Logo dispute between HealthPartners and Sam's Club is quietly settled

The litigation over logos has concluded between HealthPartners and Walmart, and the winner is … unclear.

The Bloomington-based health care provider and the Arkansas-based retailer reached a legal settlement in November over claims that the HealthPartners logo was confusingly similar to that used by Sam's Club, the warehouse club chain run by Walmart.

Neither party is commenting on the settlement terms, although both seem to still be using logos that feature three overlapping tilted squares in green, blue and purple.

Disputes over trademarks in health care are becoming more common, legal experts said, as hospitals, insurers and care providers aspire to grow beyond their traditional markets and the sector behaves more like other consumer businesses.

"It does seem like we're seeing more and more of this in the health space, and it has led to a reasonable amount of litigation over the past five years or so," said John Pickerill, a trademark and advertising attorney with Fredrikson & Byron in Minneapolis.

Last year, Duluth-based Essentia Health sued La Crosse, Wis.-based Gundersen Lutheran Health System, arguing that Gundersen infringed on Essentia's trademark by using the name "Essential Health Clinic" for a group of clinics. Essentia also argued that the Gundersen clinics adopted a four-leaf logo design that was confusingly similar to Essentia's three-leaf logo.

The case is still being heard in a federal court in Wisconsin and neither side would comment. But a judge in April denied Essentia Health's motion for a preliminary injunction.

"Defendant expended significant resources, $30,000, in its branding assessment and re-branding efforts, and its new name has been in place for almost two years," the judge wrote. "Where the likelihood of confusion and the threat of irreparable harm is relatively weak, requiring defendant to make such a costly change cannot be justified."

In another Wisconsin case, a federal judge last year weighed in on a dispute between two health care IT companies and their use of the slogans "Care Everywhere" vs. "YourCareEverywhere."

In 2013, a health plan and health care provider fought in a Wisconsin court over whether the names "Unity" and "UnityPoint" were too close, while two health care groups in 2015 fought over using the name "Ascension."

"The vast majority of litigation ends in settlements," Pickerill said, "and most of them are confidential."

Kantar Media, a market research firm, tracked nearly $3.37 billion in ad spending by health insurers, hospitals and medical clinics during 2016, and another $1.46 billion during the first half of last year.

Litigation between HealthPartners and Sam's Club started in September 2016, when the Bloomington-based health insurer and hospital operator asked a federal court to rule that its use of a symbol of three tilted squares that overlap did not constitute unfair competition or a trademark infringement.

HealthPartners argued in a legal filing that "graphic logo designs depicting chevrons, overlapping or interlocking squares, and diamond shapes are extremely common … particularly within the health care and health insurance industries." The company also argued that the nature and scope of health care and health insurance services offered under the Sam's Club trademark were limited.

In a legal filing, Sam's Club countered that the retailer offers its members "a variety of health care related products and services, including but not limited to pharmacy services." The company also denied the statement that the shapes in question are commonly used.

"Not only has the Sam's Club 'three diamond' shape been appropriated, but the colors used in the Sam's Club Design Marks have also been incorporated in HealthPartners Design Marks, increasing the likelihood of confusion, mistake and deception in consumers," the retailer said in a court filing.

It's impossible to know exactly how the dispute was settled, but Michael Lasky, an intellectual property attorney with Stoel Rives in Minneapolis, said he thought Sam's Club likely struggled to clear two big hurdles in the case.

Sam's Club would need to show that it has a significant stake in the health care business, but meeting that standard would have been "kind of iffy," Lasky said. What's more, the shapes used by Sam's Club aren't unmistakable or unforgettable, like the Nike swoosh or the distinctive piece of fruit used by Apple.

"Ordinary shapes (circles, squares, diamonds) are very common and don't evoke a high degree of distinctiveness in the mind of the consumer, especially because there is so much brand 'noise' around simple shapes," Lasky said via e-mail. "In other words, the customer won't inherently assume that all overlapping diamonds belong to Sam's Club."

Any consumer who spends more than a moment looking at the HealthPartners and Sam's Club logos, plus the words next to them, would eventually work out that one was for a discount store and the other for a health care provider, said William McGeveran, a law professor at the University of Minnesota. But disputes aren't over a consumer's thought process, McGeveran said, but rather the initial branding impression.

That impression happens almost without conscious thought, he said, and can sometimes be preserved for both sides with relatively small tweaks.

"Often, one of the parties agrees to make changes," he said. "Sometimes there can be financial accommodations as part of that, like a licensing agreement or other kinds of compensation. Often you don't know exactly what it is."

In general, branding is becoming more important to many organizations, McGeveran said, including those in sectors like health care where companies might not previously have treated themselves like traditional brands.

And when you have a brand, you don't want to limit your ability to defend it, attorneys say. Sometimes, companies are motivated to police their trademark rights just so they don't risk losing the ability to enforce those rights in other cases — when a much bigger competitive threat might emerge.

"Sometimes you settle it by doing nothing," said Pickerill, the attorney with Fredrikson & Byron. "There have been times I've seen disputes settled basically without anybody changing their behavior, but just saying: 'All right, here's an agreement. We're going to agree that if confusion occurs, we'll address it. … This way we both preserve our ability to go after the next company.' "

Christopher Snowbeck • 612-673-4744 Twitter: @chrissnowbeck