Nordstrom Steamrolls Tiny Firm In Trademark Snafu

Posted by Bob Evans on Feb 9, 2009 01:17 PM

Nordstrom, the retailer with the glorious public image, is using a screwup by the federal government's Patent and Trademark Office to overwhelm a tiny online retailer via courtoom challenges that to date have cost the two women who own the small business $70,000. Reflecting the riskiness of IP issues, they tell the PTO, "Your office has ensured our demise."

Today's TechKnowledge newsletter from the libertarian Cato Institute think tank describes what can happen when valuable intellectual property gets caught up in our increasingly regulated and litigious business environment. Jim Harper, director of information policy studies at Cato, lays out the situation in the TechKnowledge newsletter. (I could not find a Web-based copy of the newsletter so I'm offering more-extensive excerpts than I would otherwise):

"Witness the story of Beckons, an organic yoga and lifestyle clothing business founded in 2006 by two women in Colorado. Around the time they began selling their "Beckons" clothing line in July of that year, Ann Sather and Becky Prater filed for a trademark on the word "Beckons" associated with pants, shirts, T-shirts, shorts, dresses, sweatpants, and jackets. PTO registered their trademark in June 2007. Ann and Becky have been business partners for 20 years, designing and selling clothing lines while raising their children. They each have two children in or nearing college.

After Ann and Becky filed, but before their application was published, the Nordstrom retail chain filed applications for a trademark on the word "Beckon," planning to use it as a house brand on women's fashion apparel and accessories. The similarity between the two words and the identity of the product lines would have required the PTO to reject Nordstrom's application, but it didn't. Somehow, the examining attorney missed the fact that "Beckons" already was a registered trademark associated with clothing. He approved Nordstrom's applications for publication.

So instead of continuing to build their business, Ann and Becky found themselves hiring lawyers to file an opposition to Nordstrom's trademark applications, something they had to do to protect their mark. Because they were first to file and first to use, the law unambiguously gives them the right to their trademarked term "Beckons" and anything similar. But trademark law and trademark practice are two different things.

With 169 stores, a line of restaurants, and its own bank, $2.75 billion Nordstrom Inc., decided to show Ann and Becky who was boss. Instead of recognizing that the trademark they wanted was taken, Nordstrom's lawyer moved to cancel Ann and Becky's trademark. He argued that their Beckons mark only refers to "yoga clothing." His filing moved the issue to the Trademark Trial and Appeals Board and ramped up the paperwork and legal bills for Ann and Becky."

At that point, Harper writes, the Patent & Trademark Office lawyer handling the case became aware of his error, and told the TTAB that the Nordstrom applications should be sent back to him for resolution. That was done, and the attorney turned down the Nordstrom application for "Beckon," offering a (temporary) victory to the two women holding the "Beckons" trademark.

However, 10 days after that PTO lawyer turned down the Nordstrom application, the big retailer filed papers saying the two women had "abandoned rights in Beckons," Harper wrote, which sent the case back to the TTAB and triggered another round of legal machinations. And even though the TTAB dismissed this second attempt as "duplicative," the Nordstrom legal assault on Beckons goes on: "Today, Nordstrom's effort to cancel Ann and Becky's trademark is on the TTAB docket on a schedule that will take until at least mid-2010 to resolve."

Harper's newsletter offers a poignant excerpt from one of the business partners to the commissioner of trademarks:

"We filed for a trademark so that we could reasonably secure ourselves from someone else using that name. If your office cannot protect us from this, why would we, or anyone, file an application? The law is supposed to be accessible to all people. Just because Nordstrom has money and we do not does not give them the right to use the name for which we have the trademark. . . . [T]he cost to work through the TTAB will easily exceed $70,000 just to fix the problem The Trademark Office made in the first place. We understand that we must stand behind and police our trademark. How is this possible for a small company to stand up to a behemoth like Nordstrom for $70,000? Your office has ensured our demise."

It's a valuable lesson but moreso a sobering tale about the need to be relentless in understanding, securing, and enforcing IP across all facets of your organization. You can see more issues of Cato's TechKnowledge newsletter here.