NUTS, AND PROUD OF IT
Austin’s Cipi Ilai takes on the big boys in trademarking tiff over her snacks — and wins
Alocal nut lady from Transylvania has fended off a big corporation in a trademark battle that became a capital case. (Journalism 101: When pertinent, work Transylvania into a story as often as possible.)
Cipi Ilai, born in Transylvania, moved with her husband and children from Israel to Los Angeles in 1980. “I fell in love with America,” she told me in her old-country-accented English.
The family wound up in Austin in 1990. In 1993, the Ilais opened Austinuts, selling nuts they dry roast, and other gift food items. Business went well (32 employees, a second store in Dallas and a roasting plant in Manor), and the company in 2003 applied for a trademark on the word Austinuts.
Shouldn’t be a problem trademarking a word you made up, right? Wrong, thanks to the Kellogg Company, holder of lots of trademarks, including Tony the Tiger. Kellogg has a brand named Austin that has trademarks for “crackers, crackers with cheese, cheese-flavored crackers,” and “crackers, cracker sandwiches and cookies.”
You may know these products as A-3 or D-10 in your office vending machine.
Kellogg challenged Austinuts’ trademark applications at the U.S. Patent and Trademark Office. Cue the lawyers.
At her desk in her Anderson Lane store, Ilai disdainfully displayed a package of Austin’s Mega Stuffed Cheese Crackers with Peanut Butter.
“We don’t compete with them, and they don’t compete with me,” she told me. “It’s a different product.”
Maybe, but last August the Trademark Trial and Appeal Board sided with Kellogg and denied Austinuts’ trademark request. (Headline: Trademark Effort Slain by Cereal Killer). The ruling noted Kellogg “does not use its marks in connection with nuts and it does not sell nuts. However, some of its goods have nuts as an ingredient.” Stand by, this gets even nuttier. The ruling acknowledged that this was David versus Goliath. Kellogg, according to its website, sold nearly $13 billion worth of stuff last year. Austinuts, the ruling said, “is a relatively small family-owned and operated business.”
But the board said all that matters is whether the snacking public might confuse Austinuts with Austin crackers and cookies. To gauge that, according to the ruling, one must know what a snack is. That sent the board to Webster’s New World College Dictionary, where it learned that a snack is “a small quantity of food, light meal or refreshment taken between regular meals.” Who knew?
“It is clear,” the board ruled, “that both (Austinuts’) nuts and (Austin’s) cookies and various crackers are snack foods” and could “end up in the hands of the same consumers.” And snackers might think Austinuts products “originate from or are associated with or sponsored by” Kellogg. Hence, no trademark for Austinuts. The end? No way. Cipi Ilai didn’t make her way here from Transylvania (Did I mention she’s from Transylvania?) just to lose to Tony the Tiger. Austinuts appealed to federal court. And, lo and behold, more than seven years after this started, the parties reached an agreement. It’s this: Austinuts becomes AustiNuts. That’s it. That’s the whole deal. The little “n” becomes a big “N,” and the cracker people and the nut people live together in harmony. The federal case became a capital case, as in turning a lower-case letter into a capital letter.
“We’re pleased that all parties were able to reach an agreement regarding this matter,” said Kellogg spokesman Kris Charles.
Ilai came up with the capital N to emphasize it’s a nut business and to appease Kellogg. She got an unexpected boost from an error by the Austin Chronicle, which put AustiNuts on a banner honoring the business as “nuttiest Austinites.” The sign, Ilai believes, was a sign. “This is from God coming,” she said. “Nobody told them … they put the large N, exactly what I had in mind for a few months.”
So now, more than seven years and $165,000 in lawyer fees after this started, Austinuts is AustiNuts. And Ilai is still in love with America.
“I never lose faith,” Ilai said, “because I know if you fight and you know in your heart that you are right, the big, rich company cannot destroy you.”
“I need to sell a lot of nuts to make this money,” she said of the price of her faith in America.
Visit the opinion homepage for the video of my chat with austin nut vendor Cipi ilai. Ken heRMan: as i see iT