You’ve done your homework. Your brand is important to your business and the licenses to use it underpin your franchise agreements. You have taken all the brand protection advice on board and your trademarks are registered. Job done. Or is it?
Registering your trademarks is a really important step in protecting your brand but even once registered, trademarks are not invincible and can require ongoing investment. Without this, they can become vulnerable.
The need to make this ongoing investment was highlighted in the recent decision of the European Union Intellectual Property Office (EUIPO), in relation to McDonald’s Big Mac trademark.
There has been a long-standing trademark dispute between McDonald’s and Supermac’s, an Irish fast food chain. As part of this dispute, Supermac’s applied to the EUIPO to revoke McDonald’s Big Mac trademark on the basis that it had not been used in the EU between 2012 and 2017. If a trademark is not used in the first five years of registration or any subsequent five-year period, then a third party can apply to revoke it on the grounds of non-use.
Most of us will be aware that McDonald’s uses a Big Mac mark, and has done so for some time, but, extraordinarily, it did not file good enough evidence to support this. This clearly demonstrates that, while making use of your trademark is important, use alone isn’t enough and a rights owner also needs to be able to evidence that use.
McDonald’s claimed that it was commonly known that it sold millions of products under the Big Mac mark and filed evidence including employee affidavits, website print outs, packaging materials and an extract from Wikipedia on the Big Mac burger.
Hitting the threshold?
However, as far as the EUIPO was concerned, this was not enough and McDonald’s did not hit the required thresholds:
• There was no independent evidence demonstrating the real commercial presence of the trademark;
• There was insufficient evidence for demonstrating any actual or potential purchases;
• A Wikipedia entry is not accepted as a reliable source of evidence;
• The mere presence of a trademark on a website is insufficient unless the website shows the place, time and extent of use (or this information is otherwise provided).
So, at first instance, McDonalds’ case fell short and the mark could be revoked. The food franchise’s investment in defending its mark was simply not enough. Perhaps not surprisingly, McDonald’s is appealing the decision and we await the outcome: the food may be fast but the legal process is not.
The key take away from this matter is that trademark owners must be prepared to invest in their mark in order to continue to benefit from their protection.
However, the non-use ground is only one of a number of reasons that trademarks can become vulnerable and which can ultimately result in a forced rebrand. It is therefore critical that franchise agreements deal with all such contingencies by, for example, giving a franchisor the right to change its brand at its own discretion and requiring its franchisees to re-brand at the franchisee’s expense. This brand substitution right will then manage the risk of a franchisee claiming damages against the franchisor for the costs of a re-brand as well as potentially other losses.
Ultimately, franchisors need to use and invest in their brands but make sure in the event of a necessary re-brand that their franchise agreements are drafted to cover all potential circumstances.
ABOUT THE AUTHOR
Jo Pritchard is a Legal Director at UK law firm TLT
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