A Rose by any Other Name . . .

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A Rose by any Other Name . . .

18:37 19 June in Blog, Nonprofit

“What’s in a name? that which we call a rose
By any other name would smell as sweet;”

– William Shakespeare, Romeo and Juliet, Act II, Scene II

Well, no. Not always.  Sometimes a nonprofit’s name leads to the unpleasant odor of protracted litigation.

Just ask the folks over at WWP, Inc., doing business as Wounded Warrior Project about their long battle with an entirely distinct charity that had a confusingly similar name. The second group originally called itself the Wounded Warriors Hospital Fund, but then incorporated as Wounded Warriors, Inc.

You can read the appellate court’s ruling here that affirms a landmark $1.7 million jury verdict for WWP, Inc.  Not only did the second group deliberately mimic WWP, Inc.’s name and website, it cashed checks that were clearly meant for WWP, Inc.

          In a Nutshell, Here’s What Happened

Green Beret John Melia was badly injured during Operation Desert Storm. He knew that wounded service members like him needed more than the medical care that the VA provided. They needed comfort and care items like underwear, socks, and backpacks.   When — ten years later — injured veterans began returning from Afghanistan, Melia wanted to help. Starting in 2002 with a small operation from his home, WWP grew quickly – by 2008, employing over 100 people, and spending some $39 million on greatly expanded services. It had a huge marketing and public relations program as well.

WWP has two websites: woundedwarrior.org (registered January 2003) and woundedwarriorproject.org (registered March 2004). In 2005, WWP applied for and received a trademark – now famous for its image of one soldier carrying another on his back.

Enter Col. John Folsom in 2003. A Nebraska native, he founded the Wounded Warriors Hospital Fund while stationed in Germany. Like John Melia, Folsom also believed the military did not provide enough “morale and comfort items.”  He held small fundraising events in Germany, raising some $1,500 under the name Wounded Warrior Hospital Fund. He also created a website – woundedwarriorhospitalfund.org.

In 2004, Folsom incorporated his group as Wounded Warriors, Inc. and set up a new website: woundedwarriors.org. This new site included colors, font, and text that looked a lot like WWP’s.  He included a disclaimer but it was difficult to read.

Folsom moved the operations to the U.S., using contributions to buy computers and shipping them to military hospitals around the country.  Then, and later, Folsom’s charity “conducted little to no advertising, fundraising, or marketing, instead relying on networking and its websites to receive donations.”

But something happened around the time Folsom came back to the U.S., changed the organization’s name to one even more similar to WWF than before, and set up the new website mimicking WWF’s.  The Folsom group’s donations exploded.  For example, during 2004, receipts went from an average of $1,337 per month to over $87,000 per month.

By 2004, John Melia discovered Wounded Warrior Hospital Fund on the internet. He sent Folsom an email, noting that the two groups did similar work, but read: “You’re in Germany, I’m here.”  At that time, he wasn’t concerned about possible confusion because he “didn’t think that we were in any way crossing each other.” Melia even offered to help Folsom. Although declining this assistance, Folsom later listed WWP on its own website, as one of its “pass-through” charities, having twice donated to WWP.

No good deed goes unrewarded. Melia’s collegial attitude towards this fellow nonprofit was, unfortunately, a big mistake.

Melia finally became concerned. Donors contacted him. They were confused. When they intended to donate to Melia’s group, they reached Folsom’s website instead.

By 2007, Melia’s group filed a lawsuit alleging the Folsom organization violated Nebraska’s Deceptive Trade Practices Act and its Consumer Protection Act, and was unjustly enriched.

Eventually, the magnitude of the donor confusion as well as the outright fraud by Folsom’s organization emerged. Folsom simply cashed and deposited every check sent to his organization’s Nebraska address, even though he knew they were likely intended for Melia’s charity. Some checks were made payable to “Wounded Warriors” or to “Wounded Warriors Project.” Correspondence included with other checks showed support for WWP, or mentioned a particular marketing or fundraising effort by WWP.

The diversions totaled at least $1.2 million and may have been as high as $2 million.

Folsom was enjoined from operating this way, and a jury awarded over $1.7 million in damages to Melia’s WWP group. The appellate court affirmed. Folsom continues, now, operating under the name “Wounded Warriors Family Support, Inc.”

          Lessons from this Case

The name became a problem for both organizations. Unfortunately, it also became an opportunity for the Folsom group – to prey on unsuspecting donors and defraud the real Wounded Warriors charity. It’s a lesson for other groups about the significance of an original name selection and the measures an organization should take to protect itself.

Melia’s group probably would have been better served by selecting the full phrase “Wounded Warrior” as part of its corporate name, instead of leaving it to the fictitious business name (dba).  For example, instead of going with “WWP, Inc.,” the group could have incorporated as “Wounded Warrior Project, Inc.” or Wounded Warrior, Inc.”

And, of course, despite Melia’s noble intentions in extending courtesy to a fellow warrior helping injured veterans, the charity should have taken note – and action – when Folsom incorporated his group back in the U.S. with the exact name that Melia was using, and with a website with a deceptively similar look and URL. The disclaimer on Folsom’s site was a nice touch, but it was so small that it could hardly be read. Of course, in light of later events, it seems clear that may have been the intention. Disclaimers – all types of disclaimers on all types of documents – should be big and bold, so readers can’t miss them.

As for Folsom’s choice of name – particularly when he incorporated on returning to the U.S. – even if it was innocent, it was a problem. The name “Wounded Warrior” may have been available in Nebraska – Melia incorporated in Florida – but the URL was not fair game.  Folsom’s URL was second in time; the first user gets the protection under general principles of trademark law.

What if Folsom just changed a word here and there – using “veteran” instead of “warrior”? That would have headed off infringement problems, right?

Wrong. That could have brought an entirely new pack of problems. There are some 60,000 nonprofits that have the word “veteran” in their names.

Today, name-availability searches are not limited to simple, five-minute internet checks of your own state’s corporations registries. They need to be more comprehensive – national or even international in scope.  Happily, the internet is a great tool to use, but you should consider talking with a trademark attorney during the initial naming of your group as well as later when you must stay vigilant against infringement.

          Conclusion

If you think the Wounded Warrior fiasco is a one-off, think again – and ask the ladies at American Gold Star Mothers, Inc. and at National Gold Star Mothers, Inc.

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