Burned by the Real Spam

The story of Bruce Rigney's run in with Hormel over his use of its trademark contains several valuable lessons for small-business owners

Karen E. Klein

Like lottery winners and those who marry in haste, small-business owners should be careful what they wish for. Bruce Rigney, founder of Rigney Graphics, learned this lesson the hard way.

Back in May, his Glendale (Calif.) design firm nabbed some publicity in BusinessWeek Online (see BW Online, 5/1/04, "The Right Note with Customers ") thanks to his clever, hip e-newsletter, "Rigney Graphics-brand Spam." Taking a humorous twist on the slang term for junk e-mail and applying it to his unsolicited e-marketing tool had brought Rigney early success, BusinessWeek Online reported. Fanciful, packed with colorfully presented information about brand icons, logos, and advertising campaigns, the newsletter was bringing in new customers and building a loyal following.

After the column appeared, Rigney's e-mail became even more popular as word spread and scores of new subscribers signed up. But the news also caught the attention of another purveyor of spam -- the original. In September, Rigney received a letter from Hormel Foods (HRL ) in Austin, Minn., makers of the oft-maligned canned luncheon meat.


  Hormel's general attorney, Kevin C. Jones, wrote Rigney a civil but no-nonsense letter reminding the 13-employee firm that Spam, Spamburger, and Spamarama (all terms Rigney was using in his e-newsletter or on his Web site) are Hormel trademarks and have been federally registered for more than 60 years. The prim missive particularly objected to the Rigney Web page that included "a visual of a Spamburger hamburger, with copy that is less than complimentary."

Julie Craven, a Hormel spokeswoman, says protecting the company's brand names, which are well-known and have significant value, is a priority for in-house legal staff. "People associate intellectual property with the high-tech industry, but if we didn't protect our brands they could be lost or diluted," she says. Lawyers are constantly watching for and pursuing action against trademark violators, and as with Rigney's situation, many cases are resolved without litigation because the connection with Hormel's products are so obvious.

Rigney, whose newsletter is designed to convey his quirky sense of humor, admitted that he chuckled when he got Jones's letter. ("They actually hold events called Spamaramas?" he asked, incredulously.) But he also took Hormel's objection to heart.


  "In the marketing and design business, we protect trademarks for our clients all the time," Rigney says. "I wrote back and told him I respected that, and I apologized. I also explained that we have a tendency to try to get humorous around here, and that when we first started the newsletter it went to a small, select group of clients and friends." Rigney also obliged to Jones's requests: "It now has gotten national recognition and, understandably, has to be brought into line with trademark conventions," he wrote in his letter.

Processed-meat jokes aside, Rigney's encounter represents a serious warning for small businesses. In the rush to form a business entity, order inventory, plan a marketing campaign, and hire employees, entrepreneurs often overlook the necessity of securing intellectual-property protection like trademarks, copyrights, and patents, experts say. And even if they're aware they must file for legal intellectual-property protection, many put it off, figuring it's a lesser priority.

But they're dead wrong, says Michael Fedrick, an attorney specializing in intellectual property at Sheldon & Mak, a law firm based in Pasadena, Calif. Any company starting out should do a trademark search up front in order to clear the use of particular company names and terms, to make sure they're not violating someone else's legally protected intellectual property.


  "For a small business, it doesn't make either business or legal sense to use a trademark when you know that someone already has rights to it," Fedrick says. "You might go undetected for some time, but if that trademark is famous and owned by a large company, or if it's being used in a similar business area, there's a good chance that you'll eventually be challenged. Then, not only will you have to pay a lawyer to defend you, but you'll lose any goodwill that you might have built up by using the mark."

It's certainly not easy -- or even possible, in many cases -- to protect a trademarked slogan or icon. Hormel's letter acknowledged that the company has given up objecting to the ubiquitous slang term "spam" as it's used to describe unsolicited commercial e-mail. (The usage is said to have originated from a Monty Python comedy sketch that included a song celebrating Hormel's Spam. When pioneer e-mail users began getting bombarded with unwanted e-mail, they evoked the Spam song -- and the rest is quirky Internet history.)

Hormel now concentrates its legal-protection efforts on attempts to use the term as a trademark or in a manner that associates it with their trademarked canned good. The company's letter insisted that Rigney discontinue his commercial use of the term by a set date.


  Fortunately for Rigney, his story has a happy ending that didn't involve litigation. He and his team scrubbed the company Web site and newsletter archives of trademarked terms, reported back to Hormel, and got the "all clear" from Jones, who thanked Rigney the company for its cooperation. The newsletter, meanwhile, was rechristened: the Sadder-but-wiser report is now called Rigney Graphics-brand Lunch Meat, a term that Rigney has now trademarked himself.

The topic of the first newsletter sent out under the new moniker? What else -- trademarks, copyrights, and brand histories. In small business, every day you live and learn.

Karen E. Klein is a Los Angeles-based writer who covers entrepreneurship and small-business issues

Edited by Rod Kurtz

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