PictureWhich way is the right way? Src: http://blog.hwtm.com/2012/11/vintage-alice-in-wonderland-tea-party/
So Hobby Lobby. I'm sure you've heard of it. Its this big-box craft store that sells everything from fake hibiscus to jelly beans, all with the goal of giving those who enjoy crocheting and decorating something to do over the weekend. But have you heard of Hobby Lobby International? No, not the same store. Hobby Lobby International, as in the store that sells only remote control "crafts", the kind that boys big and small pine for as a form of alternative to the bigger, expensive versions. I had never heard of it either before today, although it sounds much more exciting than Hobby Lobby, the full arts and crafts store (because I just happen to be one of those guys that likes the RC stuff).

Apparently, Hobby Lobby International (the RC store, which I will simply refer to from here on out as "HLI") has been around longer than Hobby Lobby Stores ("HLS"). About 8 years to be exact. HLI opened its first shop in Tennessee in 1964 while HLI opened its first store in Oklahoma in 1972. Over the years, HLI grew from a single-retail store location to a thriving mail-order and online retailer business, with sales of at least $9 million. The same family owned HLI until 2003, when it was sold to a private equity firm. In 2009, a local business guy, Mark Cleveland, bought the company with goals to expand operations across multiple stores and sell more radio-controlled products (yeah, he's one of those small-scale, big-boy toys kind of guys, too.).

How could two companies, in virtually the same industry group, through practically the same avenues in the marketplace, reaching potentially overlapping consumers exist side-by-side for all those years without any kind of problems or misdirected consumers? Well, apparently they didn't, or at least nobody cared until Mr. Cleveland took over in 2009. Thereafter, problems seemed to pop-up like miniature RC helicopters flying around the room: customer complaints and inquiries directed to HLS, mis-directed web traffic, confused female customers who showed up to HLI stores looking for yarn instead of electronics, and so on. Given its smaller size and scale of operations, HLI took the brunt of the misdirected consumers, getting stiffed on keyword advertising on the internet and angry, confused customers who just wanted to buy wicker baskets.

This is a classic case of what us trademark attorneys call "reverse confusion". Reverse confusion occurs when one business (the junior user) uses a trademark that was first used by another business (the senior user) and where the junior user becomes more well-known than the first user. In regular consumer confusion (no, it isn't called "forward confusion"), a junior user is confused with the senior user. In this case, in essence, the junior user is free riding on the reputation of the senior user. In reverse confusion, the senior user loses the opportunity to control its own reputation and goodwill because the junior users swamps the market with its advertising and sales, so much so that consumers come to believe the senior user of the trademark is actually the junior user. In essence, then, reverse confusion occurs when a more powerful company uses the mark of a smaller, less powerful senior user.

As if everyone else hasn’t already had enough of winter, I thought I would throw a little Christmas cheer into the mix just to remind everyone that the holiday shopping season (which seems to move up a few weeks each year), is only like 6 months away. We’re halfway there, which is great if you are a retail store or manufacturer of electronic goodies because that means you have a little bit more time to fine-tune your next big release and marketing campaign in time to cash in on the big rush.

What boggles my mind is that there are some companies that actually dedicate their entire existence to Christmas and selling all the related wares like tinsel, strings of lights, ornaments, and (of course) Christmas trees. I’m not knocking these stores at all; if you can make a business successful (like this company in Michigan has done), more power to you. Christmas is a time of happiness and cheer, a time for giving. So how did a nutcracker, perhaps one of the quintessential décor items of Christmas, find itself in the middle of a fight? No, not the fight between Clara and Fritz in The Nutcracker play, but a knock-down, drag-out, spare no expense battle over copyright?

Yes, you heard me right: copyright. Here’s a little backstory to add some Christmas sparkle. Old World Christmas (OWC) is a year-round Christmas store that sells, as its name not-so-subtly suggests, Christmas décor and related products through showrooms in Atlanta, Law Vegas, and Dallas. A while back, OWC contracted with this company in Georgia to design and manufacture a nutcracker. Besides looking very nutcracker-ish, with a tall body mounted on a pedestal, large hat/helmet, and white hair protruding from under the hat and under the mouth, OWC’s design incorporated skis and poles. The nutcracker, eponymously named “Alpine Skier,” was also registered with the U.S. Copyright Office. That was in 1998. The contract between OWC and the supplier eventually lapsed. At some point, according to OWC,  this supplier began making a nutcracker with a substantially similar design for Gump’s Corp., a novelty-company in San Francisco, also a purveyor of fine Christmas décor (although not exclusively Christmas). OWC filed suit against both the supplier and Gump’s alleging copyright infringement, seeking damages and injunctive relief.