For small businesses, trademark battles are life or death

  • Article by: DAVID PHELPS , Star Tribune
  • Updated: June 30, 2012 - 4:35 PM

Legal battles over company names put small businesses at a big disadvantage.

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Amy Brooks of "Bubbles by Brooks" waited for shoppers to stop at her tent Thursday June 28, 2012 in Rochester, MN. Rooks of Rochester , sells soaps that are designed to reduced skin irritation to cancer patients as they go through therapy.

Photo: Jerry Holt, Star Tribune

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He sprays foam building insulation; she makes soap.

But Rob Linden and Amy Brooks have one issue in common. They're ensnared in a practice some attorneys call "trademark bullying." Both are fighting against big, deep-pocketed corporations over the use of their hand-selected names for their small businesses.

High-profile trademark disputes, such as the long-running litigation between Apple Corps (owner of the Beatles Apple Records label) and Apple Computer (of Macintosh and iPod fame) often pit big businesses against one another. But it can be a life-or-death contest when the defendant is a small company.

For the past four years, Linden has run a small Columbia Heights business called Thermal-Wise Insulation that provides insulation services to commercial and residential customers.

Brooks, of Rochester, sells handcrafted soaps that are designed to reduce skin irritation to cancer patients as they go through therapy. A cancer survivor herself, Brooks has been selling soap under the name Bubbles by Brooks for 10 years.

These days Linden is the target of a lawsuit brought by a Utah-based natural gas utility that claims the name of Linden's company infringes on the name of a rebate program it offers its customers, ThermWise.

Brooks is the subject of a trademark objection by Brooks Brothers, the giant Connecticut-based clothier which also has a line of fragrances and self-described "cleansing products." Brooks Brothers wants Bubbles by Brooks to withdraw its trademark application with the U.S. Patent and Trademark Office or face "potentially costly litigation."

The legal challenges have left both Linden and Brooks dumbfounded.

"I didn't think what they are claiming is even possible," Linden said in an interview. "I'm an insulation company. They sell gas."

Questar Gas Co. of Salt Lake City wants Linden to stop using the Thermal-Wise Insulation name and is seeking a federal court order in Minnesota to do just that.

In its letter to Brooks demanding that she withdraw her trademark application, attorneys for Brooks Brothers said, "Though 'Brooks' may be your surname, it does not give you the right to infringe on the Brooks Brothers trademark or otherwise compete with Brooks Brothers."

In an interview, Brooks told the Star Tribune: "I've grown every year for the last 10 years by word of mouth. I could change my [company's] name, but then there's the domino effect. I have custom printed boxes, website domains. What does that affect? Absolutely everything."

Questar, which distributes natural gas in parts of Wyoming and Idaho as well as Utah, claims Linden's continued use of the Thermal-Wise name will "damage [its] reputation and impair and dilute [its] goodwill" with ThermWise customers.

Both cases recently came to the attention of the Intellectual Property Institute at William Mitchell College of Law and institute director Kenneth Port, who has spent much of his professional life studying trademark disputes.

"It's a deal-killer. That's the whole point of this," said Port of the infringement claims. "It's strange, that's for sure."

Extreme lengths

Companies sometimes go to seemingly extreme lengths to protect their trademarks.

A Vermont T-shirt designer was sued last year by Chick-Fil-A over a shirt that said "Eat more Kale." The seller of fast-food chicken said the shirt infringed on its "Eat Mor Chikin" slogan. The convenience store chain Casey's General Stores sued Subway after Subway asked in a cease-and-desist letter that Casey's stop using the word "footlong" to describe the 12-inch sandwiches it sells.

The Vermont case is still pending; Casey's eventually decided to use "12-inch" to describe its sandwiches.

"They want to put you out of business," Port said of these disputes.

Brooks said her attorneys told her it would cost $200,000 to fight Brooks Brothers' opposition to her trademark request.

"I don't have that," Brooks said. "It's wrong what they're doing."

Arthur Wayne, a Brooks Brothers vice president for public relations, said that the company does not comment on legal matters, but did say "we are reviewing the situation and potential solutions."

In a study of trademark litigation tactics released last year, the U.S. Patent and Trademark Office acknowledged that the cost of legal counsel "has the greatest impact on small businesses" to fight trademark challenges.

But the study also concluded that "there are sufficient mechanisms in place to deter or punish those who resort to abusive ... tactics."

There were 9,025 contested trademark cases filed with the trademark office last year, up from 8,800 the year before. The number of contested cases has fluctuated noticeably in recent years, reaching a high of 12,277 in 2008.

State Rep. Joyce Peppin, R-Rogers, introduced legislation earlier this year to provide for a purportedly less-costly trademark resolution process involving the state Office of Administrative Hearings rather than federal court.

"This is an alternative for small businesses to fight cease-and-desist letters," said Peppin, who worked with Port in drafting the legislation and is herself a William Mitchell student. "They can't afford a lengthy and expensive trademark battle."

The legislation was introduced late in the 2012 session and will be reintroduced next year, Peppin said.

In the Linden case, Port and a team of five William Mitchell students have offered to provide pro bono legal assistance to Linden and his attorney in the form of research and brief writing. "I'm the unpaid expert," said Port, who has studied more than 2,800 trademark disputes going back to 1947.

'Good-faith' basis for suit

But Port may be treading on squishy ground where there are no black-and-white answers.

"This doesn't look like a frivolous suit to me," said Stephen Baird, head of the intellectual law practice group for the Minneapolis law firm Winthrop & Weinstine, referring to the Questar case. "The marks are close enough and in a similar field -- energy."

Baird said only the likelihood of confusion needs to be shown, not actual confusion, for a trademark challenge to be successful.

Joel Leviton, a trademark attorney for the Minneapolis office of Fish & Richardson, said many companies are diligent about protecting trademarks because of potential long-term implications.

"The law puts the duty on the mark owners to enforce their trademarks or they could lose their distinctiveness in the marketplace," Leviton said. "A plaintiff needs to have a good-faith basis before filing a lawsuit. We [as lawyers] have this obligation and shouldn't file lawsuits that don't fit that category. I don't agree that trademark bullying is a rampant problem."

Linden said he's already spent $15,000 in legal fees fighting the Questar motion and deferred two hires over the lawsuit uncertainty.

"This has been costly in every which way," Linden said. "I've invested a lot into this business as it is. And for me to start over with a new name would be devastating. A change of name is often a sign of a failed business."

Linden said he offered to give up the Thermal-Wise name if Questar ever came into the Minnesota marketplace, but that was rejected.

Questar spokesman Chad Jones said the utility spends $1 million a year educating its 980,000 customers about its ThermWise rebate program and its thermwise.com website, which features a character named "Therm -- the energy Wiseguy.''

"Thousands search the Internet for ThermWise to get rebates, and if they turned up something with a negative connotation that would reflect on our brand," Jones said. "The world is all connected on the Internet now."

Carlos Torelli, an assistant marketing professor at the University of Minnesota's Carlson School of Management, said brands and trademarks have become a very valuable commodity in the marketplace.

"In the last 10 to 15 years, companies have come to realize that brands are assets. The same way you think about tangible assets you think about intangible items like brands," Torelli said. "When you can bring association with a name, you have an edge that is very difficult to replicate."

Linden is still shellshocked about his legal battle.

"I recently asked my lawyer where we are at in the case,'' Linden said. "He said, 'We've just reached the tip of the iceberg.' I didn't want to hear that."

Said Brooks, "I'm not going down without squeaking some."

David Phelps • 612-673-7269

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