Tequila marketer Patron Spirits International has sued its former digital agency, alleging the shop is violating trademark law by continuing to promote Patron as a client on its website, even though the relationship was terminated in early 2014. Patron also alleges that the agency, called Reindeer, overbilled the marketer by at least $81,000.
Agencies routinely display client work on their websites. But the Patron lawsuit raises questions about what rights agencies have to promote client work, especially if the two parties no longer have a relationship. The lawsuit was recently filed in federal court in Texas.
While Reindeer's website is still active, the New York-based agency appears to be out of business. The contact phone number on the site is out of service. The state of New York's Division of Corporations lists the agency's status as "inactive," according to the division's website. Reindeer founder Troy Benton could not be reached for comment. On his LinkedIn page, Mr. Benton lists his current position as founder of Linkboard, which markets a news-filtering product for companies. A message sent through Linkboard's contact system did not yield a response.
On its site, Reindeer describes itself as Patron's "agency of record for all digital creative, social and media planning" for the U.S. and U.K. The site includes a screen shot of Patronsocialclub.com, which Reindeer says it worked on. In its suit, Patron alleges that the use of such materials amounts to trademark infringement. The site "falsely suggests a connection" between Patron and Reindeer, "which allows Reindeer to reap the benefits of the highly valuable Patron name and all the associated goodwill, but without [Patron's] permission."
Agencies are wise to get permission from marketers when using their marks, according to Tom Finneran, executive-VP for agency management services at agency trade group 4A's. "The general advice before posting any client advertising or product shots is that the agency get authorization from the client," he said.
But agencies could be protected by fair use laws if they simply display information about the clients they serve, Mr. Finneran said.
"The situation here might well be related to the fact that the agency continues to show reference to this client and this client's trademark as being work products of the agency that are still current," he said. Patron has a "pretty authoritative claim that the agency has to take it down," he added.
Patron also alleges that Mr. Benton has refused to transfer a website domain name back to Patron. Reindeer used the domain name, patroncocktaillab.com, as an advertising tool for Patron. Mr. Benton is the registered owner of the domain, which Patron alleges violates terms of its agreement with the agency, according to the lawsuit.
Patron hired Reindeer in 2009 to handle digital advertising, including Google and Facebook ads. The lawsuit notes that the two parties hashed out the scope of work via oral and written correspondence and considered a written agreement "but never executed it." Patron terminated the agency in early 2014, according to the suit.
But "instead of winding down its engagement, Reindeer endeavored to pad [Patron's] invoices before its engagement was over," charging for activities that Patron did not authorize, the suit alleges. Patron also alleges that Reindeer overcharged the marketer for more than $81,000 in media fees. As stipulated by its agreement, Reindeer could charge monthly media fees equaling 15% commission on actual media amounts paid for ad services provided by Reindeer, according to the lawsuit. But some fees were calculated at a higher rate than 15%, according to the suit, which also alleges that the agency failed to provide backup documentation for invoice charges.
A Patron spokesman declined to comment on the lawsuit. The marketer presently uses Razorfish as its digital agency of record and Golin for social.