Law School Case Brief
Smith v. Wal-Mart Stores, Inc. - 537 F. Supp. 2d 1302 (N.D. Ga. 2008)
To prove that a party committed trademark infringement or cybersquatting, or subjected the adverse party to unfair competition or deceptive trade practices, the adverse party must show that party's use of its trademarks is likely to cause an appreciable number of potential buyers to be confused about the source, affiliation, or sponsorship of the party's products. 15 U.S.C.S. § 1125(d)(1)(A). In making this inquiry, courts consider a variety of factors, including the strength of the allegedly infringed mark, whether the designs that incorporate the registered mark are similar, whether the products sold by the parties are similar, whether the retail outlets and purchasers are similar, whether the parties use the same advertising media, whether the defendant intended to usurp the registered trademark, and whether any consumers were actually confused. The court must balance the factors according to its own judgment based. on the facts in the case before it.
Plaintiff Charles Smith, a vocal critic of Defendant Wal-Mart Stores, Inc. (Wal-Mart) created websites displaying designs and slogans that negatively parodied Wal-Mart’s registered marks. Smith also sold novelty items printed with graphics that parodied Wal-Mart’s slogans on-line, with the disclaimer that he was unaffiliated with Wal-Mart. Wal-Mart alleged that its registered trademarks "WALMART"; "WAL-MART"; and "WAL*MART"; its registered word mark "ALWAYS LOW PRICES. ALWAYS"; and its "well-known smiley face mark" were infringed by Smith. Smith filed this action to declare his activities legal so that he may resume them without fear of incurring liability for damages; Wal-Mart counterclaimed for an award of ownership of Smith's Wal-Mart-related domain names, an injunction precluding Smith from making commercial use of any designation beginning with the prefix "WAL," and an award of nominal damages. Both parties sought costs and attorneys' fees.
Did Smith violate Wal-Mart’s trademark rights by selling novelty items printed with graphics that negatively parodied Wal-Mart’s slogans on-line, with the disclaimer that he was unaffiliated with Wal-Mart?
The court dismissed Wal-Mart’s federal claims under 15 U.S.C.S. §§ 1114(1), 1125(a), (c), and (d), and related state law claims. Wal-Mart failed to establish that a smiley face icon it used for advertising was distinctive enough to merit trademark protection. Smith’s slogans and graphics were scathing parodies, a form of noncommercial speech not subject to Wal-Mart's trademark infringement or tarnishment by dilution claims. Smith’s experts were qualified to present rebuttal evidence on deficiencies in Wal-Mart’s survey methodology. Wal-Mart’s expert was qualified to present evidence on the issue of consumer confusion. However, Wal-Mart failed to show a likelihood of actual consumer confusion. Although the district court admitted Wal-Mart’s surveys into evidence, it found them too flawed in design and execution to create a genuine issue of fact.
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