Fairy tail becomes an intellectual-property fight

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This article was published 21/01/2017 (3367 days ago), so information in it may no longer be current.

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. Launched in fall 2015, Blankie Tails sold about 136,000 before its first Christmas. You might say it was a fairy-tail success story.

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

So far, her tiny operation has hauled in almost US$16 million but has also been forced to wage intellectual-property battles against larger rivals.

“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.”

Last year, Blankie Tails protested Allstar’s effort to register Snuggie Tails with the U.S. Patent and Trademark Office. Allstar filed a counterclaim saying Peze’s own trademark was merely “descriptive” and 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 her complaint a few months later. Around the same time, another mermaid blanket product called Magic Tails appeared; Blankie Tails said it sent a cease-and-desist letter to owner Ontel Products, which did not respond to requests for comment.

In the online marketplaces run by Amazon.com and Alibaba, 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 takedowns 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 US$90,000 a day.

Peze may be the mermaid queen, but she’s really a David fighting 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.

Nonetheless, the owner of Blankie Tails demanded in her lawsuit that Allstar pay up profits, attorney’s fees and punitive damages.

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.

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 discontinued, both sides said.

As for Blankie Tails, it decided to drop its lawsuit against Allstar. The two parties have entered settlement negotiations with regard to the trademark issue.

— Bloomberg News