Author: Katy M. Young
Nearly every entrepreneur has fretted over selecting a name for her business. Once selected, enormous amounts of resources are dedicated to building a brand behind that carefully selected name. Some savvy business owners even go so far as to obtain trademark protection for the name of their business and the goods or services they offer. But what happens when even the most conscientious entrepreneur is faced with unscrupulous competition in the marketplace in the form of a similar business that insists upon using your name? Trademark lawyers can add another real risk to the parade of horribles that can occur when there is marketplace confusion over a business name: wrongfully being named in a lawsuit. Behold the story of mistaken identity, and how Ad Astra took care of the problem quickly and inexpensively.
Ad Astra’s client is a consulting business in Oakland, we’ll call them ABC, Inc. for the purpose of this story. ABC, Inc. registered a trademark for its name for the provision of consulting services. After some time, another business called ABC Partners, which sometimes went by the name ABC Brokerage, started offering similar services, but in Southern California instead of Northern California. ABC, Inc. sometimes gets phone calls for people trying to reach ABC Partners/Brokerage, and at one point, ABC Partners/Brokerage copied ABC, Inc.’s website and used it as their own! ABC, Inc.’s trademark lawyers have written letters to ABC Partners/ABC Brokerage demanding that they stop using the name “ABC,” but they haven’t had the money to bring a trademark infringement lawsuit.
As if the confusion in the marketplace weren’t bad enough (i.e. phone calls for one business going to the other), ABC Partners/ABC Brokerage became involved in an allegedly illegal medical cannabis dispensary in Upland, California and when the City of Upland sued to shut down the dispensary, it named ABC, Inc. as a defendant right along with ABC Partners and ABC Brokerage! Even being named in a lawsuit that you had nothing to do with can be devastating to a business because of the high cost of participating in litigation.
As ABC, Inc.’s General Counsel, Katy Young called the City Attorney for the City of Upland within 15 minutes of the complaint being served and gently explained that this is a case of mistaken identity, and ABC, Inc. has nothing whatsoever to do with the matter—except that ABC, Inc. also had a cause of action against ABC Partners/ABC Brokerage. When the City Attorney became obstinate and insisted on keeping ABC, Inc. in the litigation, forcing them to prove a negative, Ms. Young declared her intention to file a motion under California Code of Civil Procedure Section 128.7, which would have told the Judge that ABC, Inc. felt the litigation was frivolous. It also would have forced the City plaintiff to come forward with affirmative evidence showing why it thought that ABC, Inc. was a proper defendant even after being faced with the information that ABC, Inc. was a competitor of ABC Partners/Brokerage. No such information existed. The City had simply been lazy about the investigation and cast too wide a net.
Ms. Young also reached out to the other defendants named in the matter, including ABC Partners/Brokerage, and politely asked them to call the City’s attorney to explain that ABC, Inc. was not involved, else ABC Partners/Brokerage would face a cross-complaint for trademark infringement and equitable indemnity. Recognizing the danger of fighting a two-front war, ABC Partners/Brokerage’s attorney contacted the City Attorney and averred that ABC, Inc. is not affiliated with ABC Partners/Brokerage in any way. Within 10 days from service, the City’s attorney dismissed the complaint against ABC, Inc., thereby saving Ad Astra’s client countless thousands of dollars in litigation expenses. The tactic here was Teddy Roosevelt style foreign policy: speak softly but carry a big stick.