Confronting Vexing Interlopers

This is a story of two minnows. One became a whale, the other a killer whale. In 1945, Sam Walton bought a Ben Franklin store in Bentonville, Arkansas. He was able to undercut competitors by finding cheap suppliers and thus selling products at a lower price. What he lost on profit margin, he made up on volume sales. Twenty two years later, the Van Doren brothers and a friend opened The Van Doren Rubber Company in Anaheim, California selling sporty sneakers and footwear. They had so little operating capital that they allowed customers to take home their purchases and come back the next day to pay.

By the dawn of the 21st century, both companies were behemoths. VANS had evolved into a publicly-traded company on NASDAQ, still selling cool sneakers and Walmart was the world’s largest company by revenue, still promising the lowest prices possible. Looking back, it seemed inevitable that the day would come when their respective business missions would result in a conflict that exemplifies our age of relentless shopping and shameless piracy and counterfeiting of commercial brands.

In November 2021, VANS took on Walmart for copyright infringement in federal court after issuing a number of cease-and-desist letters to the giant retailer. VANS contended that Walmart was not just habitually copying the signature designs and marks of VANS commercial goods but flooding the market with the counterfeits. VANS provided the court with plenty of photographic evidence to support their complaint. Why tell when you can show?! It took the federal court less than four months to grant a preliminary injunction against Walmart for the duration of the trial.

There are two important components to this case, both of which are crucial to any hope of success in trademark litigation. Judge David Carter begins his ruling by determining that VANS is “likely to succeed in showing that its trademarks and trade dresses are valid and protectable.” He then carefully explores each one of the eight Sleekcraft factors -( AMF Inc. v. Sleekcraft Boats (9th Circuit 1979) - to determine the likelihood of customer confusion, either pre- or post- sale, about the competing designs and marks. The factors are: (1) the strength of the mark, (2) the proximity of the goods, (3) the similarity of the marks, (4) evidence of actual confusion, (5) the marketing channels used to promote the products, (6) the type of goods and the carefulness of likely consumers, (7) the defendant’s intent, and (8) the likelihood that either party will expand into new markets.

Judge Carter’s analysis is fair-minded yet damning, often riffing on the photographic evidence that VANS included in their complaint. Ultimately, VANS succeeded on seven of the eight factors and thus was able to prove that “irreparable harm was likely, not just possible.”

With the injunction in place and litigation about to shift gears, VANS and Walmart sought a stipulated protective order. Magistrate Judge Karen Scott granted the request “to expedite the flow of information, to facilitate the prompt resolution of disputes over confidentiality of discovery materials, to adequately protect information the Parties are entitled to keep confidential, to ensure that the Parties are permitted reasonable necessary uses of such material in preparation for and in the conduct of trial, to address their handling at the end of the litigation, and serve the ends of justice.”

It is worth noting that Judge Scott made clear the tension between the need for some confidentiality about operations, pricing and trade secrets and the public’s right to know about the case. “...information will not be designated as confidential for tactical reasons and that nothing be so designated without a good faith belief that it has been maintained in a confidential, non-public manner…”

This was not the first time VANS has taken on vexing interlopers. In 1988, under siege by counterfeiters, the original partners sold out to an investment banking firm. The new owners promptly used their financial and legal clout to shut down counterfeiting operations in Mexico and the US.

“If you break the human struggle down to one word,” observes the comedian Jerry Seinfeld, “it’s CONFRONT. And so, I approach everything that way.” Sage advice, particularly if you are an artist or designer entering the perilous waters of retail.

In world of retail, you have to expect pirates and sharks. They’re part of the ecology. You’re going to have to confront them at some point, often in court. Ultimately it starts with protecting and enforcing your IP - no matter if it’s against a shark or a pirate.