## Facts

- Charles Smith, a prominent critic of Wal-Mart, created anti-Wal-Mart parody designs and sold related merchandise through an online marketplace.
- Wal-Mart owned multiple registered trademarks, including variations of “WAL-MART,” the slogan “ALWAYS LOW PRICES. ALWAYS,” and a well-known yellow smiley-face mark.
- Smith used terms such as “Walocaust” and “Wal-Qaeda,” and incorporated imagery parodying Wal-Mart’s branding, including a modified smiley face and other provocative visuals.
- Smith promoted and displayed the content through websites and domain names incorporating the parody terms (e.g., “walocaust.com” and “wal-qaeda.com”).
- Smith sought declaratory relief that his websites and merchandise were lawful and did not infringe or dilute Wal-Mart’s marks.
- Wal-Mart counterclaimed for trademark infringement, unfair competition, dilution by tarnishment, and cybersquatting, and sought transfer of domains and injunctive relief.
- Both parties moved for summary judgment; evidentiary motions targeted Wal-Mart’s consumer-confusion survey and Smith’s rebuttal experts.

## Issues

1. Whether Smith’s parody marks and related imagery were likely to cause consumer confusion as to source, sponsorship, or affiliation, supporting Lanham Act infringement or unfair competition claims.
2. Whether Smith’s parody uses constituted dilution by tarnishment or were excluded as noncommercial and parodic expression.
3. Whether Smith’s registration and use of the parody domain names showed bad-faith intent to profit under the Anticybersquatting Consumer Protection Act.
4. Whether Wal-Mart’s survey evidence was admissible and probative on likelihood of confusion in this context.

## Decision

- The court granted summary judgment for Smith and denied Wal-Mart’s motion for summary judgment on the core trademark, dilution, and cybersquatting claims.
- The court held Smith’s challenged uses were successful parodies and political commentary that, in context, were unlikely to create actionable confusion.
- The court rejected Wal-Mart’s dilution-by-tarnishment theory, concluding the use fell within statutory exclusions for noncommercial use and parody, consistent with First Amendment limits.
- The court found no ACPA liability because Smith lacked the required bad-faith intent to profit; the domains functioned as vehicles for criticism rather than consumer diversion or extortion.
- The court excluded Wal-Mart’s expert survey evidence, finding it unreliable for proving likely confusion under the circumstances.

## Legal Principles

- A parody may reduce or negate likelihood of confusion when it simultaneously evokes the trademark and clearly distinguishes itself while conveying satire or ridicule.
- Likelihood-of-confusion analysis must consider overall context, including whether the challenged use signals criticism rather than sponsorship or affiliation.
- First Amendment protections constrain application of trademark law when marks are used primarily for political or social commentary rather than as source identifiers for commercial promotion.
- Federal dilution law does not reach noncommercial parody and other expressive uses that criticize the mark owner rather than exploit the mark’s selling power.
- ACPA liability requires bad-faith intent to profit; registering and using a domain name for commentary and criticism, without deceptive diversion or ransom-like conduct, may defeat the claim.
- Consumer-confusion survey evidence may be excluded where methodological flaws prevent it from reliably measuring likely confusion in the relevant marketplace and context.

## Conclusion

The court held that Smith’s “Walocaust” and “Wal-Qaeda” marks, imagery, and related domain names constituted protected parody and political criticism, defeating Wal-Mart’s claims for infringement, unfair competition, dilution by tarnishment, and cybersquatting, and supporting declaratory relief for Smith.


Smith v. Wal-Mart Stores, Inc., 537 F. Supp. 2d 1302 (N.D. Ga. 2008)