Last Chance Department Store Outlet has lost its chance to avoid a federal lawsuit filed against it by behemoth retailer Nordstrom Inc.
The Orem-based discount store, which opened in June, happens to share the "Last Chance" name with a Nordstrom-owned clearance store in Phoenix.
Call it accidental, a fluke, unforeseen or even unintentional, but don't call it chance.
Scott Yancey, who founded the Orem store with partner Ron Ferrin, said he went through all the proper procedures in securing the "Last Chance" name.
In April, Yancey registered the name with the Utah Department of Commerce's Division of Corporations. By June 1, the store was open for business, selling name-brand merchandise like Nautica and Tommy Hilfiger at discounted prices.
But one week later, Yancey received a letter from Nordstrom's legal department stating that his store's name infringed upon the Phoenix store's trade name, also called Last Chance. The Nordstrom store, where returned and altered merchandise from that company is sold, has operated under the name since 1992.
"Under trademark law, the test for infringement is whether use of a trademark is likely to create confusion with a pre-existing trademark. We are already receiving phone calls from customers who mistakenly believe that your Orem store is a Nordstrom Last Chance store," the Nordstrom letter to Yancey stated. "You should understand that this infringement is a significant problem for us. We need your timely assurance that the corrective action will be taken . . . Otherwise, we will not hesitate to take a more aggressive approach."
On Monday, Nordstrom took a
more aggressive approach by filing a lawsuit in federal court against the Utah company.
According to Shasha Richardson, a Nordstrom spokeswoman, the company filed for a federal registration of the "Last Chance" name in May. The company, she said, had not filed earlier because of the company's view that common law protected its clearance store's trademark name.
"We consider that to be our name. Customers felt confused," Richardson said.
Allan Watts, an attorney with Snell & Wilmer's Phoenix office and representing Yancey, said Nordstrom is using its heavyweight retail presence to bully Yancey into dropping the name. The Orem outlet already had a sign on display prior to Nordstrom's May 31 filing for federal registration, Watts said.
"Under the federal law, if somebody else is using the mark and they've used it prior to the federal registration and it's in a different location, then they can keep using it in that remote location," Watts said.
The Seattle-based chain with annual sales of $5.6 billion last year had offered Yancey $5,000 to change his store's name. Yancey declined, saying the signs at his Orem store alone cost $30,000, including a sizable 20-by-30-foot display at the State Street location, just three blocks south of Orem's University Mall, where Nordstrom recently opened a new anchor store.
"I've spent an enormous amount of money on my software, my Web site, my signage," Yancey said.
That may not matter in the face of a federal lawsuit, which could cost tens of thousands of dollars to fight.
"You might be able to keep the name, but it doesn't mean (Nordstrom) isn't going to sue you and bleed you dry with legal fees because you are a little guy," Yancey said.
Scott Thompson, a spokesman for the Utah Department of Commerce, said Nordstrom has no registration tied to the "Last Chance" name. And Yancey's registration is valid until 2005, he said. But Thompson acknowledges Utah registrants are subject to federal rules.
"It is entirely possible for a federal registration of a company to trump his registration here in the state. We're going to do whatever the court tells us to do," Thompson said.
Yancey said future plans include other Last Chance stores, including a Salt Lake location anticipated to open by November and a third store in Las Vegas.
Those stores may have to be put on hold, but Yancey's attorney is optimistic.
"We actually found a store in Georgia that has been using the Last Chance name since 1857," Watts said. "So I think there is a pretty good argument that Nordstrom wasn't the first one to come up with that name or the only one to currently use it."
E-MAIL: danderton@desnews.com