March 26, 2008
Griper Selling Anti-Walmart Items Through CafePress Doesn't Infringe or Dilute--Smith v. Wal-Mart
By Eric Goldman
Smith v. Wal-Mart Stores, Inc., 2008 WL 760196 (N.D. Ga. March 20, 2008)
Charles Smith doesn't like Walmart. Like many gripers, he has taken his cause to the web. Among other things, he set up two CafePress stores to sell t-shirts and other items that bore a variety of anti-Walmart designs and slogans, including the phrases "Walocaust" and "Wal-Qaeda." He registered domain names containing those phrases and pointed them to his CafePress pages. He also did some other limited promotions of the CafePress stores.
It appears Smith hoped that the CafePress sales might defray the litigation costs, and he chose to set the merchandise price at a 30% profit margin rather than at cost (which was an option in CafePress' menu). Even so, market response to these lightly marketed goods wasn't strong, and he sold less than 50 shirts in total (excluding the sales to plaintiff's lawyers). All told, "The revenues from Smith's CafePress Walocaust and Wal-Qaeda account sales have been less than his costs for the domain names and CafePress account fees." Doesn't sound like a good business decision.
Worse, the CafePress stores could have been detrimental from a legal standpoint. These sales confirmed that Smith was making a "use in commerce" of the designs and slogans, eliminating one potential defense argument that other non-commercial gripers try to invoke. As a result, the decision to expand his griping campaign to CafePress was a potentially risky one--not only didn't Smith make any money to help fund his defense, but he may have weakened his defense from a legal perspective. Stated differently, there are rules of engagement for gripers, and some courts will hold that the rules prohibit a CafePress battlefront. It worked out OK for Smith, but other gripers should proceed cautiously.
In any case, with no argument over use in commerce, Smith's defense focuses on likelihood of confusion. Walmart brought out the big guns in the form of frequent trademark expert Prof. Jacob Jacoby, who did two mall intercept surveys (including regular surveys plus a mock website) to establish confusion and dilution. First, what a ridiculous and expensive waste of money for Walmart to retain Jacoby for such a low-stakes dispute--Jacoby is like a nuclear flyswatter in this case. Second, the court rightly sees the problems of trying to fit a griping dispute into a standard trademark survey, and as a result most of Jacoby's survey gets tossed or ignored. Third, the court embraces Smith's activities as a parody, which doesn't automatically resolve the likelihood of confusion analysis in Smith's favor but swings some of the factors over to his side. Summary judgment for Smith on the trademark infringement and related claims.
The court also grants summary judgment against Walmart's dilution claims because "Smith's parodic work is considered noncommercial speech and therefore not subject to Wal-Mart's trademark dilution claims, despite the fact that Smith sold the designs to the public on t-shirts and other novelty merchandise."
Finally, to complete Smith's success, the court rejects the trademark claims over Walmart's smiley face, saying that "Wal-Mart has failed to establish that the smiley face has acquired secondary meaning or that it is otherwise a protectible trademark." Due to this ruling, Walmart ends this lawsuit with fewer trademark rights than when it began (see the analogous consequence in the American Blinds case). Whoops!
This raises the question most on my mind: why did Walmart try to enforce its rights against Smith in the first place? To be fair, Walmart didn't sue Smith; Smith brought a DJ. But Walmart did send C&Ds to Smith and CafePress, and as every trademark owner knows, every C&D has the risk of prompting a DJ that leads to the invalidation of their trademark rights--EXACTLY WHAT HAPPENED HERE! So why did Walmart send the C&D in the first place? After all, Smith was a small potatoes griper, and the enforcement action served to raise his obscure profile. More importantly, I can't imagine any construction of a trademark owner's policing duty that extends to cover a griper like this. If Walmart felt it needed to shut down Smith to satisfy some policing obligation, I respectfully but emphatically disagree with that judgment.
Walmart didn't drag CafePress into this lawsuit (after all, CafePress did initially fold in response to Walmart's C&D). Nevertheless, I'm struck by the fact that this is the second time I'm blogging on CafePress in the last month. See my previous blog post on Curran v. Amazon. It seems to me that future cases will address the liability of websites like CafePress that help users become retailers with minimal upfront investments. It's not 100% clear to me that sites like CafePress can point the finger at their users and walk away from liability.
* Public Citizen's web page with source material from the case
* Public Citizen's press release
* A thorough Law.com article with some good interviews
* Atlanta Journal-Constitution
* Sam Bayard
* Ron Coleman
Posted by Eric at March 26, 2008 02:50 PM | Trademark
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