Capital Factory, a widely-recognized startup accelerator and co-working company, is suing a competing Austin co-working company for trademark infringement.
In a new federal lawsuit, Capital Factory alleges atx Factory, a co-working space in East Austin that opened last September, has a name that is confusingly similar to Capital Factory’s and is diluting Capital Factory’s well-established brand.
“atx FACTORY’s adoption of a nearly identical mark for identical services offered in the same city as Capital Factory’s services was no accident,” the lawsuit, filed Aug. 16, reads. “For instance, atx FACTORY tried to poach Capital Factory’s employees before opening and, upon being told that its name could be an issue because ‘Capital Factory’ and ‘ATX Factory . . . sound so similar,’ informed a Capital Factory employee that they ‘could see how [the names] would be confusing.'”
The lawsuit, which requests a jury trial, was filed by Capital Factory. It lists atx Factory and its founder, Vijay Mehra, as the sole defendants.
Reached by phone Monday, Mehra declined to comment on the case.
As part of the lawsuit, Capital Factory showed an LinkedIn exchange in which Mehra reaches out to a Capital Factory employee about possibly working for atx Factory. In the back and forth, the employee says she works for Capital Factory and thinks atx Factory’s name might be confused with Capital Factory’s.
“Our building is an actual factory in Austin, hence the reason for the name,” Mehra wrote in response, according to an exhibit filed with the lawsuit. “But yes, I could see how it would be confusing.”
While the co-working spaces don’t have the same name, Capital Factory argues that the similarities are undeniable and that Capital Factory owns the domain name “austinfactory.com,” which redirects to their primary site, and frequently uses ATX in connection with events and services, such as @atxStartupCrawl.
“atx FACTORY’s unauthorized use of the ATX FACTORY mark unjustly enriches atx FACTORY at Capital Factory’s expense. atx FACTORY have been and continue to be unjustly enriched by obtaining a benefit from Capital Factory by taking undue advantage of Capital Factory and its goodwill,” the lawsuit reads.
Capital Factory says it has tried to resolve the issue with atx Factory, but an agreement hasn’t been reached.
Capital Factory didn’t specify how much money it may be seeking in damages. But the lawsuit seeks to force atx Factory to stop using its name on signs, letterheads and elsewhere. And it asks the court to force atx Factory to transfer the domain name atxfactory.com and associated social media handles to Capital Factory.
Mehra, founder of software company REthink CRM, launched atx Factory last year. He had purchased a building at 5323 Levander Loop near Cesar Chavez and Airport Boulevard, in 2015.
But Mehra had more space than REthink required. So, the ABJ reported, he opened atx Factory in September 2016 and had the space 90 percent occupied and turning a profit within six months. The space includes nap pods, massage chairs and large spaces for events.
Mehra, who plays several roles within the Austin startup community, indicated in April he is planning to add a second location in North Austin.