Michelle Newton works hard at her family’s donut shop in downtown Klamath Falls. She was sued by a shop in Maine that had trademarked a similar name. (Herald and News photo)

KLAMATH FALLS - For many, a donut is both holy and holey.

But for Michelle and Chris Newton, the financial future of their downtown Klamath Falls bakery depended on a judge seeing a difference between the two.

The family-owned operation, known until last week as the Holey Donut, will no longer go by that moniker after its owners were sued by The Holy Donut, a Maine bakery located 3,100 miles away.

“You couldn’t get any farther away from our business,” said Michelle. “And to come after us and bully us over something like this ... it hurt.”

The Newtons opened their eatery, located at 1434 Esplanade near Klamath Union High School, after a life of hard work.

For years Chris managed a Black Bear Diner in Alturas. His wife Michelle worked as a manager at Walmart and Dollar General. They moved their blended family to Diamond Lake for the summer of 2019, working night and day at the resort and saving every penny in order to fund their dream of owning their own business.

Together, they decided on donuts. And when enough money was saved, three generations of the family dragged a fryer out in the driveway to work on recipes and think up names. One grandchild stuck a finger into her donut and began to eat around it.

“They all got holes,” she said.

Something sparked in Michelle. She had fond memories of the Holey Donut, a 1980s-era diner in Eugene that had long since closed down. The family voted and it was unanimous: They would call the restaurant Holey Donut. Chris registered the name with the state of Oregon and purchased holeydonut.co domain.

Then they found a battered old building in downtown Klamath Falls and got to work cleaning it out and cleaning it up.

Holes became their theme — and some variations on that theme went better than others. When Michelle turned the standard maple bar into a circular snack, customers revolted.

“People did not like that,” Michelle laughed. “Eventually we had to make them back into bars.”

But customers did enjoy the donuts, and the family said the business was finding success until the coronavirus came calling. Six months after they opened the doors, Holey Donut was knocked sideways by the pandemic and then a phone call from across the country.

A man from a bakery in Maine demanded they change their name. His operation was called “The Holy Donut” and he had it trademarked. The business had opened in 2012 in Portland, Maine, and by 2017 it expanded to three locations in the area. Its logo included a halo around a donut and its sweets were made using local potatoes.

To Newton, it seemed like a different operation located about as far across the country as you can get.

“At first I was miffed about it but also scared,” said Michelle. “I felt like he was bullying me, but I also knew how much we had put into this thing.”

Michelle thought about how to respond and her possible courses of action, but then months passed and it slipped from her mind under the daily deluge of work.

“Maybe he was just trying to scare me,” she said. “I thought it was just a threat and they’d forget about us.”

To pivot in the pandemic, in June the Newtons purchased an old food truck to make fresh sweets at the farmers market and other events around town. They took photos of the new paint job and spread the news on Facebook.

“I thought it was going to be a step forward for us,” she said. “If people aren’t going to come in as often we wanted to come to them.”

Weeks later, however, they got served. Legal papers, not donuts.

“Holy Donut learned through a Holey Donut social media post that Holey Donut is not only continuing to advertise donuts using its confusingly similar mark, but also expanding its use of that mark through a mobile food truck” read the complaint. Holey Donut was ordered to appear in U.S. District Court in Medford.

“That’s when we panicked,” said Michelle. “That’s when it became real that this might break us.”

She called around to lawyers and was eventually put in touch with a specialist in trademark law located in Eugene. They were told they had a “50/50 chance” of winning, because their name was spelled differently, their business interests did not overlap, and there was no evidence that one was aware of the other when it was named.

“We were of the opinion that holes and god are different,” she said.

“Holey isn’t in the Bible once,” said one customer. “I looked.”

Still, the risks to the family were high.

“Even if we won, we’d have to pay out thousands and thousands in court and lawyer costs,” said Michelle. “We agonized about it for a long time. We wanted to fight. We didn’t do anything wrong.”

But to fight and win may well have bankrupted the small business. So with a heavy heart the family came together one more time to bid adieu to one name and come up with another. This time it was Michelle’s daughter Becca Moore who came up with the winner: Holey Moley Cafe and Sandwiches.

During pandemic menu tweaks, the Newton’s started to make more sandwiches — circular ones with holes in the middle, of course. The lunchtime menu allowed them access to another set of customers, and the possibility of more sales.

The pandemic was tough on profits, but it helped Michelle realized that “you either change and move forward or go out of business.”

So they tore down one sign and put up another. Now that they’ve committed to the decision, Michelle says that re-branding with a new name may be beneficial in the long run.

“We’re more than donuts now” she said. “But we’ve still got a lot of things with holes.”

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NOTE: This story published with permission of the Klamath Falls Herald and News as part of a statewide collaboration of news organizations to share Oregon news. The Enterprise is part of the collaborative.