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Brands Compelled to Bully

News came today that a small Novato winery won out in a trademark-infringement case which had been brought against it by the Trek Bicycle Corp. It seems that Trek Winery LLC had shipped three cases of wine to Wisconsin, where Trek the bike company is headquartered.

On the surface, lawsuits like this are maddening. They seem frivolous. How could shipping three cases of wine confuse consumers about the branding of a bicycle company? The judge took that point of view as well, “Plaintiff cannot argue seriously that three isolated sales show that defendants have made such purposeful availment [sic] of the benefits of Wisconsin’s laws that they could reasonably anticipate being hauled into court in this state.”

Beyond the frustration caused by what appears to be a gratuitous lawsuit, we also tend to root for the little guy. We see the larger companies as bullies. The headline in the North Bay Business Journal leads us to take that view as well, "Tiny Novato winery wins trademark case against Trek Bicycle." Tiny. It's David vs. Goliath.

In reality, things are not that clean cut. I am by no means suggesting that the winery was trying to prove a point by shipping into the Trek Bicycle's home territory or that they were looking for a fight. I'm sure that's not the case.

However, we should not automatically assume that Trek Bicycle Corp. was happy about bringing this to court either. Court cases are expensive. They take a lot of time from executive staff. Lawyers who can clock in at $500 an hour are involved.

There is also very little that a large company stands to gain from suing a tiny one. How much could David actually afford to pay in damages to Goliath? Damages are usually based on some percentage of demonstrable business losses caused by the infringement. Willful infringement may cause treble damages to be awarded. But still, in this case, how much could that be? It wouldn't be enough to make up for the time and effort required to bring the case.

So why would a case like this be brought? Why was the winery "bullied" by the bikers? Most likely, it was done because our laws compelled Trek Bicycle Corp. to do so.

Trademark law requires trademark owners to defend their marks. If a mark is not defended against an infringement by one party, no matter how small the company or infringement may be, then the trademark holder sets a precedent that may cause them to lose a case against a later and truly damaging infringement by another party. The reality of trademarks (and patents) is that the expense of holding them doesn't end when they are granted. You also have to pay to defend them whenever a conflict arises.

In this particular case, things more or less worked out for the best. The winery was spared any penalties, but probably won't ship to Wisconsin again. The bike company showed commitment to their mark, though at some cost.

Not all cases work out so well. Often, the smaller companies simply give in and settle out of court or give up their claim to a name. They can't afford the expense of a court battle, no matter how ridiculous the claim against them. But, that's the way the system works.

This article is original to Copyright 2010 NorCal Wine. All rights reserved.

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