The proper valuation and management of intellectual property is an area where accountants add value to their client services.  Often companies engage accountants and other financial experts to defend both plaintiffs and defendants in intellectual property (“IP”) disputes. As this video shows, similarity in names or trademarks can be at the heart of these disputes. 

In this David versus Goliath case, a small software firm, specializing in business management and cost accounting software for bakers got tired of being confused with the popular reality show known as Cake Boss. They had been using the name since 2007, which was well before Discovery Communications, The Learning Channel’s parent company began in 2009.  After co-owners  John and Kelly Masters were ignored by Discovery communications, they filed suit to protect their trademark and in July 2010, a federal court judge in Seattle, Washington issued a temporary injunction that barred the show from using the name “Cake Boss” following the last episode of the show’s third season.  Despite a multi-million dollar investment in the show, it was found that Discovery did not even make a rudimentary attempt to make sure the name was not in use by Masters. At stake was not only the show, but sales of related merchandise.

The case was eventually settled at the end of 2010 so that  “Cake Boss” Buddy Valastro can use the name on the show and Masters can still use it for its software and other items.   The injunctive relief in this case proved to be quite expensive.  In the end, the case serves to remind accountants and other financial experts concerned with the valuation of trademarks that performing and documenting fundamental internet searches on trademarks, trade names, etc., should be part of the due diligence process for any company.

Questions:

1. What is “reverse confusion” in an intellectual property trademark dispute? 

2. What evidence did the plaintiffs in the case present as documentation?

3. What did the Learning Channel and Discovery fail to do before beginning the show?

4. How should either company report the settlement of this litigation in their financial statements?

Source:

The case cite is Masters Software, Inc. v. Discovery Communications, Inc., No. 10-405 (W.D. Wash. July 16, 2010) (Jones, J.).

YouTube.com Cakeboss vs. Cake Boss Lawsuit – Intellectual Property Lawyer (B), World News- Hoboken Magazine, July 2010. (Retrievable online at http://www.youtube.com/watch?v=VcOUBRzmf5c)

Colaneri, K. (2010) ‘Cake Boss’ will keep his name, settles ‘amicably’ with software company. The Jersey Journal, October 22. (Retrievable online at http://www.nj.com/hobokennow/index.ssf/2010/10/cake_boss_will_keep_his_name_s.html)