How Entrepreneurs Can Survive Trademark Lawsuits

Posted on December 18, 2011 in IP & Social Media

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From the Department of Nightmares comes this story of a David-and Goliath lawsuit. Apparently, online perfume retailer Perfume Bay has been embroiled in litigation with online auction site eBay (also spelled ebaY in its logo) for about the past three years. According to the Orange County Register, which profiled the case last month, Perfume Bay grossed $17 million last year; eBay grossed $6 billion.

Perfume Bay has spent hundreds of thousands of dollars defending this lawsuit, which is on appeal from the Central District of California in the U.S. Court of Appeals for the Ninth Circuit. While Perfume Bay largely prevailed, the sticking point was whether the company violated eBay’s trademark when using “PerfumeBay” as a single word (or in connection with domain names such as PerfumeBay.com).

Imagine spending several years building your brand, investing thousands of dollars, and having cultivated thousands of satisfied customers, to find that an online behemoth with enormously deep pockets will stand in your way of protecting your trademarks. That’s what’s been happening to Jacquelyn Tran, Perfume Bay’s owner. You can read about her saga on her blog, www.makesnoscents.com. The briefs on appeal are there, too, which make for fascinating reading. It’s like the studies done in Psych 101 classes where a clown quickly runs through a room and the students are asked to describe the clown: there’s rarely agreement on height, weight, clothing, or which door the clown entered.

I’m not about to place odds on where the appeals court will come out; a decision is expected/hoped at the end of this month. I did have a chance to speak to Jacquelyn herself to see what she has learned from the experience, and what she might have done differently. Jacquelyn is the sole owner of Perfume Bay and an Inc. Magazine’s 30 Under 30 award winner. She’s been fortunate in that the company has generated sufficient revenues to pay the legal fees, which has given her the ability to stay in the game, as it were (other entrepreneurs in her situation might have to use their personal savings, or give up the lawsuit altogether).

She is passionate about her company and its branding. Upon reflection, though, she acknowledged that she didn’t seek legal counsel when she began her branding and trademark process. “I think if I had to do it again, I would definitely get legal advice . . . someone who could give me information at the outset,” she remarked. “It’s hard to say what I would have done differently–maybe trademarked sooner,” she added.

Even with the appeal looming–which has put Perfume Bay’s marketing into a bit of a holding pattern–morale at Perfume Bay is positive. “We’ree optimistic,” Tran said, “and going full force with our objectives.”

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