Government bureaucracies aren't supposed to help big businesseshound their small competitors. But right now a mistake by thePatent and Trademark Office andsome aggressive lawyering by the Nordstrom retail chain haveplunged a small online retailer into a costly morass. Itillustrates the sometimes sharp divide between the law and how thelaw actually works.
Trademark is the least controversial of the intellectualproperty doctrines. Unlike patent and copyright, which try to setincentives for the creation of new ideas and expressions,trademark's roots are in fraud prevention. Trademark preventsconfusion about the sources of goods and services by keepingsellers from adopting similar names and insignia. But trademark isjust as susceptible to government failure and legal game-playing asother intellectual property doctrines.
Witness the story of Beckons, an organic yoga andlifestyle clothing business founded in 2006 by two women inColorado. Around the time they began selling their "Beckons"clothing line in July of that year, Ann Sather and BeckyPrater filed for a trademark on the word "Beckons" associatedwith pants, shirts, t-shirts, shorts, dresses, sweatpants, andjackets. PTO registered their trademark in June 2007. Ann and Beckyhave been business partners for 20 years, designing and sellingclothing lines while raising their children. They each have twochildren in or nearing college.
After Ann and Becky filed, but before their application waspublished, the Nordstrom retail chain filed applications for atrademark on the word "Beckon," planning to use it as a house brandon women's fashion apparel and accessories. The similarity betweenthe two words and the identity of the product lines would haverequired the PTO to reject Nordstrom's application, but it didn't.Somehow, the examining attorney missed the fact that "Beckons" wasalready a registered trademark associated with clothing. Heapproved Nordstrom's applications for publication.
So instead of continuing to build their business, Ann and Beckyfound themselves hiring lawyers to file an opposition toNordstrom's trademark applications, something they had to do toprotect their mark. Because they were first to file and first touse, the law unambiguously gives them the right to theirtrademarked term "Beckons" and anything similar. But trademark lawand trademark practice are two different things.
With 169 stores, a line of restaurants, and its own bank, $2.75billion Nordstrom, Inc., decided to show Ann and Becky who wasboss. Instead of recognizing that the trademark they wanted wastaken, Nordstrom's lawyer moved tocancel Ann and Becky's trademark. He argued that their Beckons markonly refers to "yoga clothing." His filing moved the issue to theTrademark Trial and Appeals Board and ramped up the paperwork andlegal bills for Ann and Becky.
Only someone who has never set foot in a yoga studio can believethat there is a distinction between yoga clothing and fashionapparel. Yoga gear can be very fashionable, indeed.
The trademark lawyer at PTO, having realized his mistake, askedthe TTAB to remand Nordstrom's applications back to him. The TTABdid that in December 2007, and in May 2008, he denied Nordstrom'sapplications for the "Beckon" mark, so similar to Ann and Becky's"Beckons."
That should have been the end of it. But Nordstrom had a head ofsteam going, and it wasn't going to let two small businesswomen inColorado get away with "its" trademark. Just 10 days after the PTOattorney rejected the Nordstrom applications, Nordstrom filed asecond attack on Ann and Becky's trademark, arguing that they hadabandoned rights in Beckons.
This moved the case back to the TTAB and commenced another roundof legal filings. The TTAB dismissed Nordstrom's second attempt atcancellation as "duplicative," pointing out to the aggressivelawyer that Nordstrom's original cancellation attack was stillalive.
Today, Nordstrom's effort to cancel Ann and Beckys trademark ison the TTAB docket on a schedule that will take until at leastmid-2010 to resolve. A letter that Becky wrote to Lynne Beresford, the commissioner oftrademarks, illustrates how the PTO has utterly failed her and herbusiness partner:
We filed for a trademark so that we could reasonablysecure ourselves from someone else using that name. If your officecannot protect us from this, why would we, or anyone, file anapplication? The law is supposed to be accessible to all people.Just because Nordstrom has money and we do not does not give themthe right to use the name for which we have the trademark. . . .[T]he cost to work through the TTAB will easily exceed $70,000 justto fix the problem The Trademark Office made in the first place. Weunderstand that we must stand behind and police our trademark. Howis this possible for a small company to stand up to a behemoth likeNordstrom for $70,000? Your office has ensured ourdemise.
Trademark law says that Ann and Becky are entitled to tripledamages and attorney's fees for Nordstrom's use of their mark. Butthe advice they've gotten is that those remedies are rarely awardedin practice.
This division-between law and practice-is something thatpolicymakers should keep in mind when they write supposedly simplerules, or add to existing ones. Rules and regulations can turn intoa vortex of litigation because of simple error, through misuse by avindictive bureaucrat or-in this case-when taken advantage of by abig company with aggressive lawyers. When straightforward laws liketrademark are susceptible to doing this kind of damage, new lawsand regulations should have to meet the strictest, most searchingscrutiny.
Jeers are due to the Patent and Trademark Office for letting amistake like this blossom into years of litigation for a smallcompany. PTO owes these women a fix. Jeers are also due toNordstrom for its aggressive, intemperate lawyering. Intentionallyor not, it looks like a big company trying to kill off a competitorwith regulatory burden rather than competing fairly in themarketplace. Were talking yoga here, and thats not good forNordstrom's karma.
Small businesspeople work very hard and take their creationsvery seriously. "Beckons" was not a name picked at random,obviously. It is a play on the names of the founders, Becky andAnn. They rightly take this struggle for business survivalpersonally. Instead of these two, some people in the Patent andTrademark Office and in Nordstrom's legal department deserve somefinancial uncertainty and sleepless nights for a change.