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Anatomy of backing down from a trademark infringement allegation

Posted by ipelton on: February 2nd, 2015

A few weeks ago, there was much hub-bub in the craft brewing world as Lagunitas filed a lawsuit against Sierra Neva alleging that the particular use of “IPA” on the label of Sierra’s Hop Hunter IPA constituted trademark infringement. See below for the comparison.

In essence, the lawsuit alleged that that Lagunitas had rights in the font and design used with the letters IPA, and that Sierra Nevada’s use of IPA was too similar.

The online backlash was rapid and large. How much protect could such a graphic, featuring the generic letters “IPA” really have? And Sierra Nevada’s lettering was not identical. And how many other beer labels use IPA in big bold lettering?

In a rare move, the complaining party quickly backed down and dropped the lawsuit. Not only was that fact and the speed with which it was done rather astonishing — you can imagine the discussions with the very same lawyers who advised them to file the lawsuit — but their public apology was tremendous It sounded sincere and not written exclusively by attorneys. Lagunitas posted the following message on their website on January 14, just one day after the lawsuit came to light and just two days after the lawsuit was filed:

Yesterday in the Lagunitas nexus of the Twitterverse was the worst day ever in 23 years of growing our brewery. Worst. Growing a business over time sometimes involves defending that business. Defending a business requires answers to Hard Questions. Questions like: Are our Foundations Strong? Are our Flavors right? Are our Labels, our very identity, something that we can defend? There are many courts in the world in which to find those answers. For us, over the last month, one court was a series of rebuffed phone calls to another brewer. Another was a court of law. Today was in the hands of the ultimate court; The Court of Public Opinion and in it we got an answer to our Question; Our flagship IPA’s registered federal trademark has limits. We don’t know the answer to every question beforehand so we feel around for the edges and we try to learn. Today we were seriously schooled and we heard you well…! The Customer is always right and here in the 21st Century that maxim is truer than ever. Today we will Drop the Infringement Suit & get back to work answering other questions instead. We needed to raise the question because it matters, and through the miracle of Twitter the answer came back much sooner than we thought and in a different Court than we expected. The best thing is to have friends. Can we say thank you?

Other’s accused of trademark mismanagement or trademark bullying should take notice — mistakes happen. Poor judgment exists. By owning the mistake and acknowledging it, some good can potentially balance the harm done to the brand that erred in its trademark judgement.

Note: While Chik-fil-A appears to have backed down from their complaints about EAT MORE KALE they have never issued any kind of a statement, explanation or apology. Their brand image may have suffered considerably less embarrassment and ridicule if they had done something similar to Lagunitas.

 

Thankfully, the application was also abandoned by the Association. There was quite a firestorm at the end of August as it became known that the ALS Association filed to register ICE BUCKET CHALLENGE and ALS ICE BUCKET CHALLENGE as trademarks with the USPTO. I was certainly quite critical of the association (See blog, Washington Post, LA Times.)

It has now come to my attention that the Association also applied, on the same day in August, to register #IceBucketChallenge (Serial No. 86375299) and #ALSIceBucketChallenge (Serial No. 86375307) trademarks for use in commerce with “charitable fundraising.” These applicatoins are even more shocking as they were an even more bold attempt to control what was a publicly created grass-roots movement, phrase and phenomenon. These application were also abandoned after the public backlash on September 1st.

I hope that the ALS Association will fully investigate whose decision it was to file the four trademark applications. Did the ALS Association believe that it could stop others from using the hashtag?

 

FireShot Screen Capture #172 - 'Homepage - ALS Association' - www_alsa_orgfor more about ALS and the ALS Association, see www.alsa.org

Last month, the Chairwoman of the Federal Trade Commission (FTC) announced that the agency would be investigating patent trolls and patent litigation tactics.

See NY Times article and transcript of June 20, 2013 speech by Chairwoman Edith Ramirez.

Will the FTC ever investigate trademark scam operators?  Will they investigate whether abuse trademark litigation practices stymie innocent trademark owners, small businesses, innovation, and the US economy?

US-FederalTradeCommission-Seal.svg

On Monday, the state House of Representatives in Minnesota held an informational hearing on trademark bullying. See video below. This is a welcome development. The panel heard from businesses about the costs and difficulties of defending allegedly overreaching trademark lawsuits.

Since the federal Congress has done little or nothing to consider this issue, this is a welcome development. As detailed on this blog in many posts, in 2010 Congress ordered the USPTO to study “abusive litigation tactics” in the field of trademark. The USPTO sought public comments and in April 2011 issued a report with its findings. Since the study, there have been no public hearings by Congress on the issue. There has been some activity by the USPTO to increase education to the public and business community about trademark issues.

The Study actually made three recommendations (while finding no real problem): (1) urge pro bono efforts from private sector, (2) urge more CLE (continuing legal education) programs on trademark litigation issues for attorneys, and (3) enhance outreach from several government agencies. To my knowledge, nearly two years after the Study, very little if anything has been done regarding (1) and (2).

So to see Minnesota House of Representatives taking on this issue is refreshing. Small businesses are critical to the vitality of the US economy. If Congress is unwilling to help these businesses deal with unfair trademark litigation tactics (which I believe do exist and could be rectified at least in part, though reasonable people could disagree), others must take up the cause.  The SBA, US Chamber of Commerce and other small business advocates have all been largely silent on these issues as well.


Thank you to the House of Minnesota for taking on this issue!

Related posts:

Last week I spoke at the New York State Bar Association and presented on “Trademark Bullying & the Streisand Effect“. The talk was very well received. My favorite feedback was that perhaps trademark attorneys, when counseling their clients about the risks of being “shamed” or having social media backlash after sending a cease and desist, should show my slides and present the stories of the “Streisand Effect” enumerated therein. Perhaps even strong-willed client CEOs would then recognize the risk of being shamed and re-visit a very aggressive trademark enforcement policy.

My slides and paper follow below.

Trademark Bullying & the Streisand Effect (Erik Pelton – NYSBA 2012 IP conference)