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The trade mark 'David versus Goliath

The trade mark 'David versus Goliath


The negative publicity that results from trade mark giants seeking to enforce their rights against small traders should serve as a warning for the big guys, says Ben Scarfield

The world of intellectual property (IP) is somewhat of an oddity in the modern legal landscape: a complex balance of registered monopolies, overlapping in a deal brokered between policy makers and innovation. But with great monopoly comes great responsibility.

A trade mark registration is a unique right - potentially, for the owner, a perpetual monopoly right within a territory, encompassing the ability
to enforce against use of a similar mark for similar goods or services within those national borders.
A well-managed and effectively policed trade mark portfolio can allow an amount of control within a right holder's market.

Once a mark becomes established and gains some serious goodwill, the rights broaden even further. Under EU law, a registration can be used against similar marks for non-similar goods or services, if that mark enjoys a reputation and the third-party use is detrimental.

In the US, the concept of trade mark dilution
is the weakening of a famous mark's ability to function as a trade mark. US trade mark dilution has been alluded to as 'death by a thousand cuts'; sometimes it would appear that fear of this fate
has resulted in a rigorous policing of IP rights.

The Paris Convention for the Protection of Industrial Property (with 176 contracting countries) even permits for the prohibition of use which is considered detrimental to a 'well-known' trade mark. As with most international agreements,
what constitutes a well-known mark is obviously interpreted differently by each independent member, but it would appear that the odds are stacked in favour of the trade mark behemoths.
But what happens when this policing becomes over-exuberant?Big money contentious trade mark matters and litigation regularly hit the news, with giants of the media, entertainment, and commercial worlds colliding. By way of example, in the last few months, Kylie Minogue and Kylie Jenner have recently entered into a dispute over who owns the best rights to the trade mark 'Kylie' in the US (not the name, note, but the trade mark).

Trade mark enforcement is costly, and right holders with major financial backing can often afford to pursue any and every perceived infringer. Trade mark registrations are monopolies - but what if the perceived nuisance, the sole trader with a single shop, the nuisance fly in the ointment, in fact has a valid defence, or perhaps even a stronger right to that monopoly themselves?In the age of tweets and viral posts, the media can be a powerful weapon for less well-funded parties. Equally, the exposure to the mainstream media can compound the legal costs with the potential public relations damages to which the claimant opens themselves. A legal bill can be estimated and predicted, but what about damage to the claimant's goodwill with its consumers, if they are perceived as an unjustified bully? There are statutory provisions to prevent unjustified threats, but even with deep pockets, damages may be a calculated risk. But can you put a price on good PR?

A Mercenery case

The public has been exposed to the proverbial David and Goliath stories for years. In 2001,
Daimler AG (then Daimler-Chrysler), the German automotive giant, brought an opposition and subsequent High Court appeal proceedings against a small shop in Carnaby Street, London.

The shop was a self-professed 'mecca of 60s chic' and sold a range of clothing popular with mods, skinheads, and social fraternities. The owner, Mr Alavi, had applied to register its trade mark.
The mark in question? 'Merc'. Daimler had a range of trade mark registrations for 'Mercedes' and 'Mercedes-Benz', which included clothing, and even a registration for Merc, covering a range of vehicles and parts.

Daimler did not consider that Alavi's consumers fit with their brand image, alleging that the shop sales took unfair advantage or were detrimental to the distinctive character in Daimler's mark Merc. Daimler also alleged that the shop was passing off in relation to the mark Merc, given the goodwill accrued by Daimler in the mark, and Alavi was
hit with the proverbial trade marks opposition
kitchen sink.

The initial opposition failed, and Daimler appealed to the High Court. But judges are often cautious when applying the law to monopolistic rights, and when the defence submitted evidence that Alavi had been trading for more than 30 years under the brand Merc, with no reported instances of confusion, the writing was on the wall. Mr Justice Pumfrey was steered towards the defendant, and the brakes were abruptly applied to Daimler's appeal - with their options apparently exhausted.

