Sustainable Profits: How Willa Can Defend Against P.&G.’s I.P. Suit

Sustainable Profits

The challenges of a waste-recycling business.

You may have seen a fascinating New York Times article about the lawsuit Procter Gamble has filed against a start-up called Willa, which produces a line of cosmetics that is sold in Target and in small boutiques. It turns out that P.G. has a line of cosmetics called Wella, a German hair care brand that the conglomerate acquired in 2003 for $7 billion. P.G. sued Willa over the name, claiming that it was confusingly similar to Wella.

The case resonated with me because TerraCycle went through a similar lawsuit a number of years ago. The settlement terms prohibit me from discussing the case, but it had a similar David vs. Goliath plot line. Intellectual property law generally requires the owner of a mark or patent to police it. For example, if we find someone using a logo similar to TerraCycle’s, we would have to do something — starting with a gentle request and moving on to legal action if necessary. Bottom line: use it or lose it. So before we come down too hard on the Goliaths who bring these cases, it is important to put these efforts in context: the big companies have little choice; it’s the way the system works.

But all is not lost for the Davids. Yes, a lawsuit like this can crush a small business — Willa, apparently, has already spent $750,000 in legal fees, a very big bill for a small company. But the money doesn’t have to go to waste. I believe that the best defense when a big company attacks a smaller company is to take the fight to the press. America loves the little guy. It goes back to the colonies and the Redcoats. It’s in our D.N.A.

So, Willa might do well to keep telling its story. I have seen this work for other companies (here’s an example involving Jennifer Lopez that wound up on the cover of Inc. magazine). The result can be a barrage of media that can create some major benefits: the small brand receives more attention, its consumers become more passionate, and the big brand is put on the defensive. Again, I am bound by the settlement agreement in the TerraCycle case not to disclose details of the case, but I can report that the year of the lawsuit our sales doubled from $1.5 million to $3.3 million.

This media strategy changes the game from one played in the courtroom to one played in the court of public opinion. The good news is that the court of public opinion favors the little guy and will overlook many details and even legal rights that may favor the big guy. This strategy is not for everyone, however. To prevail, one needs to have a great story, one that resonates with the public. So, one thing to remember is the value in your company’s story.

For many companies, the better strategy is to avoid these situations. I strongly recommend hiring a good I.P. lawyer and — just as important — buying liability insurance that will cover legal fees.

As to the specifics of the Willa case, in my disinterested opinion, I do think the names are confusingly similar. But, while I support P.G. on the merits, I, like most Americans, I suspect, will be rooting irrationally for Willa.

Tom Szaky is the chief executive of TerraCycle, which is based in Trenton.

Article source: http://feeds.nytimes.com/click.phdo?i=17170112e07c173c5aeb3844bb36b7f9