Phi Beta Kappa, Compaq Lawsuit Set for Trial

Academic honor society Phi Beta Kappa has locked horns with Compaq Computer Corp., saying the Houston PC maker committed trademark infringement with direct promotions designed to tempt computer buyers with the slogan “Phi Beta Compaq.” A pretrial conference is scheduled for January, and a trial is expected early next year.

The spring campaign by Compaq offered promotional items bearing the slogan through direct mail and Web-marketing efforts. Phi Beta Kappa is seeking $5 million in damages for each of two counts of trademark infringement and dilution. It said Compaq traded on the reputation or assumed recognition by consumers of the name “Phi Beta Kappa,” for which the honor society holds trademarks on both the English words and the Greek letters.

Officials at Compaq would not comment on the lawsuit, although published reports indicate the company expects it to prevail in the suit.

Douglas Hoard, Phi Beta Kappa's executive secretary, said Compaq's aims were somewhat at odds with the society's name and symbol, which are associated with excellence in liberal arts study.

“We encourage students to come and study the liberal arts not because it's going to teach them some specific career skill or something they can make money from but something that is broader than that and has to do with leading a rich life,” Hoard said. “For us to take that symbol, which is about the liberal arts, and convert it into something commercial is something that so far the Phi Beta Kappa governing board has refused to do.”

Founded in 1776 at the College of William and Mary in Virginia, Phi Beta Kappa is the oldest academic honor society in the United States. Chapters of the organization exist at 255 institutions of higher learning across the country. The society examines only the top 10 percent of a graduating class as possible members and rigorously screens colleges seeking a Phi Beta Kappa chapter.

The organization's cachet for excellence — and its database of 500,000 members — has appealed to marketers of various stripes in the past. Phi Beta Kappa has declined two offers from companies selling affinity credit cards, one of which would have been worth $1.2 million in advance to the honor society. Other companies — including cereal manufacturers, clothing and athletic shoe makers and a watch company — have complied with Phi Beta Kappa's requests that they don't use the organization's name for commercial purposes, Hoard said.

Though Compaq's outside legal counsel indicated to Phi Beta Kappa that the promotion has been terminated, the society still has received no formal guarantee that the company has stopped using the slogan, said Morris Nunes, attorney for Phi Beta Kappa.

Last month, Compaq, responding to heated competition from Dell Computer Corp. and others, kicked off a concerted effort to sell PCs through direct channels. The world's largest computer maker, Compaq earned $1.86 billion on revenue of $24.58 billion in 1997.

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