Variety Stores, Inc. v. Wal-Mart Stores, Inc.

150 F. Supp. 3d 583, 2015 U.S. Dist. LEXIS 167180, 2015 WL 8975616
CourtDistrict Court, E.D. North Carolina
DecidedDecember 8, 2015
DocketNo. 5:14-CV-217-BO
StatusPublished
Cited by1 cases

This text of 150 F. Supp. 3d 583 (Variety Stores, Inc. v. Wal-Mart Stores, Inc.) is published on Counsel Stack Legal Research, covering District Court, E.D. North Carolina primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Variety Stores, Inc. v. Wal-Mart Stores, Inc., 150 F. Supp. 3d 583, 2015 U.S. Dist. LEXIS 167180, 2015 WL 8975616 (E.D.N.C. 2015).

Opinion

ORDER

TERRENCE W. BOYLE, UNITED STATES DISTRICT JUDGE ‘

This cause comes before the Court on cross-motions for summary judgment. [DE 43, 49]. The appropriate responses and replies have been filed, and the matters are ripe for ruling. For the reasons discussed below, plaintiffs motion for partial summary judgment is granted.

BACKGROUND

In 1993, Rose’s Stores, Inc., Variety Stores, Inc.’s (hereinafter .“Variety”) predecessor in, interest, began using the trademark THE BACKYARD for the in-store department selling lawn and garden equipment and supplies. [DE 44, p. 9], Rose’s Stores, Inc. filed a trademark application in 1993, and the mark was registered in 1994.1 Id. THE BACKYARD was registered for use on “retail store services in the field of lawn and garden equipment and supplies.” THE BACKYARD, Registration No. 1,847,503. Rose’s used the marks THE BACKYARD, BACKYARD, and BACKYARD BBQ (collectively “the BACKYARD marks”) on a wide variety of outdoor products,, including grills and grill accessories. [DE 44, p. 3-4].

In 1997, Variety purchased Rose’s. Id. Following the acquisition, the BACKYARD marks remained in use in Rose’s stores and expanded into other Variety stores as well. Id. Since 2002, Variety-has sold over $56,000,000.00 worth of products under the BACKYARD, marks, over [586]*586$8,000,000.00 of which came from grill and grill accessory sales. [DE 44-10].

In 2010, Wal-Mart Stores, Inc. (hereinafter Walmart) decided to begin selling grill and grill accessories under an in-house brand. [DE 44-11, p. 25]. This process entailed developing a quality brand name under which to sell these grill and grill accessories. Id. Thus, in' the second half of 2010, Walmart began researching and testing possible brand names for their desirability among consumers. Id.

Walmart went through several brand names, such as GRILL MASTER and GRILL WORKS. [DE 44-11, p. 35]. However, the legal team cautioned against use of GRILL WORKS, so Walmart abandoned it. [DE 44-11, p. 48], The next choice was BACKYARD BARBECUE. [DE 44-11, p. 48-49]. Once again, the legal team advised against it, and the brand team elected not to move forward with the name. Id. After consulting additional consumer research, BACKYARD BBQ became the mark of choice. [DE 44-11, p. 62], Once again, though, the legal team advised against using the name. [DE 44-11, p. 64]. Nevertheless, Walmart decided to move forward with BACKYARD BBQ despite being twice warned against using it. [DE 44-11, p. 78]. At some point, the preferred brand name apparently shifted to BACKYARD GRILL.

This branding decision was not made in an information vacuum. Walmart’s representative Karen Dineen admits she was aware of Variety’s trademark registration as early as 2011 “from information shared from [Walmart’s] Legal Department with [her].” [DE 44-11, p. 87]. Thus, though Walmart had earlier decided against brand names on the advice of their legal team for similar reasons, they elected to move forward with their BACKYARD mark despite knowing of Variety’s trademark registration. Moreover, no one from Walmart visited a Variety-operated store to observe how the marks were used, though this is a corporate practice at Walmart. [DE 44-11, p. 32-33]. Instead, Walmart simply moved forward with the mark and began using their BACKYARD GRILL + Design mark in late 2011. [DE 50, p. 10].

Consequently, plaintiff filed the instant suit.

DISCUSSION

A motion for summary judgment may not be granted unless there are no genuine issues of material fact for trial and the movant is entitled to judgment as a matter of law. Fed. R. Civ. P 56(a). The moving party bears the burden of demonstrating the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). In determining whether a genuine issue of material fact exists for trial, a trial court views the evidence and the inferences in the light most favorable to the nonmoving party. Scott v. Harris, 550 U.S. 372, 378, 127 S.Ct. 1769, 167 L.Ed.2d 686 (2007). However, “[t]he mere existence of a scintilla of evidence” in support of the nonmoving party’s position is not sufficient to defeat a motion for summary judgment: “there must be evidence on which the [fact finder] could reasonably find for the - [nonmoving party].” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Speculative or conclusory allegations will not suffice. Thompson v. Potomac Elec. Power Co., 312 F.3d 645, 649 (4th Cir.2002).

Variety has brought claims for trademark infringement and unfair competition under federal law and trademark infringement and unfair and deceptive practices under state law. 15 U.S.C. § 1114; 15 U.S.C. § 1125; N.C. Gen. Stat. § 75-1.1 [587]*587N.C. Gen. Stat. § 80-11. The elements of each of these claims are substantially the same. To prevail, plaintiff must prove (1) its marks are protectable and (2) defendant’s use of the mark(s) is likely to cause confusion among consumers. Swatch AG v. Beehive Wholesale, LLC, 739 F.3d 150, 158 (4th Cir.2014).

Variety first must prove its marks are protectable. As THE BACKYARD is a registered and incontestable mark, it is entitled to substantial protection. 15 U.S.C. §§ 1065,1115(b). “[I]ncontestability provides a strong presumption in favor of the mark’s predictability and validity.” Synergistic Int’l, LLC v. Korman, 470 F.3d 162, 170 (4th Cir.2006) (internal quotation marks omitted).

Variety uses THE BACKYARD, as well as the marks BACKYARD and BACKYARD BBQ, “for retail services and a wide variety of goods, including furniture and home furnishings, lawn and garden furnishings and supplies, [and] barbeque grills and barbeque grilling accessories.” [DE 44, p. 14]. Variety claims “strong common law rights” in all these BACKYARD marks, despite the fact that only THE BACKYARD is registered. [DE 44, p. 14]. Lack of registration is not fatal to Variety’s case, as “[a]ctual use’ of most kinds of trademarks, without more, establishes protectable trademark rights under common law. The right to a trademark comes from its use.” 1-3 Gilson on Trademarks § 3.02 (2015). Indeed, “all ownership rights in a mark flow from its prior use.” ' See Humanoids Group v. Rogan, 375 F.3d 301, 305 n. 3 (4th Cir.2004); see also Gen. Healthcare Ltd. v. Qashat, 364 F.3d 332

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Bluebook (online)
150 F. Supp. 3d 583, 2015 U.S. Dist. LEXIS 167180, 2015 WL 8975616, Counsel Stack Legal Research, https://law.counselstack.com/opinion/variety-stores-inc-v-wal-mart-stores-inc-nced-2015.