Wal-Mart v. Smith (Counterclaims) [1]

Wal-Mart filed counterclaims in a lawsuit against Charles Smith, asserting trademark and unfair competition claims under federal and state law. The case arose after Smith created a website using the domain name www.walocaust.com and started selling nazi-themed "Walocaust" merchandise through his account on Cafepress.com. Smith, a passionate critic of Wal-Mart, created a number of "Walocaust" graphics that parodied Wal-Mart's familiar trademarks and slogans by likening Wal-Mart's business practices to nazism and its effect on communities to the Holocaust. Smith reproduced these graphics on his website and printed them on T-shirts and other novelty merchandise that he sold through Cafepress. Wal-Mart sent cease-and-desist letters to Smith and CafePress in December 2005 and February 2006. Smith responded by filing a lawsuit in federal court in Georgia seeking a declaration that his use of the "Walocaust" was lawful, and Wal-Mart counterclaimed.

Wal-Mart asked the court for an injunction barring Smith from making any commercial use of the prefix "Wal," for an order awarding it ownership of Smith's Wal-Mart-related domain names, and nominal damages. After the lawsuit commenced, Smith registered the domain names www.wal-qaeda.com and www.walqaeda.com and developed a new series of graphics for CafePress merchandise combining "Wal-Mart" with "Al-Qaeda" and expressing Smith's virulently anti-Wal-Mart views.

In March 2008, the federal district court granted summary judgment to Smith on all counts and dismissed Wal-Mart's counterclaims. The court held that Smith's use of Wal-Mart trademarks was a parody, and that no reasonable person would be confused by Smith's parodic use. The court further ruled that Wal-Mart's trademark dilution claim was barred because Smith's use of the company's trademarks was protected "noncommercial" speech, despite the fact that he placed his graphics on items like T-shirts sold to the public.