Less Glee-ful

An integral part of trade mark prosecution is searching. Given the intricate network of
registered territorial monopolies, assessing
the legal landscape is a critical first step.

In 2014, US television show Glee was at the height of its popularity, with multiple awards,
star performers, millions of viewers, and a global concert tour. But in the UK, there was already
'The Glee Club', complete with registered rights
to the mark, owned by Comic Enterprises. Comic Enterprises' first club opened in Birmingham in 1994, and it had spread to several other cities since. Cue a major battle between Comic Enterprises and 20th Century Fox.

However, in a reversal of the parties' sizes, the entertainment Goliath 20th Century Fox was rocked with all-singing, all-dancing infringement and passing off claims by the apparent David. In the UK, an earlier registration usually has the best rights to the mark (subject to genuine use and various other provisions, including good faith). Comic Enterprises' earlier registrations covered, among other goods and services, 'entertainment services'.

The High Court sided with Comic Enterprises
in holding that its registered rights (for which genuine use was proved) were infringed. Evidence of actual confusion, gold dust in infringement litigation, and damage to business was shown, including perplexed consumers on social media. Twentieth Century Fox was then to face damages and even injunctive punishment, although the facts of the case aided it somewhat. Nevertheless, another entertainment behemoth was snared. Perhaps in future, clearance searching will become its forte.


McDonald's: the biggest franchise in the world and arguably the most successfully maintained and best-known restaurant brand in history. But it has also been reported in the mainstream media as having a somewhat aggressive trade mark enforcement policy.

In 1996, McDonald's was widely reported to have written to a small trader in Buckinghamshire who opened a sandwich shop under the 'McMunchies' brand. The 'Mc' was intended to allude to the owner's Scottish roots, in conjunction with a thistle and Scottish flag; however, it attracted the attention of the food giant. The head of the MacDonald clan of Scotland got involved and as the negative media attention built, McDonald's was evidently left with a bad taste in the mouth.

The case never reached the courts - but the bad press, from a wide selection of sources, was sufficient for McDonald's to retract infringement claims and carefully consider future approaches against small McBusinesses across the UK.


In the world of technology and software, Microsoft famously took exception to a Canadian computer programmer, Mike Rowe, who registered the domain

There is a clear trend developing in these stories: Microsoft began by threatening action against Rowe and his parodic domain name, but again, the case never reached court. Microsoft's initial offer, of $10 in exchange for the transfer of the domain, was dramatically overshadowed when the media as a whole took exception to Microsoft's approach.

The coverage was significant enough that although the case was settled, Microsoft sweetened the deal considerably, with trips to Microsoft headquarters for the Rowe family, Microsoft certification training, and a new Xbox gaming system to console Rowe. The PR from this case will be stored in the memory, and we suspect Microsoft's IP enforcement policy was updated overnight. What can we take from this? In summary, these reports offer a cautionary tale to the trade mark giants seeking to enforce their rights against small traders across the land. There are, of course, statutory provisions to restrict speculative claims, including the UK's much-debated 'unjustified threats' legislation (an article for another time), and should a case reach court, a judge will assess the case on its merits, and the surrounding facts.
The resultant punitive measures, either through court-ordered damages or simply via compensatory settlement, may be considered a drop in the ocean for a large commercial institution.

However, the potentially damaging public relations and media coverage is a real issue for major corporations, which often assert their claimed goodwill in their trade marks. The phrase 'there is no such thing as bad publicity' can be argued - but when the public learn of a David versus Goliath story, do they ever wish for a Goliathan triumph? Triumph in the face of adversity can sell newspapers and, in recent years, gain huge exposure through the mere click of a button on social media - and everyone loves a conquering underdog.

Ben Scarfield is a trade marks specialist at Kilburn & Strode @KilburnStrode