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Battle of the Beauty Brands: When Small Businesses Take Legal Action against Corporate Goliaths

When entrepreneurs Wendi Levy and Kim Etheredge realized that one of the largest retailers in their category started selling a generic version of their popular hair care brand, Mixed Chicks,...

While some could argue that it is just the nature of a company’s competitive environment, the Mixed Chicks co-founders knew otherwise.

“You compete all you want fairly,” Kim asserted. “But not unfairly by using the same bottles, color scheme, advertising [imagery], and [a similar product name].”

 

Trademark Infringement: David Takes on Goliath

At that time there were a lot of areas [that we did not have a presence in yet],” Wendi asserted.”[We believe it was a part of their] plan to take advantage of our national advertising, especially in areas where we didn’t exist.”

Knowing they faced an uphill battle Wendi and Kim contacted their general counsel and several IP firms to weigh their chances of successfully bringing suit against Sally Beauty Supply for their sales of Mixed Silk.

Alexandre Montagu, a Manhattan attorney specializing in intellectual property law asserts that, “trademark infringement litigation is extremely expensive. It could cost $1 million in legal fees alone to bring a viable case,” he says.

“Infringement cases also tend to be highly subjective. ‘There’s not a bright line’ to prove infringement, Montagu says, because ‘the standard is the likelihood of confusion,’ which must be demonstrated by consumer surveys,” according to a Businessweek post.

Despite the challenges ahead both entrepreneurs knew they had to fight for their business and its brand. “We felt it wasn’t right and we wanted to stand up for ourselves,” Wendi added.

“We really didn’t have a choice, otherwise we would continue to be bullied by other companies. They could just come and walk all over us and it was just completely wrong.”

Protecting Mixed Chicks’ Intellectual Property

After meeting with IP attorneys both entrepreneurs realized they had a strong case. Within three weeks of learning about Sally Beauty Supply’s infringement Wendi and Kim filed a suit that would become one of the largest trademark verdicts ever in the Central District of California–forcing Sally Beauty Supply to cease selling its Mixed Silk products.

Kim remembers how the ordeal took a personal toll on both founders. “We were nervous because we’re talking about trademark and trade dress law. It’s not the easiest law,” said Kim.

But “they crossed the line.”

 

Surviving a Trademark Infringement Battle

After filing suit in March 2011, Mixed Chicks did not go to trial until October 2012 — roughly two years later.

“You have to go along with the courts’ schedule,” Kim commented. “There are all kinds of motions filed [and our case] ended up getting pushed back for four months because the federal judge had criminal cases [to address].”

Both entrepreneurs soon recognized that enduring a legal battle can take its toll on any small business. The founders were not immune to personal challenges they faced along the way.

Everything is On the Line

“The major challenge for us was just staying healthy,” said Kim.

“You get frustrated, because you don’t want to be forgotten. Time is passing, [another] company is making money [with an inferior product] and it was damaging our reputation more and more as each day passed … We had to deal with the legal fees while still running our business, so it was hard to be creative, [it is hard to] think outside of the box when [everything] is on the line.”

Wendi also felt the pressure of the legal battle. “It really stressed us because the development of our brand was halted for about a year and a half. All of the creativity in our bodies was drained,” she said.

“It was depressing to not have closure for so long while the attorney bills kept coming … We had to reinvest every dime we made just to pay attorney fees. We had children that we had to take care of too.”

The Verdict Is In

However the two entrepreneurs found a happy ending at the end of their tumultuous legal battle with Sally Beauty Supply after alleging that the retailer “intentionally, knowingly, and willfully” infringed the Mixed Chicks trademark and trade dress.

“During the nine-day trial, Sally Beauty testified that similarities were coincidental. [But] the jury didn’t buy it. After deliberating for six hours, the jury decided that Mixed Chicks had suffered $839,535 in actual damages, and found that Sally Beauty had acted willfully and with malice, oppression, or fraud, resulting in a punitive damages award of $7.27 million.”

“We were really thrilled …We were very happy that [the jury was] able to see [our point of view],” Kim affirmed.

 

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