IP Law Daily Following retrial, Walmart burned for $95.5M for infringing BACKYARD grill marks
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Wednesday, February 13, 2019

Following retrial, Walmart burned for $95.5M for infringing BACKYARD grill marks

By Thomas Long, J.D.

In damages phase of lawsuit brought by Variety Stores, jury finds that Walmart’s infringement was willful and awards over $45 million in royalties and $50 million in profits. A 2018 award of $32.5 million had been vacated on appeal.

Following its determination that Walmart’s use of the mark BACKYARD GRILL plus design infringed Variety Stores’ common law marks THE BACKYARD, BACKYARD and BACKYARD BBQ and its registered mark THE BACKYARD for lawn and garden retail store services, a jury empaneled in the federal district court in Raleigh, North Carolina, has decided that Walmart is liable for over $95.5 million in damages. The jury determined on February 12 that Variety proved by a preponderance of the evidence that consumer confusion between the marks was likely, and Walmart’s infringement was willful. Variety was awarded a reasonable royalty in the amount of $45,536,846.71 and Walmart’s profits in the amount of $50 million, with post-judgment interest at the rate of 2.56% per annum. The district court issued a final judgment pursuant to the verdict in the case of Variety Stores, Inc. v. Wal-Mart Stores, Inc., No. 5:14-CV-217-BO. The award is nearly three times the amount awarded after an earlier bench trial; that award was vacated on appeal, and the case was remanded for retrial.

Variety Stores operates retail locations in 16 states and the District of Columbia and sells various outdoor products, including grills and grilling products. In 1997, Variety purchased another retailer and acquired its registered trademark THE BACKYARD for "retail store services in the field of lawn and garden equipment and supplies." At some point, Variety began using variations of THE BACKYARD—BACKYARD and BACKYARD BBQ—for selling not just lawn and garden equipment but also grills and grilling supplies. In late 2010, Wal-Mart Stores, Inc. ("Walmart") adopted the name BACKYARD GRILL as the private label mark for its grills and grilling supplies.

In 2014, Variety filed suit against Walmart, alleging Walmart’s sale of products bearing the BACKYARD GRILL+ Design mark infringed Variety’s marks. The district court granted partial summary judgment in Variety’s favor, finding Walmart liable for infringement. Following a subsequent bench trial on remedies, the district court ordered Walmart to disgorge $32.5 million in profits earned where the parties’ retail stores overlapped. The district court denied Variety’s request for a separate jury trial to determine additional non-disgorgement damages and ordered Walmart to reimburse Variety for reasonable costs and attorney fees. Both sides appealed. Finding that the district court erred by failing to consider disputed issues of material fact as to four of the nine likelihood of confusion factors (the strength of Variety’s mark, the similarity of marks, Walmart’s intent, and actual confusion), the U.S. Court of Appeals in Richmond, Virginia, in April 2018 reversed the district court’s liability judgment, vacated the damages award, and remanded the case for trial.

In October 2018, a jury trial was held on the issue of liability. The jury returned a verdict for Variety, finding that Walmart’s use of the BACKYARD GRILL+ Design mark was likely to cause confusion in connection with Variety’s marks and that Walmart had willfully infringed Variety’s marks. The court denied Walmart’s post-trial motions and decided that Variety was entitled to a jury trial on damages and profits, while noting that disgorgement of profits was an equitable remedy. Although the court stated that it would retain jurisdiction to modify the jury’s verdict on disgorgement, it signed off on the full $50 million amount in its final judgment.

Attorneys: Christina Davidson Trimmer (Shumaker, Loop & Kendrick, LLP) and Jamin S. Soderstrom (Soderstrom Law PC) for Variety Stores, Inc. Elizabeth E. Brenckman (Fish & Richardson, P.C.) and William W. Wilkins (Nexsen Pruet, LLC) for Wal-Mart Stores, Inc.

Companies: Variety Stores, Inc.; Wal-Mart Stores, Inc.

MainStory: TopStory Trademark NorthCarolinaNews

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