From time to time, I post squirrelly thoughts. Today, I wonder: Should a large company with famous, distinct trademarks sometimes hold back from aggressively enforcing those trademarks, even when doing so might at first appear to be a useful competitive strategy? I’m sure many executives at McDonald’s–the worldwide fast-food chain that it is so ubiquitous The Economist uses the prices of the Big Mac to measure purchasing power parity throughout the world–are questioning some past enforcement decisions.

If you haven’t heard, the European Union Intellectual Property Office (EUIPO) issued a decision cancelling McDonald’s “Big Mac” trademark registration within the European Union. Although the decision was based on certain procedural and evidentiary issues, it resulted from a proceeding brought by McDonald’s European competitor “Supermac’s,” an Irish fast-food burger chain opened in 1978, in response to McDonald’s aggressive enforcement tactics.

Supermac’s offers a similar cornucopia of comfort food items, including chicken nuggets, french fries, and the “Mighty Mac,” which is:

A succulent double burger complete with two 100% Irish beef patties, melted cheese, crispy lettuce, diced onion with ketchup and burger sauce served in a toasted sesame seed bun.

Sound familiar? Here’s how McDonald’s describes the Big Mac:

Mouthwatering perfection starts with two 100% pure beef patties and Big Mac sauce sandwiched between a sesame seed bun. It’s topped off with pickles, crisp lettuce, onions and American cheese for a 100% beef burger with a taste like no other. It contains no artificial flavors, preservatives or added colors from artificial sources. Our pickle contains an artificial preservative, so skip it if you like.

Perhaps for these reasons, McDonald’s vigorously opposed Supermac’s trademark registrations a few years ago, arguing that the similarity between the names “McDonald’s” and “Supermac’s” (the Mc/Mac usage) would cause confusion among consumers.

Which one is the Big Mac, and which is the Mighty Mac? (hint: in order)

In 2017, Supermac’s retaliated against McDonald’s enforcement activities, seeking cancellation of McDonald’s own flagship marks. Central to Supermac’s narrative is McDonald’s “trademark bullying”–a topic we’ve discussed generally on DuetsBlog numerous times. Specifically, Supermac’s argued that McDonald’s purposefully engaged in anticompetitive conduct, including “registering brand names . . . which are simply stored away in a war chest to use against future competitors.”

It is not readily apparent that EUIPO ruled against McDonald’s on grounds related to bullying or overly-aggressive enforcement because, ostensibly, the ruling is based on McDonald’s failure to prove genuine use of “Big Mac” as a burger or restaurant name–which seems hard to believe given, among other things, The Economist’s Big Mac Index. However, Supermac’s is calling this a victory for small businesses, and a win in “a David versus Goliath battle against trademark bullying by a powerful multinational.” As a result of EUIPO’s ruling, companies may now freely use “Big Mac” throughout the entire EU. McDonald’s has said it intends to appeal the ruling.

EUIPO’s ruling seems absurd, but it makes me wonder if McDonald’s could have avoided this ruling, and the trademark bully label, by taking a less aggressive stance in enforcing its trademarks. Instead of seeking to prevent registration of the Supermac’s and other marks in a transparently-competitive posture, McDonald’s could have decided to target its enforcement on certain products and names (e.g., Mighty Mac), or simply compete on the basis of quality and price. McDonald’s could have also considered creative ways to discourage Supermac’s from using similar marks, employing humorous methods akin to Bud Light sending a medieval jester to deliver a cease and desist message on a scroll to Modist Brewing. Increasingly, brands need to seek a balance between uncovering and prosecuting all possible misuses and not enforcing rights at all. This latest EUIPO may, at its heart, be a lesson in more selective enforcement.

Update: This article was referenced, and Kyle was quoted, by the Washington Post on February 11, 2019.

A recent Mall of America and Nordstrom shopping trip (with visiting extended family), coupled with some initial moments of admitted boredom, led me to wandering through the shoe department:

Let’s just say, the stroll through the shoe department made it all worthwhile, to capture the above image, showing Louboutin’s latest fashion sense, leading to my mental stroll down memory lane:

Louboutin Red: Blending Into the Background

Louboutin Red-Sole & Surrounding Contrast: An Implied Trademark Limitation

Louboutin: Still Waiting on the Second Circuit Court of Appeals

Louboutin Wins Second Circuit Appeal, Sort Of . . . .

Louboutin & Lessons Learned

That seven month span of blogging was pretty special (February 12, 2012 through September 17, 2012), actually making the case for narrowing Louboutin’s red sole color trademark registration.

In the end, the Second Circuit Court of Appeals ordered the amendment of the red sole color registration to compel the limitation we said was implied: Contrast with the remainder of the shoe.

This, of course, opened the door to requiring that Louboutin tolerate monochrome red shoes, as any red soles on a monochrome red shoe would not possess the necessary constrast to be seen.

