Ken Parker in Corporate Counsel: The Start-Up That Was an Upstart

01/30/2013

Two women who started a company that makes specialized hair care products were furious when they discovered that Sally Beauty Supply, a much larger company, had begun selling a competing product that was all too similar. Despite the daunting challenges of litigation, the women decided that they had no choice but to sue. And, against all odds, the case actually went to trial, and they won a jury verdict of more than $8 million. Then they settled for even more.

David vs. Goliath tales that result in big wins for the underdog are rare in the world of intellectual property, where the time and cost of litigation are especially daunting to small businesses. But Wendi Levy and Kim Etheredge, who cofounded Mixed Chicks, which makes hair care products for women of mixed race, felt that taking on the beauty supply giant was something they had to do. "We were warned the case was not a slam dunk, that it would be expensive and time-consuming, and we were told the payoff, if we won, might not be large," says Etheredge. "But it was about the principle for us."

In November a jury in federal district court in Santa Ana, California, found that Sally Beauty, the largest retailer of professional beauty supplies in the world, had infringed Mixed Chicks's product and awarded the start-up more than $8 million. A short time later the multimillion-dollar company agreed to settle for $8.5 million to preempt requests for attorney fees and disgorgement of profits.

"This is one of the largest trademark verdicts ever in the Central District of California," says Kenneth Parker of Irvine, California–based Haynes and Boone, LLP, adding that Sally Beauty has also ceased selling its Mixed Silk products, which were the focus of the suit.

Excerpted from Corporate Counsel, January 30, 2013. To view full article, click here.

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