Court Dismisses Case Brought By Wal-Mart Against Gripe Site Defendant: Case Likely Drives More Internet Traffic To The Gripe Site.

Thanks to Eric Goldman at the Technology & Marketing Law Blog for posting the recent Grip Site & Trademark Infringement Decision in Smith v. Wal-Mart Stores, Inc., 2008 WL 760196 (N.D. Ga. March 20, 2008).  As Mr. Goldman points out, there are lots of lessons to be learned here for companies seeking to shut down unfavorable commentary by gripe site authors (and third parties such as CafePress which hosted the merchant account  but did not get sued after it modified its level of involvement in selling the disputed goods).

The action arose from the contention of Defendant Wal-Mart Stores that its registered trademarks "WALMART"; "WAL-MART"; and "WALiMART"; its registered word mark "ALWAYS LOW PRICES. ALWAYS"; and its "well-known smiley face mark" were infringed by Plaintiff Charles Smith's anti-Wal-Mart merchandise. This merchandise included t-shirts and other items with a variety of anti-Walmart designs and slogans, including the phrases "Walocaust" and "Wal-Qaeda."  Smith petitioned the Court to declare his activities legal, including his domain registration of www.walocaust.com, www.wal-qaeda.com and and www.walqaeda.com so that he could 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 requested costs and attorneys' fees.  The Court granted Smith's Motion for Summary Judgment as parody and non-commercial speech. 

Smith simply wanted declaratory judgment that his activities were lawful.  Wal-Mart counter-claimed arguring that Smith had engaged in (1) trademark infringement in violation of 15 U.S.C. § 1114(1) and common law; (2) unfair competition in violation of 15 U.S.C. § 1125(a); (3) trademark dilution by tarnishment in violation of 15 U.S.C. § 1125(c); and (4) cybersquatting in violation of 15 U.S.C. § 1125(d). Wal-Mart also brought state law claims for (1) common law trademark infringement; (2) unfair competition in violation of O.C.G.A. § 23-2-55 and common law; (3) deceptive trade practices in violation of O.C.G.A § 10-1-370 et seq.; and (4) trademark dilution and injury to business reputation in violation of O.C.G.A. § 10-1-451(b).

Mr. Goldman correctly wonders:

This raises the question most on my mind: why did Walmart try to enforce its rights against Smith in the first place? To be fair, Walmart didn't sue Smith; Smith brought a DJ. But Walmart did send C&Ds to Smith and CafePress, and as every trademark owner knows, every C&D has the risk of prompting a DJ that leads to the invalidation of their trademark rights–EXACTLY WHAT HAPPENED HERE! So why did Walmart send the C&D in the first place? After all, Smith was a small potatoes griper, and the enforcement action served to raise his obscure profile. More importantly, I can't imagine any construction of a trademark owner's policing duty that extends to cover a griper like this. If Walmart felt it needed to shut down Smith to satisfy some policing obligation, I respectfully but emphatically disagree with that judgment.

I agree that this case never had much chance of success.   In general, the First Amendment and free speech rights protect gripe sites as long as they do not suggest affiliation, sponsorship or common ownership with the company getting flamed.  Both the web site content and the domain names would tell an average web surfer that thee sites were  NOT affiliated or endorsed by Walmart (where as domain such as WalmartInfo.com might not, with the words alone, tell consumers that they were likely entering a grip site).

Mr. Goldman also correctly notes that Walmart actual caused the very thing it was seeking to avoid, bad publicity.  The number of incoming links which will be generated by the adverse outcome will be free internet publicity for the gripe site, and certainly increase traffic. Companies and their lawyers need to be very careful about sending threat letters and driving litigation in matters such as these. They could compound the very flames they are trying to extinguish by pouring gasoline on the fire.

Mr. Goldman posted some related links which I shall republish here:

* Public Citizen's web page with source material from the case
* Public Citizen's press release
* A thorough Law.com article with some good interviews
* Atlanta Journal-Constitution
* Sam Bayard
* Ron Coleman