Posted on 08 June 2012.
By Judy Reed
The Red Flannel Festival sent a cease and desist letter to the Cedar Springs City Council last week, which ordered the city to stop using the Festival’s trademarked logos.
“The 8-member, all volunteer board voted unanimously to pursue this as a last resort,” said Festival First Vice President, Nick Andres. “We firmly believe, as the trademarks are the only real asset of the Festival, it is our fiduciary responsibility, as officers of the corporation, to protect the Festival from this infringement.”
The City of Cedar Springs does not agree that they should have to give up the Red Flannel town logos, however, due to the fact that they have used the term “Red Flannel Town” to describe themselves since the late 1930s, early 1940s. It is shown on City letterhead as early as 1941.
Trouble between the Festival and City began about this time last year, when the City told the Festival it could no longer offer $5,000-plus in city services to the Festival for free, due to falling revenues. The Festival asked for an estimate of the fees so they would know what needed to be covered, and the city gave the Festival a final list with an estimated total of $7,716.29. They then waived the parade fees, equipment rentals, and police fees for one year, ($2,491.64), which brought down the number to $5,224.65. The Festival then came to the city with a proposal to pay $5,224.65 in fees, with a “do not exceed” amount of $8,000 between the City and the Festival through 2015. A donor had come forward with the money, and the City accepted the Festival’s proposal.
However, when the final bill was sent to the Festival after this year’s event, it showed an actual cost of $8,064.30, $348 over the original $7,716.29 estimate. Hourly DPW and Police costs were lower than estimated, but fees for Police Reserves and hanging the crosswalk banner were added in. Salaried employees were not included in the fees. After waiving the parade fees and equipment rentals, the bill came down to $6,383.59. The city then waived the overage of $1,158.94, due to the contract between the City and the Festival.
Mayor Pro-tem Christine Fahl said they estimated the costs the best they could. “We never used to keep track,” she explained. “The workers just did it.”
The Festival, however, was surprised at the cost. “We know the agreement was for $8,000, but thought it would go up incrementally over the next few years,” Festival President Michele Andres told the Post.
In a press release issued last week, Andres said those costs threatened the sustainability of the Festival. “This drastic increase in costs from the City at $8,000 threatens the future of the Festival. It simply won’t survive this doubling of the fee structure.”
Then, in December, the Cedar Springs Library Fundraising committee began selling license plates and frames with the Red Flannel Town logo. When Fahl was told by someone on the Festival board that it was infringement because the logos were trademarked, she reacted immediately. “Within 20 minutes we spoke and pulled the license plate announcement off Facebook and stopped selling them,” explained Fahl.
The Festival decided to pay the city for the license plates and frames, then offered them to the library to sell. The library needs to turn over any plates not sold and cost of the plates to the Festival in August, so they can cover their costs.
The two entities decided to meet to discuss the issue of the City using the logos. While previously the City had used them on letterhead, street signs, etc., this new use was different. “The license plates changed the game because now they were trying to sell goods and services,” explained Andres.
When the two ad hoc committees finally met in late January or early February, the City committee, made up of Mayor Charlie Watson, Mayor Pro-Tem Christine Fahl, and Councilor Pat Capek, offered the Festival a proposal that the city would pay $4,000 a year for a license to use the Red Flannel trademarked logos, and told them to write up a proposal.
The Red Flannel Ad hoc committee, made up of Michele Andes, Nick Andres, and at the time, Rand Ruwersma, who has since been replaced by Rose Coonen, took the proposal back to their board of directors. “We wrote up the agreement, but our board said it should be $8,000, because that was the bill,” explained Andres. “To us it was like a first draft. We expected them to make changes, but they didn’t.”
Instead, the City ad hoc committee, who was surprised to get a proposal double of what they had offered, consulted with their attorney, who brought in a trademark attorney. According to Fahl, the attorney advised them not to connect usage of the logos with a fee, because they should be able to use the logos, as they have for years. So on, March 23, the City sent the Festival a letter, outlining their position. They detailed the city’s usage of the logos “Red Flannel Town” and asked that the parties “live and let live” as they have for years, in relation to the usage of the logos. They then offered $4,000 in fees to help offset Festival expenses.
The two committees met on April 4 to try to work out an agreement. “We told them it had to be two separate agreements,” said Fahl. However, as budget time grew closer (the budget meeting was April 14), discretionary funds looked meager. “We didn’t want to respond until after the budget,” explained Fahl. “We then decided it might not be feasible to offer them the $4,000.”
The Red Flannel Festival then responded on April 18 with a letter disputing that the City has any common-law rights to the trademark, since the Festival has trademarked all of them through the state, and several federally. They noted that the City had recently begun promoting its own branding, using the license plates, and then additional logos on Facebook, business cards, and new park benches. The letter said this put the City in direct competition with the Festival, and that it caused more confusion to the public as to whether the Festival is affiliated with the City. They rejected the city’s offer to live and let live, but said they were willing to work with the city to assist in reducing overall Festival service costs to the city. They then directed the city to direct future correspondence to their attorney.
With talks shut down except through their attorneys, things seemed to be at a standstill, until last week. At the same time that the City ad hoc committee was preparing a proposal, the Festival sent the “cease and desist” letter.
The City’s proposal to the Festival last week stated that the city would use the trademarks, logos, etc. for identification purposes only, and they would agree not to use them for commercial purposes without payment to the Festival. They would also cease use of all logos except the Red Flannel Town USA and round Red Flannel Town, Cedar Springs, Michigan logos. They also added an addition to the current agreement with the Festival, that if the city did profit from the sale of any items bearing the RFF trademark, they would waive city-incurred expenses associated with the Festival in that particular year.
Fahl said that the intention is not to sell anything, but that the provision is there in case another City Council or group makes the same mistake they did with the license plates. “We won’t be here forever,” she said.
What was missing from the proposal was the prior $4,000 offer. “Services have been cut, our people aren’t getting raises. We just don’t have any money to contribute,” explained Fahl. “The ironic thing is, if they had jumped on that $4,000 right away, we’d be done with this,” she said.
The Festival did not formally respond to the content of the City’s proposal. “The Festival very much appreciates the City’s proposals. Although some of the terms and conditions are not currently acceptable, the Festival looks forward to further negotiations without the need for legal action,” said Michele Andres.
For Councilor Pat Capek, who spent 20 years on the Red Flannel committee, the disagreement between the two entities has not been easy. “What’s heartbreaking is what it’s done to the city,” said Capek. “There’s no way to separate the city and the festival. To have a breach is a terrible thing. I’m still optimistic that when it’s all over, we will have reached an agreement that has everyone smiling.”
The two committees and their attorneys are scheduled to meet today, Thursday, June 7 to try to come to an agreement.