July 16, 2015


by Guest Blogger

I read a news report about a small veteran-owned company called American Built that recently settled with a company called Hybrid Apparel over sales of t-shirts that were being sold at Wal-Mart. The t-shirts infringed AMERICAN BUILT federal trademark registration 4,297,829 for "Hats; Pants; Shorts; Sweatshirts; T-shirts."

Reportedly, the owner of American Built, Nicholas Carson, discovered that the infringing shirts were being sold when he walked into a Wal-Mart and saw them on the shelves. Although the news report did not say how Mr. Carson began the complaint process, he did apparently resolved the issue successfully because the inventory will be sold off and discontinued. Presumably, he will also receive some sort of restitution. As you can imagine, sometimes this type of dispute becomes a mess.

This raises an interesting question of how to deal with retailers and manufacturers when you find your brand is infringed, and on the flip side, how to deal with infringement claims from customers for products you are reselling from a manufacturer.

This discussion assumes you have a federal trademark. If not, you can still succeed, but things can be a lot more difficult.

If someone is knocking off your brand, often the best approach is to complain to the retailer directly. This is true even if you know the identity of the manufacturer. This is because retailers will typically see the claim, and instruct their suppliers and manufacturers to resolve it. Take the AMERICAN BUILT example. There is no way Wal-Mart would want the bad press of playing hardball with an armed forces veteran who promotes American-made products because over selling knock-off products made overseas. Additionally, manufacturers/suppliers typically feel a need to show retailers they will stand behind their products, which works in your favor. These factors can help provide a quick path to resolution.

From the other side of the equation, retailers (including online sellers) typically protect themselves by having an agreement in place with the manufacturer/supplier. In the event that there is no written agreement, the Uniform Commercial Code, Article 2 also provides a default warranty of non-infringement that can help in a pinch. So when a retailer gets a demand about a product, the retailer will turn to the manufacturer/supplier. Ideally, the written agreement requires the manufacturer/supplier to step in for the retailer and defend the claim.

The good news for the American Built's of the world is that retailers tend to have very little appetite for this type of dispute, and even the smallest trademark owners often find a successful resolution.

It is important to keep your head about you though. For instance, don't assume that the retailer is even aware of the problem. In fact, assume the retailer has no idea. You may have more success if you send a nice first letter to the retailer than a hostile one. You'll notice that Mr. Carson also allowed Wal-Mart's vendor to sell through the inventory. Had he taken a harder line and tried to require destruction of the inventory (even though technically appropriate) things may have become more complicated. Who knows though, maybe he tried that route and ended up with this resolution anyway.

What happens if you are a manufacturer/supplier? The risk typically falls to you, so get insurance and be careful. A quick trademark search of AMERICAN BUILT would have shown Mr. Carson's (or at least a company in Pocatello) had a federal trademark for the name for t-shirts. When I checked today, there were 21 total registrations for the exact name, so it would not have been hard to find. Sometimes, even when you are careful, things still happen, so consider insuring these risks.

Good luck out there.