I have two clients in trademark disputes regarding the use by another company of an identical or very similar business name and in the same industry. They are on different sides of the fence bu each is facing the same question: Do I proceed with extremely expensive litigation or try to come up with some compromise? Neither wants to proceed to litigation but don't know how to think about a co-existence. One party has suggested a licensing arrangement where a percentage of sales goes to the priority user. Another has suggested something as simple as a website pointer to ensure consumers are taken to the appropriate site. Alternatives also include an agreement between the parties not to move into one another's core business or for one to pay the other to change their brand so as to separate the marks. The question to be answered is whether actual consumer confusion exists or is likely and what do the businesses have to do to alleviate the confusion. There is not one clear answer but usually something that works between the parties. It is important, though, when entering into these agreements to think about the future of the business -- where will the business be in 5 years -- and to ensure the agreement does not limit the business' potential growth by limiting the use of the mark or, worse, by allowing another party to leverage its success and dilute the mark.
Normally in my practice, I do not do litigation work. Over the past year, and more specifically in the past two weeks, though, I have seen very clearly why it costs so much and takes so long... I am working with a client through an appeal with the Board of Industrial Insurance Appeals in the Washington State Department of Labor and Industries. My client has been notified that it is a "successor" to a company that went out of business and owed the Department $25,000. The Department claims my client is a "successor" because it bought a "major part" of the property of the company going out of business. We feel confident that what it purchased did not constitute a "major part" but under the Department's rules, it must prove that it did not do so. In preparing to defend itself -- for a case that is really very straightforward with limited discovery, witnesses, and case law -- my client will likely incur $15,000 in legal fees. When I've been given a number like this from litigators in the past, it was difficult to understand why -- and now I truly understand it. From preparing the hearing memorandum to preparing witnesses (2) and evidence to attending the hearing, the time involved is exceptional. In my years of practice, I have had some difficult disputes and complex negotiations, but nothing that took the time, effort and energy that preparing for this did. Furthermore, it provides clarity as to why this particular successorship statute has no case law -- it's not worth it for most companies to fight it, giving the Department significant leverage in collecting from parties that should owe it nothing.
I worked on a merger for a client this spring. They were selling to another company in a deal that appeared almost too good to be true. A few weeks after the deal closed, management changed at the buying company and the buyer began threatening litigation, claiming a failure of my client to disclose all material facts with regard to the transaction. It's important to note that the selling company had a handful of contracts, no employees, and less than a year of operating history. The sellers entered into this agreement trusting that the buying company was acting in good faith and was shocked by the allegations when they arose. There's nothing to the allegations but the buyers want to get out of this deal (which may have been too good to be true for the sellers) and are willing to threaten a long, drawn out litigation with the sellers, whether or not they have any grounds to support their allegations. My client believes it likely would win any litigation but, again, the cost of doing so is outrageous. The parties are now trying to figure out how to back out of the deal as litigation is not practical for any of the parties.
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