Variety Stores, Inc. v. Wal-Mart Stores, Inc.
888 F.3d 651
4th Cir.2018Background
- Variety Stores, Inc. owned a federal registration for “The Backyard” (retail lawn & garden services) and used variations (“Backyard,” “Backyard BBQ”) on grills and related products; Walmart created a private-label line called “Backyard Grill.”
- Walmart filed a trademark application for “Backyard Grill” in 2011; Variety opposed and later sued for trademark infringement and related state-law claims in 2014 after TTAB proceedings were stayed.
- The district court granted partial summary judgment to Variety, finding likelihood of confusion and protectability of Variety’s marks, then after a bench trial ordered Walmart to disgorge ~$32.5 million (limited to 17 jurisdictions where the parties competed) and awarded costs and fees; the court denied Variety a separate jury trial on non-disgorgement damages.
- On appeal, Walmart challenged liability and disgorgement; Variety challenged geographic scope of disgorgement, SG&A deductions, and denial of jury trial.
- The Fourth Circuit reviewed the summary-judgment record de novo, found genuine disputes on key likelihood-of-confusion factors (mark strength, similarity, intent, actual confusion), vacated the grant of partial summary judgment and all downstream orders that depended on it, affirmed denial of Walmart’s cross-motion, and remanded for further proceedings.
Issues
| Issue | Plaintiff's Argument (Variety) | Defendant's Argument (Walmart) | Held |
|---|---|---|---|
| Whether summary judgment should be entered on liability (likelihood of confusion) | Marks are protectable and Walmart’s “Backyard Grill” creates a likelihood of confusion (factors favor Variety). | Genuine disputes of material fact exist on multiple confusion factors, so summary judgment is improper. | Court: Vacated district court’s partial summary judgment — genuine disputes (Factors 1,2,6,7) require factfinder. Affirmed denial of Walmart’s cross-motion. |
| Strength/distinctiveness of Variety’s marks (Factor 1) | Marks have commercial strength from sales, advertising, and long use. | The term “backyard” is conceptually weak; extensive third-party use undermines commercial strength. | Court: Conceptually weak; commercial strength is genuinely disputed — cannot resolve on summary judgment. |
| Similarity of marks (Factor 2) | Marks (e.g., “Backyard BBQ” v. “Backyard Grill”) are similar and likely to confuse. | Logos and prominence of “Grill” reduce similarity; reasonable minds may differ. | Court: Genuine dispute exists; district court erred in resolving this at summary judgment. |
| Evidence of intent and actual confusion (Factors 6 & 7) | Walmart knew of Variety’s registration and adopted a similar mark, supporting intent; absence of survey-proved confusion is not conclusive. | Walmart relied on counsel’s advice, did not know of Variety’s use on grills, and submitted consumer surveys showing no confusion. | Court: Intent and absence of actual confusion are genuinely disputed; district court improperly weighed survey evidence at summary judgment. |
| Remedies dependent on liability (disgorgement, scope, SG&A deductions, jury trial on other damages, fees) | Disgorgement limited to jurisdictions of competition; sought jury trial for additional damages; sought fees and costs. | Challenged liability and disgorgement; argued no liability so no profits disgorgement; defended deductions and scope. | Court: Because summary judgment vacated, all subsequent remedial orders (disgorgement, scope, SG&A deductions, denial of jury trial, fees) were vacated and remanded for further proceedings. |
Key Cases Cited
- Lee v. Town of Seaboard, 863 F.3d 323 (4th Cir.) (standard for de novo review of summary judgment)
- Jacobs v. N.C. Admin. Office of the Courts, 780 F.3d 562 (4th Cir.) (courts must apply correct summary-judgment standards where misapprehension is shown)
- Tolan v. Cotton, 134 S. Ct. 1861 (2014) (trial court must view evidence in light most favorable to nonmovant on summary judgment)
- Anderson v. Liberty Lobby, 477 U.S. 242 (summary judgment standard; credibility and weight are for the jury)
- Grayson O Co. v. Agadir Int’l LLC, 856 F.3d 307 (4th Cir.) (nine-factor likelihood-of-confusion framework; conceptual vs. commercial strength)
- CareFirst of Md., Inc. v. First Care, P.C., 434 F.3d 263 (4th Cir.) (strength/scope of mark and role of actual confusion)