Trademarks are highly valuable assets. Developing and protecting trademarks is not merely a "cost of doing business," but rather an investment in customer goodwill, leading to greater customer satisfaction and higher sales, as well as evidence of validity and exclusive ownership of a creative work.
One company that is notorious for understanding the value of its trademarks is British luxury fashion house Burberry Limited. An example of this emerged earlier this year when Burberry flexed its brand protection muscle at Target Corp., filing an $8 million-plus trademark infringement and counterfeiting lawsuit against the Minneapolis-based retailer.
The dispute and its impending outcome should serve as a reminder to designers, retailers and businesses that the line between inspiration and infringement of another's intellectual property rights can be narrow. Time will tell if Target stepped across that line as it works through this dispute over the iconic Burberry Check.
Burberry owns 11 U.S. trademarks for variations of a check pattern that it uses on products, apparel and accessories. While some of the trademarks incorporate color, others are simply directed to the particular check pattern. Burberry claims that it first began using its Burberry Check trademark as early as the mid-1920s.
The lawsuit alleges that Target is selling reproductions of the Burberry Check trademark and that its conduct constitutes repeated, willful and egregious misappropriation of Burberry's trademarks.
Burberry's complaint states that in early 2017, Target started selling several products bearing unauthorized copies of the Burberry Check trademark. Burberry sent Target a letter notifying the company of Burberry's exclusive rights to the specific checkered pattern and demanding that Target refrain from further sales of products that may infringe the trademark. The complaint states that Target ignored the letter and began offering a number of scarves for sale bearing Burberry's legally protected check print, "despite being aware of Burberry's exclusive trademark rights."
The complaint includes side-by-side images of Burberry's authentic scarves and the allegedly infringing scarves offered by Target.
At the heart of Burberry's trademark infringement allegations is the claim that consumers are likely to be confused as to the source of the respective products — that they will think they are buying a Burberry product when they are not. The complaint also seeks punitive damages stemming from Target's especially "egregious misappropriation."
Target promptly responded in a news release, stating its awareness of the lawsuit and expressing its desire to address it "in a reasonable manner." "At Target, we have great respect for design rights," the company stated. In its answer to the complaint, filed with the court, Target essentially issued a blanket denial of Burberry's allegations.
What lessons can be drawn?
First, companies in and outside the fashion industry are becoming more savvy with the use of intellectual property protection. For example, French designer Christian Louboutin owns trademark rights on a color red applied to the sole of a shoe. Similarly, the U.S. Patent & Trademark Office recently granted Hasbro trademark rights to the smell of Play-Doh ("a sweet, slightly musky, vanilla fragrance, with slight overtones of cherry, combined with the smell of a salted, wheat-based dough").
The Burberry case serves as an important reminder to companies that trademarks are not limited to words and logos. They can also extend to apparel designs and other aspects of a product that have acquired distinctiveness in the marketplace.
Additionally, seeking legal advice ahead of a product launch may help businesses steer clear of costly disputes, by identifying potential infringement issues and offering guidance on how to avoid them.
Burberry has demonstrated over many years the value of owning trademarks and vigorously defending them. In February 2016, the luxury brand filed suit against J.C. Penney Corp. — accusing the retailer of selling "inferior quality" knockoffs bearing the Burberry checkered pattern. Less than one month after filing the complaint, Burberry voluntarily dismissed the lawsuit, likely after the parties negotiated a settlement. Burberry had also previously filed and settled similar lawsuits against TJX Cos. Inc. (owner of discount department stores TJ Maxx and Marshall's) in 2010 and Iconix Brand Group (owner of the London Fog and Joe Boxer brands) in 2007. A similar out-of-court-settlement outcome in Burberry's case against Target would not be surprising. While we will likely never know the terms of whatever deal is struck, if settlement materializes it should be viewed as a victory for Burberry in its quest to protect and retain strong trademark rights.
Eric Chadwick and Kyle Peterson are attorneys with the intellectual property law firm Patterson Thuente IP in Minneapolis.