Austin’s Cipi Ilai takes on the big boys in trade­mark­ing tiff over her snacks — and wins

Austin American-Statesman - - FRONT PAGE - kher­man@states­; 445-3907

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


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