Today I read on CNBC about a new start-up called DoorDash, which specializes in delivering food. The catch is, they don’t make the food. Instead, DoorDash will order what you want from your favorite local restaurant, and then go pick it up and deliver it straight to you.
As it turns out, one of these restaurants does not care for this arrangement. The popular fast food chain called “In-N-Out” is now suing DoorDash for improper use of their trademarks in a way that suggests a partnership exists between two companies. The general counsel for In-N-Out remarked, “"We have asked DoorDash several times to stop using our trademarks and to stop selling our food."
This reminded me of a similar news story with similar rhetoric from earlier this year. But this story was about a grocery store called Trader Joe’s. Someone was buying and reselling Trader Joe’s products in a store called Pirate Joe’s. There are no Trader Joe’s grocery stores in Canada, so a Canadian businessman was buying mass amounts of Trader Joe’s products in the US, driving them to Canada, and then reselling them in a Canadian shop. This upset Trader Joe’s for many of the same reasons In-N-Out was upset with DoorDash.
Trader Joe’s sued Pirate Joe’s for trademark infringement, but lost. The legal battle upset the owner of Pirate Joe’s, and he conveyed this by temporarily dropping the P from the store name, leaving it to be called Irate Joe’s.
At first, these stories raised an interesting question. Why would a company be upset if someone was buying their products, and by doing so, to resell them? It would seem to me this is an opportunity for even more sales for Trader Joe’s and In-N-Out, which will lead to more profit. Why the big deal?
At the heart of these matters is actually trademark disputes. Companies have a lot invested in their brand, which includes the looks, as well as the experiences it produces. The last thing they want is someone to rip-off their brand and have a consumer confuse the two. If the consumer is unhappy with the fake brand, they may just as well associate that anger with the legitimate brand too. What if the In-N-Out delivered by DoorDash arrives cold or soggy? What if it makes someone sick? Sure, DoorDash gets the blame, but the consumer may have lost faith in the quality of In-N-Out too, even if they weren’t responsible for how the product got delivered.
While it may seem like an overreaction for Trader Joe’s and In-N-Out to sue, I think this reflects something positive about these companies. They have strong brands that they feel they need to protect. They want consumers to be able to distinguish their products from others, because they know consumers will remain loyal, if they can produce a consistent quality product. This has me thinking, if a company didn’t fight to defend its brand, I might wonder about the quality of things they are offering.