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UK brands and trademark legal battles

28th June 2017

Aldi supermarket

The most complex legal battles faced by UK brands are often to do with trademarks. When new companies launch, they must make the decision as to whether or not to legally trademark their brands. Failure to do so can lead to difficult disputes. Equally, they must undertake thorough research to avoid infringing on the trademarks of other brands. Law Absolute caught up with design law expert and senior associate at Stone King, Gavin Llewellyn, to find out more.

“Your brand is an asset, not just a name,” said Gavin. “For some businesses, it’s all about the brand and it’s the brand that people pay for – just look at the fashion industry. It’s also a large part of what a buyer of the business will pay for if the company is sold.” According to Gavin, trademarks are essential: “New companies should always register a trademark to protect their brand, whatever their business.”

Companies can trademark words, slogans designs, numerals, shapes, smells, sounds and colours. As Gavin explains, a registered trade mark is not just a valuable commercial asset, it also acts as a deterrent to potential copycats. He added: “Once a trademark has been registered, the owner has the exclusive right to use the mark and can take legal action against anyone who (in a nutshell) uses an identical or confusingly similar mark for the same or confusingly similar goods or services without permission.”

The law of ‘passing off’

So, when supermarkets such as Aldi and Lidl replicate popular brands, can they face legal action? Aldi’s ‘Teddy Faces’ bear a striking resemblance to the popular ‘Pom-Bear’ crisps, as do their ‘Oblongs’ to Kellogg’s ‘Squares’ and ‘Seal Bars’ to McVitie’s ‘Penguin’ bars. To understand the legality of these similar brands, we must look at the law of ‘passing off’.

“Passing off is a bit like the law of unregistered trademarks,” said Gavin. “It is based entirely on case-law, not statute. The law of passing off requires three elements to be proved:

  • Existence of goodwill and reputation (usually in a brand or get-up)
  • A misrepresentation which either has or is likely to cause confusion about the origin of the goods/services offered
  • Damage or a strong likelihood that damage will be suffered if the acts of passing off are allowed to continue

“Proving goodwill and resulting reputation is usually the biggest barrier to a successful passing off case, particularly for a new business which hasn’t been trading long enough to have generated a reputation. If you’re a celebrity (like Rihanna who won her passing off case against Topshop for using her image on a range of t-shirts), you should have no trouble in proving that goodwill and reputation exists in your brand or image.

“Claims are also often brought by famous people or brand names for false endorsement of another business or product. What you’re essentially doing in cases like this is demonstrating that the brand or image get-up you’re trying to protect acts as a badge of origin. In other words, people will always associate it with one particular source and no other.

“In Rihanna’s case, the claim was that people would think she’d agreed a commercial deal for the t-shirts with Topshop (which she had done once before, but not this time), so that implied a commercial connection which didn’t exist and hence was a misrepresentation likely to cause confusion.”

Back to the subject of supermarkets and copycat products, it is possible to bring an action in ‘passing off’ based on the packaging of goods, according to Gavin. However it can be difficult as often it’s the brand name and not the packaging that distinguishes the goods. Gavin said: “Having said that, in United Biscuits (UK) Ltd V Asda Stores Ltd (RPC 513, 1997), United brought a successful passing off claim against Asda to prevent Asda from selling ‘Puffin’ biscuits in very similar packaging to ‘Penguin’ biscuits.”

Unlike most European countries, the UK has no law of unfair competition. “The government has stated that our law of passing off is adequate, but this is simply not the case,” said Gavin. “It is completely inadequate. Passing off requires evidence of goodwill and reputation, which means that a new business usually can’t get a passing off case off the ground.

“A new law of unfair competition which did not have this requirement would enable new businesses or small businesses with only limited reach and presence in the marketplace to take action for deliberate imitations of their brand or get-up which pose a serious threat to their profitability or existence.”

