distinguish your goods from those of your competitors.

Let’s revisit the topic of non-traditional "touch" trademarks today.

Of all the traditional five human senses (sight, hearing, taste, smell, and touch) and trademarks that can be perceived by one or more of those senses, touch, a/k/a tactile, a/k/a texture trademarks are just about as uncommon as any (taste, perhaps, being the least common). Indeed, back in 2006, Marty Schwimmer from The Trademark Blog correctly noted the dearth of recognized tactile marks. Moreover, despite a 2006 INTA Board of Directors’ Resolution supporting the protection of touch marks, few appear to have reached for or grabbed any such protection (putting aside Kimberly-Clark, already blogged about here).

As arguably one of the most intimate of the senses: ‘Touch is the first sense developed in the womb and the last sense used before death." Given that and given other unique characteristics of "touch" among the senses, it is a bit surprising that touch marks haven’t been pursued more by marketers looking to create intimate, emotional connections with a brand: "Another distinction of the sense of touch is that it is identified with the real. You can’t believe your eyes, nor your ears, and taste is personal and subjective, but touch is proof." By the way, since touch/tactile/texture marks are so uncommon, why can’t we agree on what to call them? For what its worth, my vote is to call them "touch" marks since that is the term that names the underlying basic human sense.

Anyway, with that background, as far as I can tell, the one industry that seems to show the most promise or, at least, interest in touch trademarks, is the alcoholic beverages industry, most particularly those companies that focus on selling distilled spirits or wine.

                                                                 

Continue Reading Touch Trademarks and Tactile Brands With Mojo: Feeling the Strength of a Velvet, Turgid, Touch Mark?

— Karen Brennan, Attorney

Mommy Bloggers are an ever-growing group of women, estimated to number well into the millions, connecting over the Internet and sharing stories, tips and information relating to all aspects of motherhood.  There is no doubt Mommy Bloggers are impacting the on-line advertising and marketing world.  BusinessWeek recently ran an article dedicated to pitching products and services to Mommy Bloggers and many major companies are attempting to wield the Mommy Blogging economic power.  For example, Wal-Mart’s web site now includes a blogging hub for moms (Elevenmoms) and General Mills has a new blog, written by hundreds of moms recruited to blog about free products they are asked to review, in the hopes the bloggers will spark interest in the products they like.

Continue Reading Mommy Bloggers Mean Business