Favor, a women-focused telehealth company that rebranded last year from the Pill Club, is reverting back to its old name after an unfavorable initial ruling in a trademark lawsuit.
The case highlights the complexities of trademarking brand names as more companies diversify their offerings, and as the web meshes together industries and services that previously would have remained distinct in the eyes of a judge.
The telehealth company last March changed its name to Favor from the Pill Club in a bid to communicate the breadth of its services beyond contraception, Chief Executive Liz Meyerdirk said.
But a district court judge in Austin, Texas, earlier this month granted NeighborFavor Inc., a Texas-based restaurant and retail delivery company that has gone by Favor since 2012, its motion for a preliminary injunction. The judge ordered the telehealth company to cease using the Favor mark until a final judgment could be reached.
“I was actually shocked, and our lawyers were shocked as well,” Ms. Meyerdirk said.
The company decided to give up the fight to avoid incurring further legal costs, she said.
The original rebranding had cost Hey Favor Inc., as the business is officially known, roughly $375,000 in marketing agency fees and $2.5 million in implementation costs including paying engineers and product developers, the company said during court proceedings.
NeighborFavor, which is owned by supermarket chain HEB Grocery Co., declined to comment.
Trademark law aims to prevent confusion among consumers, and courts take into account the likelihood that consumers could confuse two or more companies with identical or similar names, said Laurie Marshall, a trademark attorney. Typically, the closer companies’ goods and services are to each other, the more likely the same name is to confuse consumers, Ms. Marshall said.
That historically meant that companies in separate industries could successfully trademark and operate under the same name. But the internet has made determinations of whether brands operate in the same sector more difficult than before.
“Every year the trademark office gets more rigorous in its analysis regarding what products and services are related,” Ms. Marshall said. “And that’s loosely been driven by the internet.”
Hey Favor and its lawyers took care to research any branding confusion with other companies that offered healthcare-related services when it applied for the Favor mark last year, Ms. Meyerdirk said.
The company argued in court that it operates a nationwide telehealth and mail-order prescription business, while NeighborFavor runs a Texas-based, same-day delivery service, making it unlikely that consumers would mix them up.
NeighborFavor contended that customers could confuse the two because both parties offer the delivery of pharmacy and prescription medicine products, according to a complaint filed last June.
But it also maintained that confusion could arise because both companies advertise on similar online media channels. NeighborFavor described 11 instances in which Hey Favor’s customers had contacted the delivery company in error.
NeighborFavor at the trial argued that Hey Favor’s use of the Favor mark reduces the control that the delivery company has over its brand, poses a threat to its reputation, undermines the returns on its marketing spending and subjects NeighborFavor to public-relations concerns when Hey Favor makes political statements.
Hey Favor, which rebranded from the Pill Club months before the Supreme Court overturned Roe. v. Wade, last year diverted much of its marketing budget into advocacy campaigns promoting abortion rights. A billboard campaign it ran in June argued that the end of the federal constitutional right to abortion foreshadows future limits on contraception.
Write to Katie Deighton at katie.deighton@wsj.com
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