The “little guy” has scored a victory in a California trademark infringement lawsuit over beauty products. Sally Beauty Supply recently agreed to pay Mixed Chicks, a small hair care company catering to mixed-race individuals, over $8 million.
Mixed Chicks is a $5 million company with less than 15 employees. Meanwhile, Sally operates more than 3,000 stores and generates revenue of $3 billion. Despite its small size, Mixed Chicks was able to carve out a successful niche in the hair care market and even secure the endorsement of celebrity Halle Berry. The company was also approached by Sally to sell Mixed Chicks products on Sally’s website and in retail locations. However, the two sides never reached an agreement.
Sometime later, Mixed Chick’s discovered that Sally was selling its own line of hair products marketed to mixed-race individuals, called Mixed Silk. Mixed Chicks subsequently filed a trademark infringement lawsuit alleging that the “imitation” line infringed Mixed Chicks trademark as well as the overall appearance of the hair care products.
According to the complaint, Sally used marks that were confusingly similar to Mixed Chick’s registered marks and mimicked the color, scent, and general appearance of its product. The complaint also alleged that Sally programed the search feature on its website so that when a consumer searched for “mixed chicks,” it only returned results for Sally’s competing “mixed silk” product line. Mixed Chicks alleged that this was intended to “cause confusion or mistake, or to deceive as to the origin of the Mixed Silk hair care products with the intent to benefit from Mixed Chicks’ reputation and goodwill.”
After a November trial, a California jury awarded Mixed Chicks $839,535 in actual damages and $7.27 million in punitive damages, after finding that Sally acted willfully and with malice, oppression, or fraud. Sally subsequently agreed to settle the case for $8.5 million in anticipation of a request for attorney’s fees and disgorgement enhancements. Sally has also agreed to stop selling the infringing product.
As this case highlights, David can defeat Goliath in the intellectual property world. Therefore, it can often be worthwhile for small businesses to pursue trademark litigation all the way to trial.