Corporate Memo

Subway Told Australian Customers Its Footlong Was a Trademark Name, Not a Measurement of Length. The US Trademark Board Ruled It Was a Measurement of Length and Refused Subway the Trademark.

In January 2013 Matt Corby, a teenager in Perth, bought a Subway Footlong and, as the United States Court of Appeals for the Seventh Circuit would later put it, "for reasons unknown, decided to measure it." It was 11 inches long. He photographed it next to a tape measure and posted the picture on Subway Australia's Facebook page with the caption "subway pls respond." The court's account of what happened next is brief: "It went viral." The New York Post measured seven Footlongs of its own and, as Fortune later summarised, found four that came in at 11 or 11.5 inches.

Subway responded. On the Wednesday after Corby's post, replying to another customer on the same Facebook page, Subway Australia explained the position, as quoted by ABC News: "SUBWAY FOOTLONG is a registered trademark as a descriptive name for the sub sold in Subway Restaurants and not intended to be a measurement of length." It added that "the length of the bread baked in the restaurant cannot be assured each and every time as the proofing process may vary slightly each time in the restaurant." The bread in the photograph, the company said in the same reply, "clearly is not baked to our standards."

The Name

The trademark explanation did not last the week. When ABC News asked about it, a Subway spokesman supplied a different emphasis. "Most countries, such as Australia, follow the metric system so the term Footlong can only be used as part of a trademark," he said. "Our global standard for a SUBWAY Footlong sandwich is 12 inches regardless of the restaurant's location." A press release followed, announcing, in the Seventh Circuit's later summary, that Subway had "redoubled" its efforts "to ensure consistency and correct length in every sandwich," and that its "commitment remains steadfast" that every Footlong sold "worldwide" would be at least 12 inches long.

The question of what the word meant was, as it happened, already before a federal tribunal. On 8 November 2007 Doctor's Associates Inc., the franchisor behind Subway, had applied to register FOOTLONG as a trademark for "sandwiches" with the United States Patent and Trademark Office. Sheetz, the Pennsylvania convenience-store chain, opposed it on the ground that the word was generic. During the proceeding Subway amended its application to cover "sandwiches, excluding hot dogs." The Trademark Trial and Appeal Board noted the reason: "Applicant argued that a hot dog is not a sandwich."

The Board's decision was mailed on 5 September 2013, nearly eight months after Subway Australia's Facebook reply. It found that "applicant's own use of the term, opposer's use of the term and third-party uses demonstrate that purchasers understand that 'Footlong' identifies 12-inch sandwiches." The term, it said, "has a well-understood and recognized meaning as a sandwich that is 12 inches long," and because it "identifies a category of sandwiches 12 inches long, it should be freely available for use by competitors." The opposition was sustained. Footlong was a measurement of length, and it belonged to everyone.

The Settlement

The American class-action bar had not waited for the Board. "Within days of Corby's post," the Seventh Circuit recorded, "the American class-action bar rushed to court." Nine suits seeking damages under state consumer-protection laws were consolidated in the Eastern District of Wisconsin. Limited early discovery then established what the appeals court called "common sense." Subway's raw dough sticks all weigh exactly the same, so a roll that bakes short contains no less bread than any other. The rolls that fall short generally do so "by only about a quarter-inch." The meat and cheese are standardised, and the toppings are added at the customer's request. "So the length of the bread has no effect on the quantity of food each customer receives."

Damages were therefore off the table. "It was difficult to prove monetary damages, because everybody ate the evidence," Thomas Zimmerman, co-lead counsel for the class, told the Associated Press. The lawyers instead pursued an injunction, and the parties settled. For four years Subway would have franchisees "use a tool" to measure rolls, have inspectors measure a sample of baked bread and check that the ovens were "within operating specifications," and display a notice on its website and in every restaurant: "Due to natural variations in the bread baking process, the size and shape of bread may vary." The settlement also stated that "because of the inherent variability in food production and the bread baking process," Subway "will never be able to guarantee that each loaf of bread will always be exactly 12 inches or greater in length after baking."

The parties then spent, in the court's phrase, "the next year or so dickering" over fees. On 25 February 2016 US District Judge Lynn Adelman approved the deal, certifying a class of everyone in the United States who had bought a 6-inch or Footlong sandwich at Subway between 1 January 2003 and 2 October 2015, and awarding class counsel $520,000 and each of the ten named plaintiffs $500. The class received no money. Adelman wrote that after the first mediation session the plaintiffs' lawyers had realised their claims "were quite weak," and that "the length of the bread does not affect the quantity of food the customer receives." Subway said it had "already taken steps to ensure each guest receives the Footlong or six-inch sandwich they order."

The Objector

One class member objected. Theodore Frank of the Competitive Enterprise Institute, described by the Seventh Circuit as "a class member and professional objector to hollow class-action settlements," argued that the deal enriched only the lawyers. The district court disagreed, and Frank appealed. On 25 August 2017 a panel of Judges Joel Flaum, Ilana Rovner and Diane Sykes reversed, in an opinion by Sykes that summarised the litigation strategy in two sentences: "In their haste to file suit, however, the lawyers neglected to consider whether the claims had any merit. They did not."

The opinion compared the class's position before and after the settlement. Before, a customer handed a slightly short roll still received the same amount of food; "no class member, regardless of bread length, was cheated on the amount of ham or turkey, provolone or pepper jack." After, "despite the new measuring tools, protocols, and inspections," there was "still the same small chance that Subway will sell a class member a sandwich that is slightly shorter than advertised." The court observed that customers presumably already knew bread varies, "but the settlement requires Subway to include a disclaimer on its website and in a poster prominently displayed at each restaurant." Its conclusion was unadorned. "The injunctive relief approved by the district judge is utterly worthless. The settlement enriches only class counsel and, to a lesser degree, the class representatives."

The plaintiffs and Subway had argued that the class could at least return to court for contempt sanctions if Subway broke its promises. The court dealt with that briefly. "Contempt as a remedy to enforce a worthless settlement is itself worthless. Zero plus zero equals zero." Borrowing from its own earlier ruling in another of Frank's appeals, it had already described a class action that yields only fees for class counsel as "no better than a racket," one that "should be dismissed out of hand," and added: "That's an apt description of this case." Subway, for its part, told Nation's Restaurant News that the court had recognised the brand "did not misrepresent its product." "We stand behind our commitment to quality," it said.

On 24 October 2017, back in the Eastern District of Wisconsin, the plaintiffs dropped the case, Bloomberg Law reported. The disclaimer poster, the measuring tool and the four years of oven inspections went with it. Subway's position on the length of its bread, after a trademark opposition, nine lawsuits and an appeal, was the one its Australian Facebook page had stated in January 2013: it cannot be assured each and every time.

Filed from public reporting:

Subway Told Australian Customers Its Footlong Was a Trademark Name, Not a Measurement of Length. The US Trademark Board Ruled It Was a Measurement of Length and Refused Subway the Trademark.

The Name

The Settlement

The Objector

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