Damn Bad Business Decision

A Fort Collins taco shop has made a wicked bad decision.

According to the AP, Dam Good Tacos [DGT] opened sometime in 2006. About the same time, Torchy’s Tacos [TT], a taco franchise in Austin, began using DAMN GOOD TACOS as part of its branding.

TT has three relevant trademark registrations.* TT wrote to DGT asking them to stop using DAM GOOD TACOS. TT offered to help DGT pay for the rebranding. DGT refused. TT is suing.

First, let’s be really clear that trademark law sees no difference between DAM and DAMN. Say them out loud. They sound exactly the same. End of discussion.

So whose rights will prevail?

DGT may have limited common law rights to DAM GOOD TACOS in Fort Collins that will allow it to go on using the name for its existing restaurant. If the court allows that, does it mean that DGT has won?

No. They still lose:

• DGT will be out tens of thousands of dollars in legal fees. Imagine how else they could have used that money to promote and grow their business.
• This proud independent taco shop will not be happy when it’s confused with TT some day. And that will happen.
• DGT won’t be allowed to open a second restaurant using the same name outside its current area.
• Potential buyers of the restaurant won’t pay as much for the goodwill because of the limitation and the confusion.

It sounds unfair. It may even sound mean. But DGT needs to make a business decision, not an emotional one. Rebrand.

 

*Here are TT’s relevant registrations:

	Filed	Use started	Registered	Disclaims
TORCHY’S DAMN GOOD TACOS	July 2008	Nov 2006	March 2009	TACOS
DAMN GOOD TACOS	Feb 2015	2006	Oct 2015	GOOD TACOS
DAMN GOOD	Feb 2015	2006	Oct 2015

 

Photo of tacos by James Willamor used under Creative Commons Attribution-ShareAlike 2.0 Generic license.

 

The Wasp Still Stings

A little earlier this year, a court in Turin, Italy ruled in favor of Piaggio & C.  S.P.A., the company that makes the iconic Vespa® scooter. A company in China had copied the design for the scooter and was selling its product in Italy.

The ruling was based on both Piaggio’s copyright and five “3-D” trademark registrations in Italy for their scooter design. It’s a big deal that the trademarks were part of the ruling because the copyright will expire but the trademark registrations, as we’ve learned, can live forever.

Piaggio presented evidence of how well-recognized the Vespa is. They conducted a survey and were able to show that 85% of the people in the survey could recognize the contours and design of a Vespa. The percent grew to 95% when the pool was limited to people who regularly ride scooters.

In other words, just by looking at a drawing of a scooter, 85% of Italians could tell which scooters were made by Piaggio. That’s one hell of a strong brand.

So, does that mean no one else can make scooters? You already know the answer to that question is no.

But it does mean you can’t make a scooter that incorporates the iconic elements of the Vespa design.

What’s the lesson here: Figure out why customers want your stuff and then make sure you protect the hell out of whatever it is that distinguishes you from your competition.