Since then, Louboutin has been seeking global protection for his contrasting red-color trademark applied to shoe soles, with a recent win in the EU, however, he’s currently been snagged in India.

Given the striking shoe above, other Louboutin spiked shoes below, and knowing Louboutin’s comfort with non-traditional trademarks, filings at the USPTO seemed plausible, but no, none yet:

Afterall, the spikes appear purely ornamental with the potential for acquired distinctiveness, and no functionality, well, unless this footwear is designed for, shall we say, painful kicks in the pants.

At this point, the Louboutin brand appears synonymous with the red-sole of a woman’s shoe, which probably explains the non-verbal trademark below being applied to other fashion items:

 

 

So, we’ll keep a lookout for new non-traditional trademark filings by Louboutin, while you keep a lookout for any look-for advertising that might set the stage for claimed rights in a spiked mark.

Lauren Millward, Solicitor, Browne Jacobson LLP

In recent times trade mark law in the UK has developed to comply with the fundamental principles of the EU including the free movement of goods and services within the EU. The decision of the Court of Appeal in the UK in Speciality European Pharma Ltd v Doncaster Pharmaceuticals Group Ltd is important in this respect and relates to parallel importing of pharmaceutical products within the EU.

Speciality European Pharma (SEP) sold a drug (tropsium chloride) in the UK, under an exclusive licence. The drug was sold under the trade mark REGURIN in the UK, CERIS in France and URIVESC in Germany.

Doncaster, a parallel importer of pharmaceutical drugs had, for many years, imported CERIS from France but over-stickered the box with the name of the drugs’ active ingredient, tropsium chloride.

Shortly after expiry of the patent in the drug, generics manufacturers entered the market in the UK. Doncaster, as a parallel importer, could not compete on price with those generics manufacturers and instead began importing the drugs CERIS from France and URIVESC from Germany into the UK and re-branding those drugs with the UK trade mark REGURIN.

SEP argued that Doncaster’s rebranding in these circumstances infringed SEP’s trade mark in the REGURIN mark.

The Trade Mark Directive deals with exhaustion of the rights of the trade mark owner at Article 7, however it doesn’t precisely apply in this case as it relates to the use of a trade mark where goods have been put on the market in the EU under that mark. The drug in these circumstances had been put on the market under the CERIS and URIVESC marks respectively but the claim related to use of the REGERIN mark.

The court therefore looked outside of the provisions of the Trade Mark Directive at the Treaty on the Functioning of the EU. In particular, Article 34 prohibits between Member States quantitative restrictions on imports and all measures having equivalent effect. There is an exception to this in Article 36 where prohibitions or restrictions on imports are justified on grounds of the protection of industrial and commercial property (such as trade marks). Such prohibitions or restrictions must not however constitute a means of arbitrary discrimination or a disguised restriction on trade.

The judge considered that the enforcement of a National trade mark having territorial effect in one Member State could be a measure having the effect of a prohibition on imports, however, enforcement of that trade mark would not be prevented by Article 34 where that enforcement is justified for the protection of that trade mark. The principle of free movement of goods must therefore be balanced against the protection of the relevant trade mark.

By having in place different trade marks for the same product in different Member States the court held that there was an unjustified “artificial partitioning of the market” by the trade mark owner constituting a disguised restriction on trade.

Although Article 7 didn’t apply in these circumstances, the court considered that the case law under that Article concerning re-packaging of products was relevant. The cases of Bristol-Myers Squibb v Paranova and Boehringer II in particular held that where a parallel importer re-packages goods, the following conditions must be satisfied to prevent infringement:

  1. The repacking must be objectively necessary to avoid market partitioning;
  2. The condition of the product must not be effected;
  3. The manufacturer and the importer must be clearly identified;
  4. The reputation of the mark and its owner must not be damaged; and
  5. The importer must give notice to the trade mark owner.

The court considered in particular whether the re-branding of the product from CERIS and URIVESC was objectively necessary to avoid market partitioning. Overturning the first instance decision, it was held that it was objectively necessary. Doncaster was effectively excluded from a proportion of the market where the brand REGERIN was prescribed, rather than the generic version. Although that was a small proportion of the overall market (the majority of the prescriptions were made under the generic name), that proportion was a substantial part and therefore the enforcement of the trade mark REGERIN by SEP was unlawful partitioning of the market.

This decision makes it difficult for trade mark owners to benefit from the strong brand built up under a trade mark during patent-protection. It was held that it was unreasonable to expect Doncaster to create its own brand and to compete with the trade mark owner, particularly considering the high costs of marketing and Doncaster’s lack of control as a parallel importer over its own supply chain (meaning that it is unlikely that doctors would rely on Doncaster’s brand). Re-branding to the REGURIN brand was therefore necessary in these circumstances to allow for effective access to the market.

Although each case will turn on its facts considering, this decision is in favour of parallel importers in the EU and suggests that, in the majority cases, the principles of free movement of goods will prevail over the rights of a trade mark owner.