Isle company faces opposition by Swedish corporation

Kaholo. Kahlua. Might a person confuse one for the other?

Owen O’Callaghan, owner of Hawaiian Happy Cakes, the Hawaii-based company aiming to market its Kaholo Coffee product internationally, doesn’t think so. In fact, he said, the possibility never crossed his mind when he submitted a trademark application for the product to the U.S. Patent and Trademark Office in March.

The Absolut Co. Aktiebolag, the Swedish corporation that markets liqueur and coffee-related products under the Kahlua mark, disagreed, and in September submitted via the New York law firm Arnold &Porter Kaye Scholer LLP its opposition to the application, arguing that Kaholo Coffee is “confusingly similar (to Kahlua) … in numerous respects, including in appearance, sound and commercial impression.”

As the notice of opposition elaborated, “the first word in Applicant’s mark, which is the most prominent element of that mark, is extremely similar to KAHLUA insofar as both marks begin with “KAH,” contain an “L,” end with a vowel, contain three syllables, and otherwise have very similar overall impressions.”

O’Callaghan said he was surprised by the opposition, noting that the Kahlua name is derived from the Nahuatl (Aztec) language while Kaholo is Hawaiian (for “swift” or “nimble”; it is also the name of a fundamental hula step).

“They said the two names sound identical,” he said. “Anyone who has ever lived here or visited here will laugh at that. What this is is a small Hawaii company being bullied by one of the largest liquor companies in the world.”

O’Callaghan, a former bond trader who moved to Hawaii in 2002, bought Hawaiian Happy Cakes from retiring founder Dick Rodby in 2004. Last year he began selling coffee grown and roasted on Hawaii island at the Kapiolani Community College Farmers Market with plans for broader distribution online under the Kaholo Coffee name.

He said he chose the name because it was “straightforward and simple,” as well as easily searchable online. He didn’t anticipate that it would cross the radar of Arnold &Porter Kaye Scholer, a law firm he said specializes in fishing for potential trademark conflicts.

“They’re trademark bullies,” he said. “They contact the (trademark holders) and snitch. They don’t care about the outcome. They make their money either way. The longer it goes, the better for them.”

Responding to a Honolulu Star-Advertiser inquiry on behalf of the Absolut Co., attorney Louis Ederer said his client would not comment on pending legal proceedings.

The Absolut Co.’s opposition was filed toward the end of the publication period of O’Callaghan’s application process.

Kahlua, best known for its coffee-based liqueur produced in Mexico, was founded in 1936 by Pedro Domecq. The company was purchased in 2005 by French distributor Pernod Ricard, which in turn assigned it to its subsidiary the Absolut Co., manager of the Absolut Vodka and Malibu Rum lines.

The Kahlua trademark covers multiple categories including coffee-based drinks, sauces, coffee concentrate, cappuccino mix, candies and nonalcoholic cocktail mixes in addition to its best-known alcoholic beverage.

The notice of opposition says the similarity in product lines is likely to add to confusion in the marketplace. The notice further claims false suggestion of a connection, dilution by blurring, mere deceptiveness and lack of bona fide use of applied-for mark (based on the allegation that the Kaholo Coffee name was not currently in use).

In initial correspondence with O’Callaghan on Sept. 18, the Absolut Co. via Ederer demanded that O’Callaghan cease using the Kaholo Coffee name, withdraw its trademark application, acknowledge Absolut’s trademark standing and promise not to file any future applications for a Kaholo Coffee trademark.

O’Callaghan rejected the demands in a response letter dated Sept. 18, and noted the existence of four other trademarks granted to companies with a “Kah” prefix since the original Kahlua mark was registered in 2005.

The two sides exchanged settlement proposals — O’Callaghan proposing to continue with his application but promising not to use the mark for alcoholic beverages and Absolut proposing that O’Callaghan withdraw his application in return for permission to use the Kaholo Coffee name for regional marketing only — which were rejected by the other.

The case has now moved to arbitration. Unable to afford representation for a protracted legal battle, O’Callaghan has opted to represent himself as the case moves through the discovery phase.

“I have no intention of backing down,” he said.