There are so many costs when you are starting a new business. For small businesses without major financial backing, it can be hard to prioritize how to best allocate limited resources. Legal services are intangible and seem hard to justify when you are facing rent, renovations and other tangible costs. But skipping these basic steps to creating a strong foundation for your new business can have expensive consequences. A North Carolina bar called The Bathtub Gin is in a trademark battle with the owners of Bathtub Gin in Manhattan’s Chelsea neighborhood. After the technical legal arguments, the North Carolina bar’s defense is that there is no proof that there could be any likelihood of confusion among the population of the relevant geographic areas. The Manhattan bar argues that it features national bands and profits from its recognition on TripAdvisor and other social media. It has an incontestable mark for “Bathtub Gin” granted by the USPTO and states in its complaint that “the registered mark is used to identify a first class bar that contains classic decorative chairs and couches with exceptional service and quality of drinks. Filo employs first rate cocktail mixers and servers so that the customers’ experience is nothing less than amazing….Defendant’s [North Carolina bar] The Bathtub Gin is a basic bar with none of the same attention to quality and décor attended to by plaintiff [the Manhattan bar].” The Manhattan establishment argues that bar-goers are visiting North Carolina and going to The Bathtub Gin, thinking incorrectly that they are patronizing “a first rate saloon” because of their reputation built.

This strategy has engendered an interesting counterargument. The North Carolina bar contends that the Manhattan bar has clearly established the dramatic differences between the establishments and the unlikelihood that the public would confuse them “denoting vast socio-economic, physical, menu, concept and ‘relevant class of bar goers’ differences between plaintiff’s burlesque establishment and defendant’s ‘basic bar.’” However, the outcome of this case will also depend on some basic facts surrounding who was the first to use the term “bathtub gin” in the North Carolina market. There are allegations that the North Carolina bar is actually the senior user. There is a registered mark owned by the Manhattan bar, but if the North Carolina bar was the senior user in its market, the Manhattan bar’s registration cannot operate to extinguish the pre-existing rights in the North Carolina’s common law mark. The Manhattan bar’s rights would extend to the entire US except the North Carolina bar’s market footprint at the time of its trademark registration. If that is the case, the North Carolina bar missed an important opportunity to oppose the registration at the time the application was ending at the USPTO. Like many businesses, it did not have a way to police and protect its name and avoid situations like the one at issue.

There are some lessons to be learned from this case as it works its way through the courts. Small businesses can learn the importance of their trade name as a business asset and steps they can take before and after they start using it in their business.
The case is Filo Promotions Inc. v. BathTub Gins Inc., case number 1:17-cv-10246, in the U.S. District Court for the Southern District of New York.