Retail

The $16 Million Battle Over Mermaid Tail Blankets

A new entrepreneur had a quirky idea that went viral. Then she started fighting to protect it.

Seated on a bar stool in Manhattan’s West Village, Hattie Peze orders a glass of red wine as she flips through photos of mermaid-tail-shaped blankets. (The drink is on the house—her hedge funder husband owns the place.) The entrepreneur lights up when she shows off the bright, fuzzy novelties, leaning forward excitedly in a black-and-blue Diane von Furstenberg dress. She calls herself the “chief mermaid enthusiast.”

In less than five months, Peze, 35, built a multimillion-dollar business hawking mermaid blankets. Yes, mermaid blankets. Launched in the fall of 2015, her company—Blankie Tails—sold about 136,000 of them in the run-up to its first Christmas. It was a fairy tail success story.

Then a company called Allstar Marketing Group LLC came along. The “as seen on TV” operation behind infomercial products like Snuggie blankets and Chop Magic food slicers started its own mermaid business. It bought the URL for a website and sought to trademark “Snuggie Tailsin April. By July, they were on the market: mermaid blankets in eye-popping colors and patterns. Another company and numerous crafters on Etsy were also hot on Peze’s trail. 

So far, her 17-month-old operation has hauled in almost $16 million, spurred by the growing popularity of its ubiquitous blankets. But Peze’s tiny company has also been forced to wage intellectual-property battles against larger rivals like Allstar.

“You can work your butt off and have a great idea,” Peze said, “but I don’t care how hard you work: Life isn’t always fair.” 

Hattie Peze sports a Blankie Tails creation.

Confusing my mermaid with your mermaid

Last year, Blankie Tails protested Allstar’s effort to register “Snuggie Tails” with the U.S. Patent and Trademark Office. Allstar responded by filing a counterclaim saying Peze’s own trademark was merely “descriptive” and that “Snuggie Tails” wouldn’t be confused with it, given Allstar’s product “incorporates the famous Snuggie mark.” Peze also sued the competitor in federal court for trademark infringement and unfair competition, only to voluntarily dismiss its complaint a few months later. Around the same time, another mermaid blanket product called Magic Tails appeared—Blankie Tails said it sent owner Ontel Products Corp. a cease-and-desist letter. (Ontel didn’t respond to requests for comment.) 

Meanwhile, in the online marketplaces run by Amazon.com Inc. and Alibaba Group Holding Ltd., Blankie Tails has been calling out what it sees as knockoffs, many made in China (where Peze’s own product is made). She frequently requests take-downs of products believed to be counterfeit. 

Despite some celebrity Blankie Tail sightings, Peze laments that shoppers are mistaking other brands for the real thing. She estimates that during peak gifting season her company is losing as much as $90,000 a day. 

A photo posted by Miley Cyrus (@mileycyrus) on

Peze may be the mermaid queen, but she’s really a David facing various Goliaths. Allstar alone is estimated to bring in tens, if not hundreds, of millions of dollars a year and sells dozens of different gizmos, like rotating nail files and arch-shaped cat-scratchers. (Allstar declined to disclose its annual revenue.) Nonetheless, the owner of Blankie Tails demanded in her lawsuit that Allstar pay up profits, attorney’s fees, and punitive damages for allegedly infringing her trademark.

“[Allstar’s] acts of intentionally offering the Snuggie Tails Products which bear a striking resemblance to the Blankie Tails Blanket products, has resulted, and will continue to result, in deceiving the public into believing that the Snuggie Tails Products are the same as, or associated with, the Blankie Tails Blankets,” the complaint stated. “[Allstar] has attempted to misappropriate Blankie Tails’ innovations and has sold inferior, cheaper products under a trademark that is intentionally, confusingly similar to the Blankie Tails mark.”

In the suit, Blankie Tails also alleged Allstar purchased Google ad words for the phrase “Blankie Tail” in an effort to redirect shoppers to its product, demonstrating “willful bad faith on the part of the defendant.”

“This is frustrating, but I feel blessed to be in this situation,” Peze said in an interview, referring to other companies now making mermaid-themed blankets. “At least I’m in the position where the product is so damn popular people want to copy it.”

Jennifer De Marco, a lawyer for Allstar, said the company “has not infringed any intellectual property rights of Blankie Tails and there was no merit to the claims in the federal action.” She added that Allstar’s activities “with respect to its Snuggie Tails product have nothing whatsoever to do with the unrelated Blankie Tails product.” 

This was not Allstar’s first trip to court on trademark issues: Laughing Rabbit Inc., an Oregon-based flashlight maker, sued it for patent and trademark infringement in 2010 over LED flashlights. (Allstar said it settled the case; Laughing Rabbit didn’t return a request for comment.) Also, JetNet, a company that makes the meat netting product ‘RoastWrap,’ sued in 2012 for trademark infringement after Allstar released the competing product ‘wrap’nroast.’ (The case was later discontinued, both sides said.) 

A photo posted by Blankie Tails (@blankietails) on

As for Blankie Tails, it decided to drop its lawsuit against Allstar. The two parties entered settlement negotiations with regard to the trademark issue. “Allstar’s counterclaims with the USPTO are still live and the parties are discussing settlement of those claims,” said De Marco. Blankie Tails lawyer Emily Danchuk declined to comment. 

