Lost in a blizzard: Buffett’s Dairy Queen TM loss

Owners of large brands have the might and means to assail smaller companies with a flurry of lawsuits if they detect any sign of trademark infringement and/or dilution.

But a trademark loss incurred by billionaire Warren Buffett this month has shown that smaller players can shield themselves from litigation by offering persuasive evidence against the claims.

This week, it emerged that US office supplier  WB Mason prevailed against Warren Buffett’s  American Dairy Queen (ADQ), after a district court of Minnesota ruled that it had not infringed by using the Blizzard name on its bottled spring water.

Judge Susan Richard Nelson of the US District Court for the District of Minnesota ruled that ADQ, “failed to prove, by a preponderance of the evidence, all of the elements of its claims for trademark infringement, trademark dilution, and unfair competition by false designation of origin, as well as common law unfair competition and deceptive trade practices claims under Minnesota law”.

ADQ sued WB Mason in 2018 over the use of the Blizzard name, which ADQ uses for a line of frozen treats, alleging that WB Mason intentionally or recklessly copied ADQ’s brand to benefit WB Mason’s private-label spring water product.

ADQ further alleged that WB Mason’s use of Blizzard on spring water was likely to cause marketplace confusion and dilute ADQ’s brand.

In a 220-page decision published on June 17, the court disagreed with ADQ and found in favour of WB Mason on all five counts asserted in ADQ’s complaint.

A cautionary tale

Commenting on the outcome, Jason Kravitz, a  Nixon Peabody IP partner who led the trial team, welcomed the victory as “a cautionary tale to companies about the risk of overplaying their hand when it comes to trademark rights”.

“WB Mason has been using Blizzard for more than 10 years in connection with its private-label spring water and has sold 190 million bottles of water—yet ADQ couldn’t find a single person who had ever been confused. We believed ADQ’s case was extraordinarily weak, so it’s gratifying to know that W.B. Mason can keep using Blizzard,” he told WIPR.

In his view, the team secured victory as ADQ offered “no persuasive evidence to support its claim” that WB Mason’s spring water would dilute ADQ’s mark. “ADQ relied on expert opinions that the court found to be speculative and unreliable. ADQ adduced no survey evidence to support its claims of likely confusion or likely dilution,” he said.

By contrast, WB Mason submitted consumer surveys showing that neither confusion nor dilution was likely, and also introduced evidence that dozens of other companies use “Blizzard” in connection with a variety of other goods and services, including  Blizzard Entertainment.

WB Mason’s expert witness, explained Kravitz, testified that consumers are able to distinguish between different products named after common words such as “blizzard”.

A problem of ‘its own making’

During the trial, WB Mason also showed that ADQ actually adopted a new Blizzard logo after filing suit against WB Mason and, as the court agreed, the new logo was more similar to the logo used by the business product company.

“WB Mason argued that any confusion resulting from ADQ’s new logo was entirely a problem of ADQ’s own making. The court found that ADQ’s decision to transition to a new logo—one that was more similar to WB Mason’s logo—strongly suggested that ADQ was not genuinely concerned about consumer confusion,” noted Kravitz.

During the trial, the court also dismissed ADQ’s demand for a $25 million monetary award, finding that the evidence ADQ presented at trial failed to support any such relief and that there was no evidence suggesting WB Mason sought to derive any benefit from the fact that ADQ also used Blizzard as a trademark.

Precedential value

In terms of precedential value, there are some interesting findings by the court with respect to ADQ’s dilution claim, noted  Sharon Urias,  Greenspoon Marder partner and IP practice group leader.

“The finding that Dairy Queen changed its Blizzard logo to look more like WB Mason’s logo, with full knowledge of the parties’ dispute, weighed against awarding it relief,” she added.

The ruling, noted Kravitz, also offered some insights on how US courts might apply the  Federal Trademark Dilution Act of 1995, despite the law of case law available. This is a US federal law which protects famous  trademarks from uses that  dilute their distinctiveness, even in the absence of any likelihood of confusion or competition.

“While infringement cases are common, the federal anti-dilution statute is relatively new and few of those disputes have ‘gone the distance’. This means there is not an abundance of case law interpreting the statute. We were pleased that the court carefully considered the available law of dilution and applied it to the trial evidence in reaching her decision, ” he concluded.

No customer confusion

This case marks a rare IP enforcement loss for Warren Buffett’s ice cream and fast-food giant.

“Dairy Queen is aggressive in its trademark enforcement efforts, as it should be, to protect its marks. It has enforced its Blizzard mark at least 109 times through cease and desist letters, trademark oppositions and litigation,” explained Urias.

“However, Dairy Queen’s problem here is that there simply is no evidence of consumer confusion. That was the death knell for its claim,” she emphasised.

“In addition, Dairy Queen’s vice president of brand and product marketing and WB Mason’s CEO agreed that their company does not compete with Dairy Queen, as Dairy Queen does not sell Blizzard branded water.”

According to Urias, evidence presented that there are more than 70 trademark registrations or applications for “blizzard” marks that Dairy Queen did not oppose or does not intend to oppose, as well as the testimony of nine third parties using “blizzard”, further cemented ADQ’s inevitable loss.

Don’t play the waiting game

“The court pointed out that many of the third-party uses of “blizzard” involve unrelated products, but some are used in the consumable context with commercial success, such as  Blizzard Wines, the  Blizzard Burger, and the  Blue Blizzard Margarita sold at  Disney’s  Blizzard Beach,” she added.

The court also nodded to the fact that Blizzard Entertainment, which generated $1.1 billion in revenue in 2020, uses the domain name blizzard.com and when the term “blizzard” is searched on Google, Blizzard Entertainment is the first result.

Sherry Flax, partner from  Saul Ewing Arnstein & Lehr, chimed: “The lack of actual consumer confusion over 11 years of coexistence in the marketplace is antithetical to proving likelihood of confusion while supportive of the judge’s findings that the products and audiences are not sufficiently similar. This case shows that there is nothing to gain and everything to lose by waiting to assert trademark rights.”

WIPR has approached ADQ for comment.