Zara vs. Zara and Lily: A Lesson for Small Business Owners

This case is a great example of why small business owners should never decide on a name for their business without conducting a thorough trademark search through an attorney. Two years ago, an Australian based "mumpreneur", Shelley Tilbrook, decided to launch an online gift store called ZaraandLily.com, or Zara + Lily. Tilbrook came up with the trademark by combining the names of her daughter, Zara, and niece, Lily. Sweet, right?

Well apparently the major Spanish retailer Zara, Inc. didn't think so and their Australian lawyer sent the mumpreneur a cease and desist letter demanding that they cancel their business name and domain name, claiming it is "substantially similar or deceptively similar" to its client's. Like the United States, the trademark laws in Australia are all about preventing consumer confusion. And while Zara did not waste time in protecting their brand name, its PR team released the following statement to soften the legal ramifications:

"Zara Australia wants to underline its high respect for Ms. Tilbrook's initiative and has tried to demonstrate this throughout the process. We cannot forget that Zara originated from a small family business in apparel manufacturing and, as a result, the brand is empathetic to all entrepreneurs."

Nevertheless, Tilbrook still had to learn an expensive lesson. She was left with 50,000 dollars worth of merchandise that she could no longer sell and had to pay an additional 15,000 dollars in rebranding and web costs. For a small business owner, that is quite a hefty amount that she could have avoided paying had she hired an attorney to conduct a proper trademark search. Given that her business was online and had the potential of reaching millions of consumers across the world, her business name was even more susceptible to infringing on someone's trademark than, say, its brick and mortar counterpart. We hope Tilbrook sought the help of a trademark attorney for her new name- Peach and Pear Kids- and that the success of her business will continue despite this first legal hiccup. And to other small business owners out there trying to come up with a name or trademark, do your research and don't underestimate the degree to which big time corporations will go to protect their brand name. To check out the video clip of the news segment covering this case, click here.