Protecting your company's Brand
It is becoming even more important for a company to protect its brand. Recently, the High Court upheld a UK Intellectual Property Office decision in respect of the trade mark “BUDWEISER” which declared that the producer of the popular beer Budweiser Budvar no longer has the right to use its internationally established brand name.
For over thirty years, two beer-producing companies, the American brewer Anheuser-Busch Inc (“Anheuser”) and the Czech beer producer Budejovicky Budvar Narodni Podnik (“Budvar”) had been trading within the UK using the identical trade mark Budweiser on their beers. Disagreements between the two parties over the right to use the trade mark started in the early 1900s, when the brewers began to export their like-named products to markets beyond their national borders. Budvar began selling Budweiser branded beer in the UK in 1973, whilst Anheuser began in 1974. Both companies applied to the courts claiming that the other party was “passing-off” the name as its own. The applications were eventually judicially determined in February 2000 when the Court of Appeal held that both companies were entitled to register Budweiser as a UK trade mark due to the “honest concurrent use” of the mark by both parties, provided for under the Trade Marks Act 1938. The 1938 Act had since been replaced by the Trade Marks Act 1994, however, the legal proceedings had continued under the 1938 Act as this was the legislation under which they had begun. On 19 May 2000 both Anheuser and Budvar became the registered proprietors of the trade mark.
However, the new Act provided fresh opportunities for battle between the parties. The 1994 Act states that, should a registered trade mark owner fail to take action against a party whom it knows to be using the same or a confusingly similar mark to its own for a period of 5 years, that mark owner is assumed to accept the position and is from then on barred from taking action against the offending party. With impeccable timing, Anheuser applied to the court to have Budvar’s rights to the mark declared invalid exactly 4 years and 364 days after Budvar had become registered owner of the mark, leaving Budvar no time to launch its own counter-claim. This time round, Anheuser claimed that it held the “earlier trade mark” for the purposes of the 1994 Act because, despite the fact that both companies’ marks were registered on exactly the same day, Anheuser had applied to register the mark before Budvar. Anheuser therefore argued that Budvar’s mark was invalid on the grounds that Anheuser had not agreed to the later mark’s registration (as required by the 1994 Act). The High Court upheld Anheuser’s argument and Budvar’s trade mark was rendered invalid.
The decision does not sit easy from a commercial view point as it is obvious from the facts of the case, and from the length of time both companies have been trading, that Budvar had not set out to profit directly from the goodwill associated with Anheuser’s product and had indeed established its own successful brand. In fact, it had been trading in the UK before Anheuser! The court took a strict approach to the interpretation of the law and the case is an extreme example of how far down the line the strength of a company’s brand may be undermined.
Unfortunately, a company’s brand or reputation can often be taken for granted and any lack of protection of that brand may only come to light once competitors have already taken advantage of the company’s goodwill or, alternatively, when the company comes to sell its business. If a brand is protected correctly, it is much easier to pin-point this invisible asset as a figure in the company’s accounts. Indeed, it is becoming increasingly popular for organisations to capitalise on their brand rights by selling or licensing them. Trade marks are the ownable and legally protectable instruments that give legal definition to the particular words, colours, shapes, sounds and even smells that comprise a brand.
An obvious example of the importance of determining the value of a brand is in the case of a franchise. Where a business in, for example, the retail or food industries is looking to cash in on its success by licensing its brand, a potential franchisee will be unwilling to buy into the name and know-how of a business which has left itself wide open to “copy cats”. Whilst the name may have accrued rights through use alone, the value of the product the franchisor brings to the table is immediately diluted by the fact that its brand is not registered officially as a mark.
So how does a company register a trade mark? As part of the application process, the following points will need to be considered:
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Is the mark the same as or confusingly similar to a mark which has already been registered? The application will list the various “classes” of goods and/or services against which the company wishes to register its mark. Is it likely that the public may mistake the company’s goods or services for the goods or services of the earlier trade mark owner?
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Is the mark distinctive? A term which simply describes the goods or services for which the mark is being applied or which has become customary in the company’s line of trade is usually not capable of registration.
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What is the trade mark attempting to protect? For example, is the colour of the mark important? If not, is it wise to limit the application to a specific colour if there may be circumstances where it may appear, for example, in black and white? Alternatively, it may help the mark meet the distinctive criteria if it could otherwise be considered descriptive.
In many circumstances, successful registration of a trade mark is vital for a company to afford its brand legal definition, however such registration will not provide indefinite protection. Companies should seek to keep ahead of their competitors as far as possible whether this simply means renewing a trade mark registration every ten years or, as the Budweiser case highlights, keeping abreast of new legislation to make sure that it does not cancel out earlier acquired rights.
For further information please contact: Scott Kerr
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