Recently, the WSJ reported on the trademark dilution lawsuit filed by Plano, Texas, based Dr. Pepper Snapple Group (“Goliath”) against Dublin, Texas, based Dr. Pepper (“David”) in Dr. Pepper v. Dr. Pepper. David started using its DR. PEPPER mark in 1891, whereas Goliath registered its DR. PEPPER mark in or about 1905. (David started using DUBLIN DR. PEPPER in the 1990s.) Because Goliath registered first, it has priority over David, who is now selling outside of Dublin. But that doesn’t mean that David is is diluting the distinctive character of Goliath’s mark.
Unlike most other countries, the first party (“senior user”) to file a trademark with the United States Patent and Trademark Office has priority rights over another party (“junior user”) that started using the mark first. But the senior user’s rights are not unlimited. The junior user who first started using the mark in, say, Dublin, Texas, is usually entitled to keep using the mark in its original geographic and product market. To the extent that the junior user expands and does business in channels where the senior mark is used, and the senior mark is famous/distinctive like the NIKE and GUCCI marks, then the senior user could sue the junior user for dilution under federal and state law.
While these principles apply to the dispute between David and Goliath, it is highly unlikely that David’s use will dilute the distinctive character of Goliath’s mark. David has sales of only $7 million a year. This pales in comparison to the $5.6 billion in sales by Goliath. Indeed, David accounts for less than 1% of DR. PEPPER branded sales in the United States. Plus, David is the shining star in the economically downtrodden Dublin, and accounts for 80,000 visitors a year to the small town. Nonetheless, Goliath argues that David’s internet and phone sales across state lines are diluting Goliath’s brand. However, ninety-nine percent of the people in the United States, including myself, wouldn’t even had known about David if it weren’t for the WSJ article. It seems that Goliath’s extensive resources would be better spent improving product quality and service, not attempting to squash an inconsequential David that is vital to a struggling local Texas economy.