Introduction

In 1993, Rose Stores, Inc. started using the trademark “The Backyard” on its products. The brand was registered in 1994. It applied to retail store services, lawn and garden equipment. 

Variety Stores (“Variety”) purchased Rose’s business. After the purchase, the trademark was maintained. It was further extended to grills and grilling equipment. The company used different variations such as; “Backyard” and “Backyard BBQ”.

In 2010, Walmart Stores sought to adopt these variations. As a result, Walmart filed its trademark application before the US Patent and Trademark Office (“USPTO”) in 2011. Variety opposed before the Trademark Tribunal and Appeal Board (the “Tribunal”).

In 2014, Variety Stores instituted an action before the District Court of California (the “court”) after being granted a stay of proceedings at the Tribunal.

Discussion

Before the court, Variety claimed trademark infringement, unfair and deceptive trade practices. The claims were brought under the Lanham Act and other state laws. As a result, the company applied for summary judgement.

The court partially granted the summary judgement. First, the jury stated that Walmart had willfully infringed Variety’s trademark and then refrained from using the “Backyard Grill” brand because it created confusion with Variety’s trademark.

Walmart followed the court’s decision. First, it stopped using the “Backyard Grill” trademark on its new product and then filed an interlocutory appeal before the Fourth Circuit of the US Court of Appeal (the “Fourth Circuit”).

The Fourth Circuit reversed the district court’s grant of partial summary judgment based on a misapprehension of the summary judgment standard. In October 2018, proceedings continued before the court. Walmart’s motion for trademark infringement and willfulness was denied.

The court found Walmart guilty of infringement of Variety’s trademark. However, it denied Variety’s contention of limited voir dire. Variety was then awarded 95.5 million dollars in damages.

Walmart appealed, and Variety cross-appealed. The Fourth Circuit considered if there was actual infringement and held Variety’s trademark to be commercially weak.

The basis was that “Backyard” is widely used in the grilling industry. Accordingly, the court’s partial judgement was reassessed. It was held there was a genuine dispute to warrant the summary judgement as Variety’s trademark has commercial strength.

The Fourth Circuit also found that there was a likelihood of confusion because both marks had certain similarities.

Both had a similar linguistic design and also had descriptive words following “Backyard”. The trademarks also had similar colour schemes. Therefore, a reasonable jury would find this favorable to Variety’s Store.

The intention of Walmart as regards to the infringement was also considered. Knowledge of the earlier Variety’s trademark was not considered alone. Walmart’s bad faith was also inferred from its failure to carry out further investigations. Thus, the trial court’s decision was affirmed.

Another issue before the Fourth Circuit was that of willfulness. Walmart argued that the district court erred regarding this. However, the district court’s denial of Walmart’s motion was affirmed because Walmart failed to further investigate Variety’s trademark.  

Conclusion

The appeal before the Fourth Circuit had previously been brought on different issues. However, in the previous instances, the decision of the district court was vacated. But this time, it was affirmed.

Source: https://www.ca4.uscourts.gov/opinions/171503.P.pdf 

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