It is hard for an ADR junkie like me to admit this (and don't spread this around please), but sometimes you just need to try the darned case. I am referring to, in particular, the trademark lawsuit between Internet giant eBay and scent seller PerfumeBay.
The lawsuit was fairly simple.
eBay, naturally protective of its distinctive "Bay" web-moniker when it comes to on-line sales, was none too pleased when "Perfume Bay" (aka "Perfumebay" and sometimes "PerfumeBay" sought to register the Perfume Bay trademark for use in on-line perfume sales.
The fact that "PerfumeBay" actually contained the entirety of "eBay's" name did not help matters.
As an eBay trial witness testified, eBay has a "fragrance section" which moved approximately $6 million in cologne and perfume during a 2-1/2 year period. eBay was concerned that consumers might confuse PerfumeBay as an eBay affiliate of some kind. Or, it might dilute the eBay name.
PerfumeBay, for its part, argued that the "bay" in its name reflected "a bay filled with ships importing perfumes from all parts of the world and this bay would be the place where perfume lovers could go to locate its selection of fragrances . . . .”
Uh, okay.
In any case, the two parties entered into negotiations to resolve this dispute, without success and apparently without a mediator. There's a rant in this but I'll do that later.
PerfumeBay predictably brought a declaratory relief action in federal court, asking for a ruling that it was not infringing the eBay trademark. eBay prevailed at trial with the court finding a likelihood of confusion based upon survey evidence concluding that 70% of consumers, when faced with the word "Bay" and internet shopping, thought of "eBay."
The Court ordered Perfume Bay to un-conjoin the two parts of its name.
The Ninth Circuit affirmed in part and reversed in part, approving the order forcing Perfume Bay to separate the "e" in Perfume from the "B" in Bay.
So what does this have to do with ADR?
On the one hand, the parties clearly could have settled this case with an equally good, or better, resolution for both sides.
On the other hand, eBay possesses something it could never have obtained in mediation or arbitration: precedent, glorious, future-designing precedent, contained in a Ninth Circuit opinion suitable not only for framing, but also for demand letters to any other online company slipping little "e"-big-"B" Bay into its tradename.
For the price of a single trial, eBay earned itself a great tool for dominating the online market, one that shoud effectively dissuade other internet marketers who might have been thinking of climbing onto the eBay wagon as a portal to successful online sales.
Maybe that's why the names "WineBay" and "GameBay" are still available in the url market.
By NOT using an ADR process to resolve this dispute, eBay will, in the long run, likely save considerable grief, conflict, and legal fees.
It's difficult for an ADR junkie to admit this, but sometimes -- very rarely, I submit -- when important public policy issues are at stake or when precedent is needed to resolve likely future disputes, the alternative dispute resolution of the future -- litigation -- is often called for.
If you are interested in Perfume Bay's take on all this, the company's owner, Jacquelyn Tran, has a blog of her own at here. Jacquelyn vows to continue the fight to the Supreme Court, stating:
This battle has been exhausting and expensive, but I refused to give up. Too often, Goliaths are victorious in these types of battles. I am fighting for small businesses everywhere, for our more than 300,000 customers (YOU!), and for my American Dream.
Coverage of this matter along the way has been provided by DomainNews.com here; the IP News Blog here; and a helpful article on How Entrepreneurs Can Survive Trademark Lawsuits here.
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