A recent Ohio Ninth Circuit Court of Appeals case, based on some convoluted facts and possibly misguided in its outcome, nonetheless illustrates some very important business realities on the intersection of trade names and trademarks in Ohio. Wooster Floral & Gifts, LLC v. Green Thumb Floral & Garden Ctr., Inc., 2019 Ohio 63.
Kimberly Gantz owned and operated Wooster Floral LLC beginning in the early 2000s. In late 2014, she decided to close the business. The store’s manager Kimberly Heimberger purchased certain assets of the store in January, 2015, that while not purchasing “the business,” did include purchase of the name “Wooster Floral.” Heimberger filed and recorded articles of organization for Wooster Floral & Gifts, LLC, with the Ohio Secretary of State, as well as an assignment of the trade name “Wooster Floral, LLC” which Gantz had previously used. Heimberger operated Wooster Floral & Gifts, LLC out of the same location that Wooster Floral, LLC has used prior to the sale, and the store operated continuously during the transition. Gantz formally dissolved Wooster Floral, LLC in December, 2015.
Now the case becomes more complex, and important business red flags begin to appear. The first is that while Gantz had previously owned the domain name www.woosterfloral.com, she did not own it at the time of the asset sale, having let the registration lapse. After the lapse, Green Thumb Floral & Garden Center, Inc (“Green Thumb”) acquired the domain name “woosterfloral.com” and used it to redirect customers to Green Thumb. Second, Heimberger testified that at the time she purchased the assets of Wooster Floral, she was aware that Green Thumb owned the domain name woosterfloral.com.
Wooster Floral & Gifts (Heimberger) sued under O.R.C. 1329 – “Labels and Marks” (Ohio’ s state trademark statute); and the Ohio Deceptive Trade Practices Act, O.R.C. 4165. In its decision, the Court underscored two important features of trade name and trademark law. Wooster Floral’s claims under O.R.C. 1329 collapsed immediately because it never owned a state registered trademark. The remedy section, O.R.C. 1329.65, is clear that civil actions for unauthorized use or reproduction of a mark are limited to holders of registered marks only. Therefore, Wooster Floral had no state trademark remedy to assert.
So the question on appeal was limited to O.R.C. 4165.02(A)(2), and whether Green Thumb’s use of www.woosterfloral.com “causes likelihood of confusion or misunderstanding as to the source, sponsorship, approval, or certification of goods and services.” Wooster Floral argued that consumers who enter a specific business’s name into a web browser expect to be directed to that business’s site, and that use of its trade name to redirect business to Green Thumb was the 21st century equivalent of placing a deceivingly similar newspaper advertisement or purposely providing an incorrect telephone number.
The court however, in what seems to be an unrealistic understanding of the function of branding and reputation, instead accepted Green Thumb’s counterargument that the relevant point for examination was whether a customer, while already on www.woosterfloral.com, was likely to become confused by what they found there. Since Green Thumb did not use the name “Wooster Floral” within the web pages, and that the home page was clearly labeled “Green Thumb Floral,” the Court found there was no likelihood of confusion.
As mentioned, this seems to be a misunderstanding of how branding and brand preferences operate in the modern world. Customers who enter a business name into a website do expect to be taken to that business’s website and not another. In a way, the situation resembles the federal doctrine of “initial interest” trademark infringement, where infringement can exist when a customer is initially attracted by a competing mark, even if a minimum of attention or investigation will reveal the true nature of the marks.
Did Wooster Floral’s inability to maintain a trademark action hurt its ability to prevail on a Deceptive Trade Practices claim? Very likely. In her dissent, Judge Callahan relied on the so-called duPont factors, a 1973 Federal Circuit ruling that is cited in almost every case of trademark infringement. Not one of the 13 duPont trademark infringement factors involves an intentional act. In contrast, all but two of the deceptive trade practice acts under the Ohio Statute require some sort of intent or affirmative action.
So even though both trademark infringement and a deceptive trade practice involving trademark do intersect on the issue of “likelihood of confusion,” there is clearly a subtle difference between the two. Trademark exists to protect the public, and the public is injured by confusion alone, whether or not an infringer acts with any bad intent, or even knowledge, of a trademark. The deceptive trade practices law, on the other hand, is more intended to punish those who intentionally engage in unfair practices.
But while the legal issue may be debatable, the business implications are not. Simply boiled down they are:
- State trademark remedies are entirely predicated on having a registered trademark. No registration; no relief for state trademark infringement.
- Ownership of the logical domain names for a business is a crucial aspect of the value of a business.
Gantz should never (with, admittedly, the wisdom of hindsight) have let the domain name www.woosterfloral.com lapse while she still owned the business, even if she was not using the domain name. Heimberger’s knowledge that Green Thumb had acquired the domain name at the time of her purchase of Wooster Floral should have been a major red flag in the acquisition of the business.
I would go so far as to say that ownership or availability of appropriate and logical domain names needs to be a major item of due diligence in the purchase or start-up of any business. The unavailability of appropriate domain names, which are realistically limited to “.com,” and not “.biz,” “.net” or other top level domain identifiers, is as much of an impediment as a severe lien against a business, code violation, or clouded title. This is such a serious problem in the modern world of internet dependence that a purchaser who cannot acquire the appropriate domain names for a business is probably well-advised to change the name of business to one where such domain names are available. It’s that serious. If your business cannot be found on the web, then you just don’t exist in modern America.
And I you’re wondering why Wooster Floral didn’t plead cybersquatting, it would have been to no avail. Green Thumb also operated a floral business in the town of Wooster, and therefore had every legal right to register the domain name www.woosterfloral.com. The anti-cybersquatting statutes only protect against those who register domain names, with no legitimate business reason, for the sole purpose of ransoming them to the proper owners.