Small greeting-card firm has a sympathy note for Hallmark
In the battle to sell delicate love poems and lilting personalized prose, Hallmark Cards is a giant - but it has stubbed its toe on tiny Blue Mountain Arts of Boulder, Colo. A federal judge in Denver late last week ordered an injunction barring Kansas City-based Hallmark from selling 83 of 92 styles in its ``Personal Touch'' line of alternative greeting cards. The judge ruled that Hallmark copied Blue Mountain's distinctive look in an effort to ``cash in'' on its image.
Blue Mountain's creator, Susan Schutz, is jubilant, although Hallmark has appealed the injunction. A trial is expected in coming months.
``We've proved that artists can protect what they create,'' Ms. Schutz says. ``I have a whole new faith in the American justice system and that truth prevails.''
Hallmark sees things a bit differently.
``Naturally we are disappointed in this judgment,'' says Charles W. Hucker, senior vice-president for public affairs. ``The court has effectively granted Blue Mountain Arts a perpetual monopoly.''
Until a few years ago, privately held Hallmark had little interest in alternative greeting cards. Far and away the greeting card industry leader, Hallmark had some $1.7 billion in sales last year and holds a 40 to 45 percent share of the card market. Blue Mountain's sales and share of the market are, on the other hand, ``negligible,'' according to one analyst.
But even though the market for alternative cards is still small (about $170 million), the rate of growth in this segment has been three to four times that of regular cards. Alternative cards frequently use free-form poetry (as does Blue Mountain), offbeat humor or irreverent depictions of such subjects as divorce or dating.
Hallmark entered the alternative card market seriously last spring. Until then, it had focused mainly on the over-40-year olds because they buy more cards per person. Each year Americans buy roughly 5.75 billion cards - about 25 cards for every man, woman and child.
The copying issue is serious because small companies must rely on uniqueness and an added dollop of creativity to stay a step ahead of the Big Three. Those three - Hallmark, American Greetings, and Gibson - control 83 percent of the market.
Blue Mountain isn't the only small card company unflattered by Hallmark's alleged mimicry. Roserich Designs Ltd., of Carpinteria, Calif., and three Hallmark retailers also have suits pending against Hallmark. Other cardmakers complain that Hallmark is buying up competing inventory if retailers accept another of its nontraditional card lines.
``Tough business practices are one thing,'' says Robert A. Gall, general manager of Blue Mountain Arts. ``But to copy the cards as closely as they did is a completely different thing.''
Hallmark spokesman Patty Moore says Hallmark has never tried to copy anyone's cards, but that the company has done significant market research in order to develop ``the same type of product - one with similar appeal, but that is quite different from copying.''
But US District Judge Jim R. Carrigan, basing his ruling on different evidence presented at the preliminary hearing, included the following, which lends insight into how that market research is done:
``At one point Hallmark even posed to a panel of card dealers the following question: `How do you feel about Hallmark copying Recycled Paper, Blue Mountain Art, and California Dreamers.' Moreover, in a June 16, 1986, performance report on the second generation Hallmark cards, the defendants [Hallmark] stated: `A dealer who complained that we were wrong to `copy Blue Mountain Art' apologized and is excited about sales results.'''
No matter what the outcome of Blue Mountain's suit, observers say Hallmark will ultimately find a way to compete in the alternative card market.
``They're not going to be precluded from competing in alternative cards,'' says E. Gray Glass III with Kidder, Peabody & Co. ``Whether they win or lose this one, they'll eventually develop a design that's totally their own.''