What's in a name?
On the Internet, only everything. Building a brand name is just about the most important thing a company can do as it tries to increase advertising and traffic levels -- just ask
That's why a little-followed trademark-infringement trial involving
and its SportsLine name threaten to derail the Internet company just as its
site guns to overtake
unit, in the battle for online sports supremacy.
SportsLine is being sued for a "100% share of its company profits" and "actual and punitive damages" by a St. Louis-based company called
, which provides localized phone reports on time, temperature and sporting news in 130 cities.
Weatherline claims in its suit, filed in a Missouri federal district court, that it has had the name "Sportsline" under U.S. trademark since 1968. The Weatherline complaint asks the court to issue "a permanent injunction prohibiting the defendant from using or beginning to use any name or mark which includes Sportsline."
SportsLine management hasn't talked publicly about the case, expected to go to trial Sept. 14, but the dispute has shown up in its 10-Q reports to the
Securities and Exchange Commission
. "The legal costs that may be incurred by the company in defending itself against this action could be substantial," SportsLine warned in an Aug. 14 filing.
U.S. Patent and Trademark Office
said Weatherline does in fact still own the SportsLine trademark, or "mark" as it is called in the business. The mark was originally registered on May 13, 1975, for 20 years by Weatherline, and renewed in 1995 for another 10 years, according to Gerard Rogers, staff attorney for the trademark trial and appeals board in Washington.
Weatherline's case, which was filed March 25, 1997, has been unusually hard-fought even though it has yet to go to trial, says Bill Dolan, one of Weatherline's attorneys. It seems as if the sides swing between wanting to settle and favoring a trial, and now -- with time growing short before the trial date -- it seems as if the parties are looking again to settle.
The action is intense because the stakes are high. "In trademark cases such as this one, it's a very real possibility that the court could grant permanent injunctive relief against the defendant so that the party could no longer use the name," says David Witcoff, a partner and trademark specialist with
Jones Day Reavas & Pogue
Even though closely held Weatherline's Sportsline business pales in size and stature compared to SportsLine USA's Internet service, Witcoff notes that "people should not count the small guy out." Witcoff isn't involved in the case. SportsLine USA currently boasts a $475 million market cap.
SportsLine CEO Michael Levy would not comment on the case, but the company's contention is expected to be that its official Internet name is CBS SportsLine, not just SportsLine, says a source close to the proceedings who requested anonymity. The company also may claim that Weatherline makes sports information available through the telephone while SportsLine provides sports content via the Internet. The company already has filed an answer in which "it denied all material allegations of the complaint and asserted several affirmative defenses," according to SEC documents.
However, Witcoff says the two companies aren't so different. "If one company was selling shoes, and the other was selling beef, that would be one thing, but in this case we do not have such disparate markets," he says.
SportsLine has been having a banner summer in terms of revenues, but not so stellar a season on Wall Street. Sportsline's stock has been falling lately in a poor market and is almost 50% below its 52-week high of 39 5/8, falling 1/2 Friday morning to 21.
But SportsLine is aggressively acquiring ancillary companies and its advertising revenues are going through the roof. Best of all, a potentially lucrative
National Football League
season is approaching. SportsLine, through its partnership with
, will receive free advertising plugs during the television network's
American Football Conference
games this fall.
SportsLine has become so well known, in fact, that
NationsBanc Montgomery Securities
analyst Steven Horen argues it wouldn't be that big a deal if the company were forced to relinquish its name. "It's the attributes that people like about SportsLine," says Horen, who rates the stock a buy. "And even if the company is forced to change, management probably has other company names to jump to in their back pocket." (His firm participated in SportsLine's public offering last year.)
Still, a change in company name and a sizable penalty could knock SportsLine down a peg. "As long as the small guy came first, he can win, and often times he can win in a big way," concludes Witcoff.
For more info on institutional holders of this stock, as well as financial statements and earnings estimates, please see the
Thomson Company Reports.