Jury Awards $95.5M in Trademark Infringement Case
$95.5M in damages has been awarded by a jury in the ongoing trademark infringement battle between Walmart Stores, Inc. (Walmart) and Variety Stores, Inc. (Variety) over the use of the trademark “BACKYARD.” A federal judge approved a jury verdict that determined Walmart must pay Variety for infringing on Variety’s trademarks “The Backyard,” “Backyard,” and “Backyard BBQ.” This decision comes after Variety appealed a lower court’s decision to award Variety a $31.5M summary judgment. Walmart issued a statement calling the $95M verdict excessive and indicated that it is evaluating its options, including post-trial motions and an appeal. We have provided more details below, but stay tuned, as we suspect we have not heard the last of this dispute.
Background of the Case
In April 2014, Variety filed a civil action in federal district court (for trademark infringement, unfair competition, and deceptive practices) against Walmart for its adoption and use of the trademark “Backyard Grill” in connection with grills and grilling supplies. Variety owns a federal trademark registration for the mark “The Backyard” for “lawn and garden supplies and equipment” and has common law rights in the marks “Backyard” and “Backyard BBQ” in connection with “lawn and garden equipment, grills, and grilling products.”
In December 2015, a District Court granted partial summary judgement in Variety’s favor, concluding that Variety’s trademarks were strong, its rights went beyond just the sale of lawn and garden products protected by its federal registration, and that Walmart’s use of the mark “Backyard Grill” created a likelihood of confusion. Of particular note in the District Court’s decision is the commentary that (i) Walmart ignored its own counsel’s advice and proceeded with adoption of “Backyard Grill” despite Variety’s use, and that such behavior exhibited an intent by Walmart to confuse consumers; and (ii) this case was about a large corporation trying to outlast a smaller company in competition or litigation.
The District Court ordered Walmart to pay Variety $32.5 million in profits, which was based on a calculation of sales from the jurisdictions in which the parties directly competed minus Walmart’s costs of the goods and overhead. Variety moved for a separate jury trial to determine additional non-disgorgement damages. The District Court denied the request and Variety appealed. The U.S. Court of Appeals for the Fourth Circuit vacated the District Court’s original $32.5 million summary judgment, deciding that a jury, not a judge, should have decided several disputed infringement factors.
On February 12, 2019, a jury determined that Variety proved by a preponderance of the evidence that Walmart’s use of the mark “Backyard Grill” was likely to cause consumer confusion and therefore was infringing, and also found Walmart’s use was willful. Walmart was ordered to pay Variety a total of $95.5M for its infringement of the trademark “BACKYARD.” The award was calculated as $45M for Walmart’s trademark infringement and $50M for sales of the infringed goods.
For more on this case, see Variety Stores, Inc. v. Wal-Mart Stores, Inc., E.D.N.C. No. 5:14-CV-217.