By Tom McGhee

December 6, 2001

What happens when you reverse two letters in the word Altira? It spells trouble, according to Dirk W. McDermott, managing partner of Denver-based Altira Group.

In a letter to Philip Morris Companies Inc., McDermott demanded that the tobacco giant go no further with plans to rebrand itself with a moniker that sounds similar to Altira, a venture capital firm.

Philip Morris filed an application on Nov. 7 with the U.S. Patent and Trademark Office to use the name Altria, a word that is so similar to Altira that McDermott believes potential customers will confuse the two.

'We worked extremely hard on first coming up with the name Altira and then making sure that we maintained the integrity of the name We are not going to sit back and let a company like Philip Morris steal our name.' Philip Morris, based in New York City, owns Kraft Foods Inc., Miller Brewing Co., Philip Morris Inc. and other businesses.

The company is a global powerhouse with 178,000 employees worldwide and more than $ 80 billion in revenues last year.

McDermott wouldn't disclose the revenues of his 5-year-old privately held firm.

Altira consists of three managing partners and two support staffers.

In its most recent fundraising effort, Altira raised $ 100 million from institutions and private backers to use in funding start-ups, he said.

Philip Morris plans to change the name of Philip Morris Companies Inc., the holding company for all its enterprises, to Altria Group Inc.

Philip Morris Capital Corp., a wholly owned subsidiary, would be renamed Altria Capital Corp.

Trademark regulations don't bar sound-alike names.

A financial services company called Altira would have nothing to complain about if a yogurt maker produced a new product called Altria, said Natalie Hanlon-Leh, a lawyer with Faegre & Benson in Denver. It's unlikely that anyone would mistake one for the other.

But trademarks that cause confusion between companies aren't allowed, Hanlon-Leh said, whose specialty is trademark law but who isn't working for Altira.

And that is where the problem lies, said McDermott.

Philip Morris Capital Corp. is an investment firm. So is McDermott's Altira.

Philip Morris buys airplanes, real estate and other costly assets and leases them to other companies. Altira is a venture capital fund that invests in start-up energy operations.

Those distinctions won't prevent confusion between the two, McDermott said.

In a few years, he said, after the Altria name becomes well-known, the institutions and individuals that McDermott relies on to help fund Altira's venture investments will not be able to tell the two apart.

'You go down the road four or five years from now and that name is everywhere the name has gotten around and they say you're with Philip Morris, the cigarette company. Some won't invest with us because of the negative connotations.'

McDermott may have a case, said Lynn P. Hendrix, a lawyer with Holme Roberts & Owen.

'I would look at these and it would appear to me that there is potentially a likelihood that they would be confused,' he said.

But Mark Berlind, associate general counsel for Philip Morris, said there is little chance customers won't know the difference.

Altria and Altira will raise money in completely different markets and invest in completely different niches, he said.

Trademark disputes are usually settled by the parties involved and rarely go to court, Hendrix said.

In the late 1970s, Englewood-based Big O Tire Dealers Inc. sued Akron, Ohio-based Goodyear for using the name Bigfoot to promote some of its tires. Big O had begun using the name several years earlier and won a trademark infringement claim in the U.S. District Court in Denver.

After a 10-day trial, a jury awarded Big O compensatory damages of $ 2.2 million and punitive damages of $ 16 million.

McDermott wouldn't say if Altira is willing to sue over the matter, only that the company is looking at all options.

Philip Morris tried hard to avoid choosing a name that could conflict with others already in use, said Berlind.

But it was impossible to create a unique mark. 'We came up with conflicts for every conceivable name we looked at.'

In a letter responding to Altira's demand that the company desist from using Altria, Robert J. Eck, a Philip Morris associate general counsel, said his firm is willing to discuss ways to avoid potential conflicts. But he defended the Altria name.

'We have no intention of interfering with your business as we understand it,' he said.