SNEWS Editorial: The North Face and South Butt settle, but who really wins in court of public opinion?

The North Face's drama with South Butt has made it very clear that entering into legal defenses of a brand, for whatever righteous reasoning, is no longer black-and-white in this age of digital media. What are the lasting consequences on public image?
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The North Face reached an out-of-court settlement on April 9 with The South Butt, closing the legal chapter on a lawsuit TNF brought against then-18-year-old Jimmy Winkelmann and his once unknown company. Terms of the settlement are sealed, and neither side is talking anymore; however, it is worth noting that, as of April 13, The South Butt website was still selling product, and its Facebook page was still live.

Watching this legal fight evolve -- perceived by many in the public as a David vs. Goliath battle -- was both entertaining for the humor and sad for the way it was being played out. The South Butt drama has made it very clear that entering into legal defenses of a brand or product, for whatever righteous reasoning, is no longer black-and-white in this age of digital media and 24/7 streaming of electronic news. The costs of doing battle in the court extend well beyond the walls of the courtroom and can have potentially dire and lasting consequences on public image.

This story had its beginning Aug. 14, 2009, when TNF sent a letter to The South Butt demanding it cease its business based on trademark infringement and potential consumer confusion. Until that moment, no one other than a few hundred friends and buyers of a limited line of product sold in several local St. Louis drugstores and via a rather amateurish website knew anything about The South Butt.

In our Oct. 9, 2009, story, “SNEWS® View: South Butt drags North Face into PR quagmire,” we noted that while TNF was likely on very strong legal ground, its standing in the blogosphere and media world was about to become very shaky. Within days, TNF became, dare we say it, the butt of thousands of Twitter, blog and media editorial jokes.

The noise dropped off almost as quickly as it began -- until TNF legal eagles decided to file a lawsuit on Dec. 10, 2009. Just as quickly, the volume of news and social media chatter rose to a deafening crescendo. Winkelmann’s business also profited, veritably exploding. Almost overnight, The South Butt went from being a relative unknown generating a reported $5,000 in revenue monthly to suddenly raking in $100,000.

At every turn, Winkelmann and his attorney, Albert Watkins, took the opportunity to tweak TNF’s nose and make the company look silly in public. Over 25,000 Facebook fans reveled in South Butt posts. The news media ate up lines such as “the consuming public is well aware of the difference between a face and a butt….” Winkelmann even launched a Facebook app that purported to help anyone "sharpen your skills" to see if you can "tell a butt from a face."

By the time the two sides reached an agreement in principle to settle, on April 2, the backlash that TNF had been subjected to in the court of public opinion was monumental. While the fervor has quieted significantly, one can’t help but wonder about the long-term costs to TNF’s brand image. Was it worth it? Only time will tell. However, a perusing of blog posts since the settlement was announced indicates there remains significant embedded resentment. One such April 11 post stated:

“In June I will be a 57 year old outdoor junkie, who bought his first TNF item in 1968 or 1969 (very early in the history of TNF). I have copies of TNF catalogs that go back into the early to mid 1970’s….

TNF, like most of the pioneering producers of outdoor equipment from the period 1965-1985, sold out to corporate interests, who have no interests in maintaining the company culture that made TNF great.

You go Jimmy. I have no doubt that the average person wouldn’t be confused by TNF or TSB logos. But perhaps TNF customers just might be. After all, if they aren’t smart enough to recognize TNF products for the crap that they have become in 2010, maybe they couldn’t tell the differences between the logos.

If you need an expert witness with years of experience buying & using TNF (and almost every other ‘big name’ brand of) outdoor equipment around the globe just let me know. I’d be more than happy to help you show TNF the error of their ways.”

Is there anything to be learned from The North Face vs. South Butt? Perhaps that each case needs to be treated individually -- and there is no such thing as a standard legal trademark defense playbook anymore. Before any company decides to file a lawsuit in defense of its brand or image, it would do well to collectively engage the minds of its marketing, PR and legal departments before firing off a legal bullet that can never be called back.

There were many ways to defend this situation and, in our view, TNF employed the wrong one -- albeit for the right reasoning of defending its brand and mark. It could have easily beaten Winkelmann at his own game with a sense of humor. When Winkelmann and his lawyer said they’d be willing to sell the company to TNF for $1 million and just go away, it would have been so easy to let the public know TNF would be more than happy to acquire the company at a market rate…and that market rate would be based on average gross monthly sales of $5,000. It could then go on to state that if the asking price is $1 million, perhaps little Jimmy needs some remedial math work before continuing with his education.

TNF could have perhaps offered to make a donation to Winkelmann’s university to support fitness and wellness programs to ensure students’ butts don’t get too big. In any case, there was a lot of opportunity for TNF to come out looking very good while still defending its mark and reputation.

Certainly, the other alternative for TNF could have simply been to stay quiet and let little Jimmy’s company enjoy a few moments of local fame, sell a few thousand products, and then fade away. Of course, there are those who argue that a company has to defend every possible infringement on a trademark or risk losing the mark itself. Which brings us to trademark law: In simple terms, when trademark law was enacted, it was with the intent that one person cannot use the mark of another in a confusingly similar way. Was The South Butt’s mark confusingly similar? That would have been difficult to prove, according to several trademark attorneys we consulted. However, thanks to something called the Lanham Act, Congress added the concept of “dilution” to trademark law which allows “the owner of a famous trademark to forbid others from using that mark in a way that would lessen its uniqueness.” On the subject of dilution, TNF had a very strong case. No doubt this is what the TNF legal team felt when it fired its legal cannons at Winkelmann.

Unfortunately, while the cannon fire seems to have left smoke rising from Winkelmann’s fort, the blow-back from the resulting digital media explosion has left TNF trying to smile through faces blackened with its own gunpowder.

--Michael Hodgson

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