March 27, 2008, 12:00 AM

Online t-shirt seller wins federal court suit against Wal-Mart

Charles Smith won the right to sell his anti-Wal-Mart t-shirts through online retail site CafePress. The ruling gives more latitude to online critics to exploit the trademarks of well-known companies, a legal expert says.

When Charles Smith started selling t-shirts at CafePress.com likening Wal-Mart Stores Inc. to the Nazis and Al-Qaeda, Wal-Mart threatened to sue both CafePress and Smith, leading CafePress to remove the items from its site two years ago. Smith sued, and last week won his case in federal court in Georgia, prompting CafePress to put his items back on sale.

In his ruling, U.S. District Court Judge Timothy C. Batten rejected Wal-Mart’s claim that Smith infringed on its trademarks with his WAL*OCAUST and WAL*QAEDA designs for t-shirts and bumper stickers, and by selling items with those designs through CafePress using the domain names walocaust.com and walqaeda.com.

“This is a big win for gripers,” says Eric Goldman, an assistant professor at the Santa Clara University School of Law and director of the High Tech Law Institute, and one likely to affect companies that own other well-known brands. “Every major brand has some group of people who don’t like them and take their sentiments to the web,” Goldman says.

In previous cases, Goldman says, courts often ruled against critics if they made any money from exploiting trademarked names. But in this case, the court ruled against the trademark owner, Wal-Mart, even though the critic, Smith, was selling the shirts for a profit. “This court was persuaded this was all about a parody,” Goldman says says. The court also noted the huge disparity between the parties, with Wal-Mart grossing $283 billion in U.S. sales in its most recent fiscal year, while Smith sold only 47 anti-Wal-Mart t-shirts on CafePress, apart from 15 bought by lawyers in the case.

Smith and CafePress executives called the ruling a victory for the right to use CafePress as a vehicle for free expression. CafePress allows individuals to upload designs that other consumers can add to t-shirts, bumper stickers, mugs and other items, and buy them through CafePress, No. 116 in the Internet Retailer Top 500 Guide.

“CafePress has been empowering self-expression via merchandise since 1999,” says Fred Durham, CEO. “We’ve known for years that t-shirts, bumper stickers and the like are a powerful publishing medium, just like books. The judge recognized that selling t-shirts for a profit doesn’t weaken their first purpose as a means of self-expression.”

“When Wal-Mart threatened to sue me over my parody designs I thought I had no choice but to agree to their terms,” Smith says. He credits support from Public Citizen, an organization founded by consumer advocate Ralph Nader, and from the Stanford Center for Internet and Society and the American Civil Liberties Union for helping him to pursue the lawsuit and win a victory for free speech.

A Wal-Mart spokeswoman says, “We’re still studying the opinion and considering our options for appeal. We feel we do have a duty to defend our trademarks and other intellectual property.” Wal-Mart.com is No. 78 in the Internet Retailer Top 500 Guide.

Goldman emphasizes that each case of trademark infringement is decided on its own facts, making it hard to predict how courts will rule in other situations. But he says this decision suggests it’s not worth pursuing “inconsequential gripers.”

“This guy sold fewer than 50 shirts,” he says. “If you’re a big retailer and somebody’s griping and selling merchandise that’s clearly not expropriating the value of your trademark, let it go.”

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