The Third of Two: Why Rich Trademark Owners Have to Bully Small Businesses and How There is a Better Way

[ UPDATE 16 March 6:45pm. Since this was written SZC has now made an offer to resolve this dispute amicably, offering the pub a license for a nominal fee. Details in this article]

Nobody really believes that The Hobbit pub in Southampton, UK, does any harm to the bottom line of the Saul Zaentz Company, the owners of the movie and merchandising rights for Tolkein's book. Yet the company is taking legal action to stop the owners of this pub from using the name The Hobbit and the names of characters from the book for their cocktails. The story is detailed in a BBC Report.

From a strictly legal point of view they have a point. They own the rights and the rights appear to be infringed, at least in part. Dictionary divers have already found that the word "hobbit" is actually much older than Tolkein's book, but combine that with a drink called Gandalf and a picture of Elijah Wood on their loyalty card and it is clear which kind of hobbit they are thinking of.  But the legal action has caused a backlash, widely publicized in traditional media and in social media. Actor Stephen Fry even joined in the debate, siding with the pub even though he will appear in the movie The Hobbit: There and Back Again..

Reading the comments on the pub's Facebook page it is clear that most people assume that the Saul Zaentz Company is taking legal action simply because they are evil, stupid or both.  Perhaps this is the case, but it is more likely that they are doing this purely to protect their rights; they believe that they have to do it.  Most people are unaware that you have to take action against trademark infringers or you could lose your rights. This explains why the Virgin Group pursues anyone using "Virgin" even if it is their own name, why JK Rowling's lawyers are so quick to stop Harry Potter inspired activities even for worthy causes and why Johnson and Johnson took legal action against the American Red Cross over their use of the red cross logo.

Suppose that the Saul Zaentz Company knew about The Hobbit pub but took no action. Later I could launch a new product called The Hobbit and when they take me to court I could use the Southampton pub case as an example to show that the rights are not enforced. This might sound daft but it is the way trademark law works.

Traditional thinking gives people two choices: send in the lawyers or risk losing your property. Trademark owners invariably choose the former, spending a lot of money in the process and creating a wave of negative coverage in the media.  But when there are only two choices and both are bad I always recommend that people choose the third one and if there isn't a third option you have to create one.

In this case there are many "third of two" solutions. One could be for the Saul Zaentz Company to help rebrand the pub, providing both creative assistance and help with the expenses -- all of which probably costs a lot less than a legal fight. Alternatively they could license the brands for a token fee but for a limited time, up to the expected date of the next renovation. Another idea could be simply to buy the place and lease it back to the present owners. At the same time they should also learn how to explain better the trademark law issue to media and the owners of infringing businesses.

If there is a lesson in this story it is that there is always another solution. When you don't like any of the solutions on the table it's time to brainstorm a new one, to get out of the rut and use creativity to find a new way that makes everyone happy.

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