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.

My son snapped this photo during a recent family trip to Washington, D.C. It almost has become a hobby for him to capture people in the act of ignoring a sign’s specific request or doing exactly what a sign purports to forbid. While some retreated from the water in the World War II Memorial when they saw a camera pointed in their direction, it appears, others just can’t help themselves, despite having actual knowledge of the opposite instruction:

In any event, it got me thinking about notice and the difference between and consequences of actual notice and constructive notice in trademark disputes.

  • Constructive Notice. It may surprise some to learn that we are all deemed to be aware of the registrant’s ownership claim for each and every mark that is federally registered on the Principal Register. See Section 22 of the Lanham Act (15 U.S.C. 1072). This reality is perhaps another good reason to conduct trademark searches (at a minimum) before adopting and using words, symbols or devices (don’t forget about non-traditional trademark devices) that might function as trademarks. It doesn’t matter that you or your client may not have actual notice of the ownership claim or trademark rights, if the use results in a likelihood of confusion, there is trademark infringement. So, you might as well actually know what you are presumed to know through constructive notice.
  • Actual Notice. The danger with actual notice is, what do you do with it once you have it? Actual notice of trademark rights can lay the groundwork for a trademark owner pursuing a willful trademark infringement claim that — if proven — might lead to an award of enhanced monetary relief and recovery. The best defense to a claim of willful trademark infringement is to have a well-reasoned opinion by competent trademark counsel in your back pocket, in the event a trademark claim is asserted. As a result, if you’re going to search, and create actual knowledge of trademark rights, best to obtain an appropriate opinion from counsel that the planned use is clear and does not violate the rights of another.

If you’re interested in learning more on this subject, you might consider signing up for the upcoming 90-minute live webinar, sponsored by Strafford Publications, Inc., on October 5th entitled Trademark Clearance Opinions.

Labor Day Bonus: The first two commenters to this post will earn free attendance to the webinar.