Entrepreneur magazine’s zeal on behalf of enterprising business owners apparently has its limits.
Irvine-based Entrepreneur Media, parent of Entrepreneur magazine, is suing Sacramento-based Scott Smith, president and publisher of Entrepreneur Illustrated, a quarterly publication containing press releases about various entrepreneurial companies.
Meanwhile, Greg McLemore, founder of Pets.com, Toys.com (later sold to eToys.com) and most recently WebMagic and Entrepreneurs.com has managed to fend off,if only temporarily,a similar suit from Entrepreneur Media.
Not so for James Borzilleri, founder of FreeClub.com, who originally registered the domain name entrepreneur.com. He lost his weighty domain name last year, and it’s now the online home of Entrepreneur magazine. A story in Forbes magazine reported he sold it for a paltry $50,000. OC-based Mark Finkelstein, one of the Latham & Watkins’ attorneys representing Entrepreneur Media, said the amount is confidential.
In all, more than a dozen small startups have changed their names at the behest of Entrepreneur Media’s attorneys.
Entrepreneur Media says it has exclusive trademark rights to “entrepreneur,” while the entrepreneurs say “entrepreneur” is a generic word from the dictionary and can’t be marked for exclusivity.
“We have an obligation to try to protect our mark,” said Finkelstein.
Smith, whose web site is www.entrepreneurpr.com, received a “cease and desist” letter in January 1998 from Latham & Watkins.
Smith said he originally agreed to negotiate and Entrepreneur Media president Peter Shea visited him in an effort to settle. But Smith said he later decided to stick to his guns.
Finkelstein acknowledged that the firm tried to negotiate a settlement with Smith.
“We try to resolve all of them,” he said. “All he has to do is stop using the mark and we’ll drop the suit.”
But Smith says he has “zero plans to change its name.”
“It’s not only frustrating, it’s unjust,” he said.
Thus far, he said, he’s spent not only his time but also a lot of money battling Entrepreneur Media. His company had $400,000 in revenue last year. This year he expects to take in $3.5 million.
Smith publishes Entrepreneur Illustrated, a quarterly publication that is ad-free and has no subscribers. It is distributed to various media outlets. It earns revenue from its clients,entrepreneurs,who place their stories in the publication for a fee. Smith contends his magazine does not compete with Entrepreneur magazine, which is a glossy, ad-filled, monthly, subscriber-based magazine.
A Question of Size
Smith suggests the reason for the lawsuit against him is because his is a relatively small firm,five employees,with few resources to bring to a fight. He points to fellow entrepreneur, Greg McLemore, who isn’t being sued, Smith says, because of his wealth.
That’s not the case, Finkelstein said. “It has nothing to with how big they are.”
McLemore’s company isn’t in direct competition with Entrepreneur magazine because it’s not a magazine, he said. On the other hand, Finkelstein said, consumers could easily confuse Smith’s publication with Entrepreneur magazine.
“We don’t want to be associated with him,” the attorney said.
The way trademark law works, explains Finkelstein, a word can be trademarked for certain uses. For instance, if someone started a shoelace business called Entrepreneur Shoelace, he said, Entrepreneur Media wouldn’t be able to sue,and wouldn’t care,because a shoelace firm doesn’t compete with a magazine.
Generic Usage at Issue
As for “entrepreneur” being a dictionary word, Finkelstein points out that the dictionary word “apple” is trademarked by Apple Computer.
That’s where McLemore jumps in.
“Apple (the company) is not using the Apple brand name to sell apples,” McLemore said. Meaning that magazines and web sites targeting entrepreneurs should have the right to say so in their company or domain names.
Entrepreneur Media dropped a case against McLemore last year.
“We weren’t going to let them get away with taking a name away from me,” he said. “They didn’t come up with the word (‘entrepreneur’).”
So when McLemore received his “cease and desist” letter, he fired back with a letter from his attorney, Frisco, Colo.-based Carl Oppedahl, who has made a name for himself in the realm of Internet domain-name trademarks.
McLemore suggested his business wasn’t pursued because if a suit was filed, Entrepreneur Media’s trademark claim would get closely scrutinized.
Finkelstein says that’s not the case and Entrepreneur Media may still file a suit against entrepreneurs.com in the future.
“We can only sue so many people at a time,” Finkelstein said. n
