Business

Trademark battle snares Bellingham company in David vs. Goliath fight

When Whatcom County resident Christine Palmerton received a letter from clothing giant Nautica in January 2013, she had no idea she was about to embark on a strange odyssey that still hasn't come to a conclusion.

Palmerton owns Nautigirl Brands LLC, which sells clothing and other products geared toward boating enthusiasts. What she received more than a year-and-a-half ago from Nautica was a cease-and-desist letter, demanding that she stop using her business name and logo and forfeit all of her products that have the Nautigirl name on them.

Nautica contended her logo and company name - Nautigirl, with the tagline "Dare to be naughty" - were too similar to the Nautica brand and would create confusion with consumers. Nautica's logo is the outline of a spinnaker sailboat, while Nautigirl's cartoon logo has a woman holding a martini while standing behind a ship's wheel.

"It was a very aggressive letter," said Palmerton, noting that her reaction was confusion and frustration, followed by tears, wondering what would become of her company.

The case is currently before the Trademark Trial and Appeal Board, with a ruling expected in the next six months.

It would be one matter if she didn't have rights to the Nautigirl name, but she does. Palmerton had the Nautigirl name trademarked in 2008. The U.S. Patent and Trademark Office researches all applications to make sure there isn't a similar name that would lead to brand confusion, and that office approved it.

Going after a small company to drop its name or logo is a practice that's become common because large companies can successfully intimidate small businesses into giving up in order to avoid huge legal fees, said Eve Brown, director of the Intellectual Property & Entrepreneurship Clinic at Suffolk University Law School in Boston. Brown, a licensed attorney, took on Palmerton's case pro bono, enlisting third-year law students to gain experience in real-world setting.

Brown estimates that if they charged Palmerton for the work they've done on the case to this point, the bill easily would surpass $100,000. That's just for the chance to keep a trademark that Palmerton already had rights to.

"This case is about closing down an existing business," Brown said. "It's something that has become economically rational for a (big) company."

Nautica is aggressive when it comes to defending its brand. On the website trademarkia.com, Nautica is listed among the "trademark bullies." The website lists more than 50 instances of Nautica challenging a business name or logo since 1995. Many of the companies had "nauti" in the name, and in most instances the businesses gave up using the name. Giving up is a common result in these cases, Brown said.

Two attorneys representing Nautica that were listed on a petition to have Nautigirl's trademark canceled, Neil Friedman and Stephen Baker, did not respond to emails requesting comment for this article. According to its website, Nautica has products available in 75 countries, with 265 regular stores and more than 3,000 Nautica branded shop-in-shops.

Many other large companies are on the "bully" list. Brown said her clinic recently worked on a case where Monster Energy demanded that a company called Monster Fish Keepers drop its name because it would cause brand confusion. That case is still going on.

"I would say 9 out of 10 businesses just give up," Brown said. "Small businesses haven't been able to argue that strongly because of the lack of resources."

Palmerton understands why so many small businesses acquiesce. Soon after getting the cease-and-desist letter, she started contacting lawyers. They told her that she was in the right, but that she didn't have enough money to win. She learned that it was possible that lawyers would take on some cases for free, and through some research she found Brown's clinic.

What's particularly frustrating to Palmerton is that a case she believes is flimsy has gone on this long. When Nautica first demanded that she cease and desist, they initially accused her of using a logo that wasn't even hers. Even after looking at Nautigirl's actual logo, which is much different, a decision was made by Nautica to proceed anyway.

"It's crazy. Think of all the awesome products that aren't on the market because of this (practice)," Palmerton said.

Palmerton is well known in the local boating community, having formerly owned a yacht charter company. She is also very active in the business community, having been a board member for a variety of organizations, including the Bellingham/Whatcom Chamber of Commerce & Industry, the Bellingham Bay Rotary Club and the Boys & Girls Clubs of Whatcom County.

Many local businesspeople she has talked to have expressed surprise when they hear her story.

"They usually ask why can't we just go to the board and show the trademarks and get a decision," Palmerton said, adding that she also thought it would be that simple.

Brown said there is an option to ask for a motion to dismiss if it is a frivolous charge, but she said it is rarely granted.

Even though Palmerton doesn't have to pay legal fees, this case has affected her company. She believes her business can grow into other markets, but seeking additional capital to expand while her trademark name is being contested is too challenging.

The company currently sells products online and wholesale; she recently closed her retail store on Bellwether Way as sales were not quite strong enough to allow her to maintain an employee running the store while she concentrated on the business and this case.

Palmerton has endured a lot in response to this case, including traveling to New York City to answer questions from lawyers. She said she has been forced to turn over her financial records, copies of her ads, emails and vendor information to establish that she has been her own business and not trying to link her company to Nautica.

Brown said one of her goals for taking on cases like Nautigirl is that maybe it can help change policy, particularly when it comes to contesting trademark names. These cases also generate bad publicity for the large companies, so maybe it will deter some from being so aggressive.

"The clinic is trying to make it less easy for companies to do this," she said.

It's such a problem Brown is considering creating a trademark bullying defense network.

The Nautigirl case is being put together outside of court; Palmerton testified and was cross-examined on Tuesday, July 29, in Bellingham in the presence of lawyers and a court reporter. Brown isn't sure how the ruling will go, but after going through the process she feels confident that Palmerton should win. If she doesn't, they plan on appealing to a federal court.

As for advice for other small-business owners, Brown said the first step is to think carefully when coming up with a business name. If a business owner does get challenged on a name they believe isn't similar to another name, they should fight it.

"They (large companies) want to scare you into giving up a mark," Brown said. "Don't give up."

The status of the Monster Energy v. Monster Fish Keepers case was corrected Aug. 4, 2014.

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