Surfing the mermaid zeitgeist

Peze may be the world’s most prolific mermaid blanket entrepreneur, but she didn’t invent them.  She stumbled upon the idea on Facebook, where she saw a hand-crocheted mermaid tail blanket go viral. She wanted to buy one, but quickly realized none were mass-produced. She partnered with a manufacturing expert and said she is the first to bring factory-made mermaid blankets to the online market. She designed the styles herself, ranging from a menacing great white shark to a rainbow mermaid tail in every size, from child to adult to dog. There are even tiny mermaid tails for kids to put on their dolls. 

How did such a strange idea get so huge? Turns out, mermaid tails are super shareable. Shoppers would post playful photos of their kids in the blankets on Facebook and Instagram. The silly little items eventually piqued the attention of internet hotsheet BuzzFeed. For Blankie Tails, it was off to the races. 

Online searches for mermaid tails this winter are at an all-time high, according to data from Google. At one point, Amazon said its “most watched deal” of the Christmas shopping season was mermaid tail blankets. Last year, Kim Kardashian posted a photo of North Kardashian West and her cousin Penelope Disick in mermaid tail swimsuits, vacationing in St. Barts. Gwyneth Paltrow also posted a mermaid glamour shot of her daughter, Apple. Britney Spears and Miley Cyrus were spotted in mermaid mode, too. Even an Olympian has a embroidered mermaid blanket of her own. 

It’s gotten so crazy that even fashion royalty broke down (at least when it comes to their pets): Designer Marc Jacobs got a Blankie Tail for his dog, Neville.

Don’t expect this fishy zeitgeist to drown anytime soon: Disney has a live-action remake of its famed Little Mermaid franchise in the works, and a reboot of the 1984 romantic comedy Splash, starring Channing Tatum and Jillian Bell, is on the way as well. In the meantime, Blankie Tails plans to take advantage of this pop culture moment, building out its network of retailers. Besides Amazon and its own online venue, the blankets are sold at more than 1,600 physical stores, including Dylan’s Candy Bar and Hallmark. 

Blood in the water

Despite all the attention paid to such an unlikely product, Peze’s enterprise could be swimming upstream. Even if it were to reach an agreement with Allstar, protecting her revenue source will get increasingly difficult as more competitors arrive. Peze said she’s routinely hounded by those hoping to get a piece of the mermaid tail action. At trade shows, as-seen-on-TV sellers flood her booth with inquiries (“Those guys would always pull me aside and be like, ‘Let me talk to you, sweetheart!’”). One man called her so often she had to block his number, said Peze. Then he flew to New York to try to get a hold of her, she said. He failed.

But while it’s true she was a moving force behind the mass-produced mermaid blanket, first doesn’t always mean you win in the world of intellectual-property law. Sonia Lakhany, a trademark attorney based in Atlanta who wasn’t involved in the Blankie Tails-Snuggie Tails litigation, said there’s a high burden to show your design is sufficiently original to warrant protection. “In cases like this, to show that this is such an original work that it could not have been simultaneously created by someone else, it’s a common problem,” she said.

A photo posted by Blankie Tails (@blankietails) on

There’s also the matter of money. The cost of seeing a lawsuit through to its conclusion can be exorbitant for a small company. “If Blankie Tails lost $60,000 in sales a day, let’s compare that to how much they would keep paying in legal fees,” Lakhany said. “They have to admit defeat, not because they’re wrong, but because, financially, it’s not worth the fight.”

Looking to understand its chances of winning a jury trial, in-house lawyers for Blankie Tails sought the advice of intellectual-property law firms, which put its probability of winning outright at less than 40 percent, said a person familiar with the matter who wasn’t authorized to publicly discuss it. Not bad odds, but not great either. Soon after, settlement talks began, the person said.

Then there are the internet marketplace whales to contend with. On Amazon, more than 5,000 results appear in a search for “mermaid blanket.” More than 80 results appear in a search for “Blankie Tails,” including numerous items not sold by Peze. The eleventh result on the page is a “Snuggie Tail,” made by Allstar.

In early December, Allstar sued Amazon in federal court. In its complaint, filed along with co-plaintiffs Ontel and Idea Village Products Corp., it alleged that Amazon allows the sale of “an astronomical number of counterfeit and infringing products.” In other words, Allstar is none-too-pleased that products similar to its own are sold online—the same complaint Peze had about it. 

Contacted about the Allstar suit, Amazon said it “has zero tolerance for the sale of counterfeit items on our site.” A spokesperson added: “We work closely with manufacturers and brands to identify offenders and remove fraudulent items. We are taking legal action and aggressively pursuing bad actors.” Amazon has yet to file an answer in court.

For her part, Peze is trying to move on. She hopes that licenses for her products can set her apart from rivals. Blankie Tails scored a deal with a major entertainment franchise and plans to release exclusive designs next year, she said. (Peze declined to share additional details, citing a business agreement.)

Allstar’s “Snuggle Tails,” meanwhile, are still on the market, with over a million units sold to date, according to the company. Ontel’s Magic Tails seem to have disappeared entirely.

“It’s disheartening, because you’re dealing with people with more money and resources,” said Peze. “But you need to move forward. Take a breath, have a cocktail, and move forward. That stuff can be paralyzing.”

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