Myrtle Beach sugar shops in sour disagreement over trademark claims

dwren@thesunnews.comJune 19, 2013 

— Confectionery combat is being waged between a pair of retailers here who specialize in selling sweet treats, with the national It’Sugar chain – and its store at Broadway at the Beach – filing a trademark infringement lawsuit this week against candy come-lately I Love Sugar, which opened this month along Ocean Boulevard.

It’Sugar claims in court documents that I Love Sugar is a “slavish copy” of the national chain’s concept. It has asked a federal judge to issue a preliminary injunction to forbid I Love Sugar from using marketing and design materials that It’Sugar claims violate its trademark. No hearing has been scheduled.

“The I Love Sugar store mimics every element and the entire look of the Myrtle Beach It’Sugar store,” Atlanta lawyer John Foster said in court documents filed in support of the preliminary injunction.

Mark Rosenberg – a New York-based lawyer representing I Love Sugar and its owner, David Oaknin – called the lawsuit “an instance of ‘trademark bullying’,” adding in court documents that I Love Sugar “does not intend to change its name or the design of its store.”

“With regard to [the] trademark infringement assertion, that assertion is absurd,” Rosenberg said.

Oaknin said the lawsuit will represent a financial hit for his business, “but we’re not backing down.”

“They have absolutely no case,” Oaknin said. “What’s going on here is that they are not used to direct competition. America was built on competition and they don’t own the candy store concept. Everything in our store is on a much different level than them.”

The sugary standoff pits the national It’Sugar chain, with 67 locations and an expected $60 million in sales this year, against local entrepreneur Oaknin, who previously operated a T-shirt kiosk near the It’Sugar site at Broadway at the Beach.

It’Sugar claims in court documents that Oaknin visited the Myrtle Beach It’Sugar store on “numerous occasions” in the months before I Love Sugar opened. The national chain says Oaknin also tried to recruit employees of It’Sugar to his store and contacted It’Sugar’s vendors – including candy wholesalers, design firms and marketers – in an attempt to duplicate It’Sugar’s concept.

“He [Oaknin] told me he wanted his store to be as close as possible to It’Sugar stores and asked me very specific questions concerning the items sold . . . to It’Sugar stores,” Randy Goldbaum, vice president of specialty confections for Nassau Candy of Hicksville, N.Y., said in an affidavit included with the lawsuit. Nassau Candy has been a longtime supplier for the It’Sugar chain and Goldbaum said Oaknin contacted the company to also supply products for his store.

“When I commented that the drawing of the I Love Sugar store looked a lot like the It’Sugar stores, Mr. Oaknin replied that ‘Imitation is the sincerest form of flattery’ and said ‘Why reinvent the wheel?’,” Goldbaum said in the affidavit.

It’Sugar hired a private investigator from Myrtle Beach to visit the I Love Sugar store when it opened on June 1, according to court documents. That investigator took photos at the I Love Sugar and It’Sugar sites and then filed a report showing similarities between designs and marketing materials at both locations. Among the similarities, according to It’Sugar: a lollipop swirl design on storefront signage; marketing posters showing mermaids in candy outfits; a wall display of various M&M candies; large photographs of young women “holding, wearing or licking candy”; and round tables featuring bulk candies.

Jeffrey Rubin, founder and chief executive of It’Sugar, said in an affidavit that his company “broke the mold” in candy retailing by specifically marketing to customers in their teens and twenties when the majority of candy stores were featuring nostalgic or child-like themes.

It’Sugar stores combine “notions of optimism, indulgence, irreverence, spontaneity, boldness, energy, fashion, fantasy, pleasure, color and fun,” Rubin said, adding that It’Sugar presents a “cool, cheeky attitude . . . that is unique among retail candy stores.”

It’s that alleged unique atmosphere that Rubin said he is trying to preserve by taking I Love Sugar to court. The lawsuit claims that It’Sugar’s store at Broadway at the Beach is already feeling a negative impact from its Ocean Boulevard competitor -- sales prior to June 1 were clocking in at 3.2 percent higher than the same period a year ago while sales have dipped 11.5 percent year-over-year in the weeks since I Love Sugar opened. The Broadway at the Beach location is among the chain’s top performers, with sales of about $3 million projected for this year.

Worse than a drop in sales, Rubin said, is the notion that some tourists will leave Myrtle Beach confused over whether the I Love Sugar site is affiliated with the It’Sugar chain.

“I Love Sugar has seized control of It’Sugar LLC’s reputation,” Rubin said in the affidavit.

Not everyone agrees with that. Oaknin said there are other chain stores -- such as Dylan’s Candy Bar in New York and Sugar Factory in Las Vegas -- that have concepts similiar to It’Sugar and I Love Sugar.

“Your client will have a very difficult time” showing trademark infringement, Michigan lawyer Barry Kane wrote to It’Sugar’s lawyers. Kane represents Blu Sol Design, which created shop displays and layouts for I Love Sugar. It’Sugar named Blu Sol Design and MCoy Group LLC as defendants in the trademark infringement lawsuit over work they did for I Love Sugar. Both Blu Sol Design and MCoy Group previously did work for It’Sugar.

Neither company has filed a formal response to the It’Sugar lawsuit, although Ohio lawyer Gregory Hall -- who represents MCoy Group, which builds and installs fixtures for retail outlets -- said in a court filing that there is no basis to the trademark infringement claim.

“The layout and fixtures being installed in I Love Sugar differ significantly from the design and fixtures of the It’Sugar stores and, therefore, no confusion will be experienced by the general public as to the two separate companies,” Hall wrote in a letter to It’Sugar’s lawyers.

In addition to the trademark infringement claims, It’Sugar is suing I Love Sugar under South Carolina’s Unfair Trade Practices Act. It’Sugar wants a jury trial and is asking for unspecified triple damages and costs.

Contact DAVID WREN at 626-0281.

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