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Walmart Inc. must pay a smaller retailer more than $95.5 million for using its trademarks to sell grills, a federal jury in North Carolina found this week.

The jury found in October that Walmart's Backyard Grill + Design trademark was likely to cause confusion with Variety Stores Inc.'s Backyard and Backyard BBQ trademarks. The jury also ruled that Walmart willfully infringed on Variety's trademarks.

On Tuesday, the jury awarded Variety a "reasonable royalty" of $45.5 million, and $50 million for profits Walmart earned from sales under the infringing trademark, court records show. Both amounts are subject to post-judgment interest.

Variety, based in Henderson, N.C., sells a range of merchandise including lawn and garden equipment and supplies. A subsidiary of Variety Wholesalers Inc., it operates about 380 stores in the Southeast.

In an emailed statement Wednesday, Walmart spokesman Randy Hargrove said, "We continue to believe that our use of Backyard Grill did not infringe on Variety's mark, that consumers were not confused and Variety suffered no harm through our use of the brand."

The company does not believe the evidence supports the jury's decisions in assessing liability and damages, Hargrove said in the statement. "This verdict is excessive and we are evaluating all our options, including post-trial motions and an appeal," he said.

Hargrove said in a phone interview that the retailer believes it has strong grounds for an appeal.

During the October trial, he said, "the jury heard from experts who conducted surveys that found no likelihood of confusion between the two brands. And then a third survey found that our Backyard Grill mark had no influence on consumers purchasing Walmart's grills and grill accessories."

Also, "We felt there were several errors in the way the court allowed the jury to determine damages," Hargrove said. Walmart had said in a motion filed Feb. 4 that because Variety has no e-commerce presence and only does business in 16 states, "the Court should exclude any evidence or arguments related to Walmart's revenues for sales of accused products outside of the geographic area Variety has penetrated." That motion was denied.

According to the complaint filed April 11, 2014, in U.S. District Court for the Eastern District of North Carolina, Variety had used the mark The Backyard for decades and registered it with the U.S. Patent and Trademark Office in 1994. The company also claimed in the complaint that it had built "strong common law rights" on variations of The Backyard through many years of commercial use.

Variety became aware of Walmart's use of the term Backyard Grill + Design in July 2012 when a Variety employee saw it in an ad for grills, the document said. Shortly after, Variety learned Walmart had a federal application for the mark pending before the U.S. Patent and Trademark Office.

Records showed Walmart had filed the application on Aug. 17, 2011. Variety filed a document with the Trademark Trial and Appeal Board on July 18, 2012, seeking to prevent registration of Walmart's mark.

The case is Variety Stores Inc. v. Wal-Mart Stores Inc.

Business on 02/14/2019

Print Headline: Walmart loses grill trademark case

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