A Business Lesson From McDonalds – The Law of Trade marks and Passing Off

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When Mary Blair opened her hole-in-the-wall sandwich shop, McMunchies in Fenny Stratford, Buckinghamshire, she never dreamed she would attract the attention and wrath of the world’s biggest fast-food chain.

Especially since she did not sell burgers or chips.

She chose the name because she liked the term ‘munchies’ and she came from Scotland and thus wanted to add a touch of her heritage to her business name.

However, she duly received a letter from McDonalds stating she had one week to take down her shop signs and remove the ‘Mc’ from her business name, or face legal action.

McDonald’s said that the prefix was the firm’s recognised trade mark. “McDonald’s Restaurants Limited is the registered user of the ‘Mc’ prefix as a registered trade mark”, a spokesman said in a statement.

“We have made a significant investment over the years to build up the reputation for restaurant services and food items associated with this trade mark and also of the golden arches logo, which is also registered. If someone, either deliberately, or unintentionally, uses our trade marks in their own food or restaurant-related business they are effectively using something that does not belong to them.”

Ms Blair received worldwide support, including Lord Godfrey James Macdonald of Macdonald, the head of the Scottish clan that embraces all spellings of the name.  But eventually, unable to afford to fight a lawsuit against such a powerful opponent, she was forced to remove the ‘Mc’ from her business name.

Why would a company, with a turnover in 2015 of £17.4 billion be so ferocious in forcing a little English sandwich take-out shop to change its name?

The answer rests in the law of trade mark and the millions of pounds invested by businesses every year in developing and protecting their brand.

You may not have the clout of a corporate giant such as McDonalds or Microsoft, but you can take steps to protect your brand if a company begins to trade under the same (or a very similar) name to your enterprise.

The law of trade marks 101

A trade mark’s essential function is to be a badge of origin. It distinguishes the goods and services of one undertaking from those of other undertakings. Trade marks may comprise words, slogans, logos, sounds, three-dimensional symbols or even smells and colours. However, in order to fulfil their function, they need to be distinctive.

There are four different types of trade mark rights which coexist in the UK:

  • UK registered trade marks
  • European Union Trade Marks (EUTMs), formerly European Community Trade Mark (CTM)
  • International registered trade marks
  • Unregistered trade marks

Trade mark rights are territorial so protection exists only in the jurisdiction(s) in which the mark has been registered. All UK registered trade marks and International trade marks designating the UK are listed on the trade mark register maintained by the UK Intellectual Property Office (IPO).

All EUTMs and International trade mark registrations designating the EU are listed on the trade mark register maintained by the European Intellectual Property Office (EUIPO).

Provided that they are renewed every ten years, trade mark registrations will remain valid indefinitely. Registrations may become vulnerable to cancellation if they are not used correctly.

How to apply for a trade mark

The easiest way to apply for a trade mark is to do so through an experienced trade mark solicitor.  This way, you can be assured that the search for similar trade marks is done correctly and the relevant forms are filled out accurately.  Once an application for a trade mark is submitted, only certain types of amendments are permitted, so it is essential to get it right first time.

The IPO receives and processes trade mark applications, and grants the trade mark if the application is successful.

You have more chance of a trade mark being accepted if you keep in mind its purpose – to distinguish one company’s set of goods and/or services from another company’s so as to not confuse the consumer.  It follows that in the spirit of achieving this objective, marks that are simply descriptions of goods or services, or are similar or identical to trade marks that are already in existence, will not be granted.

You will need to search the UK Trade Mark Registry, and ideally, the European Community Trade Mark register to check whether your proposed trade mark is unique.

You can apply to register a trade mark which conflicts with an earlier mark, but the owner of the existing trade mark must be told and may decide to oppose the application. In addition to checking for registered trade marks, an applicant should consider whether a conflicting unregistered mark is in use.

On receipt of a trade mark application, the IPO will carry out its own searches, send a report to the applicant which will contain any objections, and give time for the applicant to overcome answer these concerns.  If done so satisfactorily, the trade mark will be published in the Trade Marks Journal.  The IPO allows two months for any objections to be made, and if none are forthcoming, or those that do come are defeated, then the trade mark will be registered.

If the process is free from objections, a trade mark can be granted within six months from the date of the initial application being received by the IPO.

Trade mark infringements

The Trade Marks Act specifies the following as infringements to a registered trade mark:

  • Identical marks on identical goods and services
  • A mark which is identical to the registered trade mark in relation to similar goods or services for which the trade mark is registered, or similar mark for identical/similar goods or services, which leads to a likelihood of consumer confusion
  • Conflict with a mark which has a reputation

The use of the sign by the infringer must be in the course of trade.

The most common remedies granted by the court for trade mark infringements are damages and/or injunctions to stop the infringer from using the mark.

Unregistered trade marks or ‘passing off’

Unlike many other countries, the UK has no unfair competition law. Brand owners seeking to prevent competitors from marketing ‘copycat’ products or using misleading advertising have to rely on a combination of different intellectual property rights, which include the common law right to prevent passing off.

A claim in passing off is based on the premise that no one has the right to represent their goods or services as being those of somebody else.

The elements of ‘passing off’

The case Reckitt & Colman Products v Borden set out three elements, known as the ‘classic trinity’ that the claimant needs to establish in order to show passing off.

They are:

  1. The claimant’s goods/services have acquired goodwill and are known by some distinguishing feature;
  2. There has been a misrepresentation (intentional or unintentional) by the defendant which leads (or is likely to lead) consumers into thinking that goods/services offered by the defendant are those of the claimant, and
  3. Damage has resulted or is likely to result as a result of the misrepresentation.

Passing off does have its limitations.  For example, the presence of a different brand name on the defendant’s goods or services is often enough to defeat a passing off claim, regardless of similarities.  Establishing goodwill is an onerous and expensive burden on the claimant.  If a claimant has registered trade mark rights, the presumption is that these rights exist.  In cases of passing off, it is for the claimant to prove, on the balance of probabilities, that goodwill exists and public confusion or deception has occurred.  Claimants relying on evidence gained from surveys have been heavily criticised by judges rendering such methods useful only as a way of finding witnesses to give statements.

If passing off is proven, as with infringements of trade marks, the most common remedies are damages and/or injunctive relief.

Whether you want to register a trade mark or pursue a claim for passing off, you will need an experienced intellectual property solicitor to guide you through the process.  Registering a trade mark should be seen as an investment rather than an expense, after all, it is cheaper to formally register your mark than try and establish and run a passing off claim.

Establishing a brand and goodwill takes years of hard work and dedication.  Do not let someone else benefit from your blood, sweat and tears.

Bennett Griffin are award winning solicitors based in West Sussex with offices in central Worthing and Ferring.  Our experienced and specialist solicitors offer a comprehensive service and will work with you in an honest, considered and practical manner.  Our commercial and civil litigation departments can advise and represent you on all intellectual property matters.  Please contact us on 01903 229 999 or by email at info@bennett-griffin.co.uk for more information.

The information contained in this article is for general guidance only and is not intended to be legal advice. Professional advice should always be taken on the application of the law in any particular situation.