Horrifying Trademark Infringements

Ilianna Soto,

Today is Halloween, and all over the globe, houses will be decorated and children will celebrate by going trick or treating and eating ‘dead-man’s fingers’, and spider cakes. For anyone interested in a little trivia: Halloween derives from the pagan festival Samhain.  

Samhain was the most significant of the four fire festivals celebrated by the ancient Celts, taking place at the midpoint between the fall equinox and the winter solstice. After the harvest was completed, druids lit a communal fire wheel which, thanks to friction, would spark flames. Huge sacred bonfires were built and animals were sacrificed. People wore costumes, typically consisting of animal heads and skins, and attempted to tell each other’s fortunes. 

During Samhain, it was believed that the barriers between worlds were breached and dead ancestors could cross over. Offerings were also left for fairies (or Sidhs, as they were known). It was also believed that during this time, druids could predict the future, an incredibly important comfort for people bracing for a harsh, dark winter.

At the end of the celebrations, everyone took flame from the fire to relight their domestic hearths, believing this act would protect them over the coming months.

Nightmare trademark infringements 

Nowadays, we have the comforts of central heating and plenty of food to get us through the dreary winter months. However, that does not mean we are immune to nightmare scenarios. When it comes to trademark infringements, there are certain cases which stand out amongst the thousands of breaches that occur every year. Of course, the financial damages wrought by major trademark infringement litigation makes the headlines, but the nightmare of being involved in such cases also encompasses the loss of productivity, reputational damage, as well as the terrible stress of court proceedings.

Two horror trademark cases

Below are two horror trademark cases that highlight the heavy price of trademark infringements.

Variety Stores Inc. v. Wal-Mart Stores Inc E.D.N.C. No. 5:14-CV-217

In February 2019, a North Carolina jury ordered Walmart Inc, one of the worlds biggest retailers, to pay Variety Stores Inc $95.5 million for infringing the latter’s rights related to its trademarks on “The Backyard,” “Backyard,” and “Backyard BBQ.” 

Variety was awarded a "reasonable royalty" of $45.5 million, plus $50 million for the profits Walmart earned from sales under the infringing trademark. Both amounts are subject to post-judgment interest.

The case dates back five years, when, in 2014, Variety filed a civil action against Walmart for trademark infringement, unfair competition, and deceptive practices, after the latter adopted and used the trademark “Backyard Grill” in connection with grills and grilling supplies. Variety owns a federal trademark registration for the mark “The Backyard” for “lawn and garden supplies and equipment” and has common law rights in the marks “Backyard” and “Backyard BBQ” in connection with “lawn and garden equipment, grills, and grilling products.”

At first instance, the Court agreed that Walmart’s use of ‘Backyard Grill’ was likely to confuse consumers. The Court noted  Walmart ignored its own internal legal advice regarding the use of the contested term which indicated it deliberately sought to cause consumer confusion and oust a smaller retailer from the market. The District Court awarded $32.5 million to Variety, based on Walmart’s sales in disputed jurisdictions, less expenses. Variety moved for a separate jury trial to determine additional non-disgorgement damages. This request was denied, and Variety appealed. The U.S. Court of Appeals for the Fourth Circuit declared the District Court’s original $32.5 million summary judgment void, because a jury, not a judge, should have decided several disputed infringement factors. This led to the February 2019 award of $95.5 million on the grounds that Walmart had infringed the trademark ‘BACKYARD’ and that the infringement was willful.

Walmart has announced it is appealing the decision.

Louis Vuitton v Louis Vuiton Dak

It will come as no surprise that a luxury fashion house may strenuously object to fast food being associated with its brand. So, when Louis Vuitton discovered that Louis Vuiton Dak, a South Korean restaurant, had not only stolen its name but imitated the French fashion house’s logo and packaging, it sent in its lawyers. To mitigate the damage, the fried chicken restaurant changed its name to ‘Louisvui Tondak’ after the first ruling. However, the name was deemed too similar, and a Seoul court ordered the fast-food outlet to pay 14.5 million won ($12,500) in damages.  

Although this amount pales in comparison to that imposed on Walmart, Louis Vuiton Dak was a small takeaway and the award would have hit the business hard. Whilst one might frown on a multi-million-dollar business pummelling a small organization through legal means, the fact is Louis Vuitton and other fashion houses face relentless brand dilution via counterfeit goods and copycats. One cannot blame them for saying “enough is enough” when a business, however small, blatantly infringes its marks. 

Check your dream trademark - don’t let it turn into a nightmare

All these cases illustrate how destructive trademark infringements can be and the drain they place on company resources. Thorough trademark clearance search and due diligence, as well as seeking and listening to expert legal advice will ensure that your dream brand does not become subject to a nightmare trademark infringement case.

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