BrewDog VS The Wolf pub

BrewDog

Earlier this year, BrewDog, a Scottish craft beer company, threatened an independent pub in Birmingham with legal action over its name. Sallie and Joshua McFayden of the Wolf pub were forced to drop their original plan to name the watering hole ‘The Lone Wolf’ when BrewDog issued them with a legal warning. The beer company was launching its own range of vodka at the time, also named The Lone Wolf.

According to The Guardian, the publicans said they were too scared of BrewDog’s “financial muscle” to fight back, deciding to change the name of their pub to the Wolf and adjusting the branding at their own expense. Sallie McFadyen told The Guardian: “We had an email one day from their solicitors – and that was the first we knew of it – saying they had a trademarked spirit coming out. All our money has gone into refurbishing this place and getting it open and we don’t have the same money as they have. We were told we might have to incur their legal costs so we were panic-stricken.”

In March 2017, BrewDog decided not to pursue the pub, with founder James Watt announcing a “change of heart”. An update by The Guardian revealed he offered to send the pub some cases of the brewer’s new spirits range, adding: “Although they wear suits and are mostly sensible folks, lawyers can sometimes go a bit crazy and forget the kind of business we are and how we behave. They are sorry for their actions and we have put them on washing up duty for a week.”

Branding expert and chief marketing officer at the Chemistry Group, Graham Hales, told The Guardian he agreed BrewDog had made the right decision: “Lawyers have their jobs to do and any brand needs to protect its trademark. That being said, the sense of David versus Goliath in a business context is something people will comment on.

“The threat from a family-run pub is minimal and the bigger win is for the hearts and minds of your prospective customers. You end up doing your dirty washing in front of an audience and social media can be a merciless audience.”

According to Ward Trade Marks, a specialist trademark attorney company, there were several issues with BrewDog’s proposed legal action. Director and chartered trade mark attorney Rachael Ward said in a blog post: “My basic observations are that this involved many different issues, not all of them contributing to the David versus Goliath rhetoric. For both the brewer and the pub, this dispute was a case study in how not to look after a business’ reputation.

“Firstly, the action was disproportionate and on the evidence in the article had a reasonable chance of failing. Courts will look for a ‘likelihood of confusion’ to determine trademark infringement, and it’s very unlikely that a consumer will have a bottle of Brewdog’s Lone Wolf vodka and then choose to go into a pub when they’re walking down the road as they think it’s been opened by the same people!

“Secondly, I think it is unlikely that BrewDog’s lawyers would have pursued this case as they did without the authority and knowledge of the company themselves. An instruction is an instruction after all.

“Thirdly, the pub could have saved itself a lot of bother had it applied to register the name as a trademark, not least as their business was trading before BrewDog launched its vodka. UK trademarks operate under a first to file jurisdiction and it is important that all businesses, including start-ups and micro companies, realise that is in their own interests to register their trade marks as soon as possible in every national market in which they have a presence.”

Gavin of Stone King echoed this and emphasised the need for thorough research. He said: “Before a trade mark application is made, a company should check the trade mark register online to check whether an identical (or similar) mark has been registered for the same (or similar) goods or services.

“It is impossible to eliminate all risks of conflict with prior rights holders without spending vast sums of money on clearance searches, but it is good practice to do some basic clearance searching to identify the most obvious conflicts.”

Final words of advice

For the best chances of avoiding any trademark legal disputes, seek advice from those in in-house legal jobs. Gavin added: “If a possible conflict with an earlier mark is identified, it is probably advisable to seek legal advice from someone who deals regularly with brands.

“The most crucial thing is to avoid infringing on someone else’s trademark. You therefore need to watch out for infringement risks if the proposed new trade mark is used because trade mark litigation is an expensive business.”

It is also worth giving extremely careful consideration to your brand and trade mark. “The best trade mark is the one which bears no relation to the goods or services at all,” said Gavin. “This is because descriptive or completely non-distinctive names cannot be registered as trademarks. So, for example, a name which describes the nature of the products or their purpose is unlikely to be registrable as a trade mark.”

Image credit: Bernt Rostad, Mikey