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McReputation Recognised

The General Court of the European Union has this week handed down its decision in the MACCOFFEE case granting McDonald's application to cancel the contested mark.

The General Court of the European Union has this week handed down its decision in the MACCOFFEE case granting McDonald's application to cancel the contested mark (Future Enterprises Pte Ltd v EUIPO, McDonald's International Property Co. Ltd – Case T-518/13 and Press Release is here). 

Background

Future Enterprises applied for registration of the mark MACCOFFEE in 2008 for various food and drink products.  Registration was granted by the EUIPO (then OHIM) in 2010 and McDonald's then applied to have the registration cancelled on the basis of its earlier EU trade mark McDONALD'S plus 12 other trade marks for fast food restaurant services which include the "Mc" or MAC prefixes.  The cancellation application was granted and Future Enterprises appealed to the First Board of Appeal, which upheld the decision, whereupon Future Enterprises appealed to the General Court.

The law

The original decision of the EUIPO to cancel the MACCOFFE EUTM registration was based on fulfilment of grounds under Article 8(5) of the European Union Trade Mark Regulation which prohibits registration of a mark where there is:

(i) an earlier registration;

(ii) the challenged mark and the earlier mark are identical or similar;

(iii) the earlier mark has a reputation in the EU; and

(iv) use of the later mark is without due cause and would lead to the risk that unfair advantage might be taken of the distinctive character or repute of the earlier mark or would cause detriment to the distinctive character or repute of the earlier mark.

These grounds are cumulative so a failure to satisfy one is sufficient to render Article 8(5) inapplicable.

The assessment

The MACCOFFEE registration was declared invalid on the ground that, given the long-standing reputation of the McDONALD'S trade mark and the establishment, on the part of the relevant public of a link between that and the contested mark, there was a serious likelihood that use, without due cause, of the contested mark would take unfair advantage of the reputation of the McDONALD'S trade mark. Future Enterprises did not challenge the fact that McDonald's had an earlier registration nor did it dispute the McDonald's reputation in its mark under the first and third conditions. The appeal related to whether the EUIPO and, in turn, the Board of Appeal were right in finding that the requirements under the second and fourth conditions were satisfied.

The Court found that the second condition was met and there was a certain degree of similarity between the marks at issue. The finding of similarity under Article 8(5) does not require confusion on the part of the relevant public, merely that the degree of similarity establishes a link between the marks in question in the minds of the public. Although the Board of Appeal was wrong to find that the marks in question were visually similar to a low degree, this did not affect the decision since the marks at issue were phonetically and conceptually similar to a certain degree in light of the inclusion of the "Mc" or "Mac" element. The existence of McDonald's family of "Mc" or "Mac" trade marks was relevant in establishing a link with the contested mark because it possessed characteristics in common with the McDonald's family of marks capable of associating it with such marks.

The goods registered under the MACCOFFE name were deemed to be closely linked to the services for which the McDONALD'S trade mark had a reputation, namely fast food restaurant services, contributing to the mental link between the marks in question in the minds of the public.

In terms of the damage or potential damage to the McDONALD'S trade mark, it was held that use of the contested mark could entail a transfer of the image of the McDONALD'S trade mark or the characteristics associated with that trade mark to the goods covered by the MACCOFFEE mark, taking unfair advantage of the reputation of the earlier mark. Use of MACCOFFEE would amount to riding on the coat-tails of the McDONALD'S mark in order to benefit from its power of attraction, its reputation and its prestige, and to exploit, without paying any financial compensation, the marketing and effort made by the earlier proprietor, in order to create and maintain the image of that mark. The stronger the mark's distinctive character and reputation are, the easier it is to accept that detriment has been caused to it and the more immediately and strongly the earlier mark is brought to mind by the contested mark, the greater the likelihood that current or future use of the sign is taking, or will take, unfair advantage. Actual and present damage need not be shown so long as such damage is foreseeable. Here, the relevant public could establish a mental link between the marks at issue, for the reasons already mentioned, so upon seeing MACCOFFEE affixed to goods closely linked to those of McDonald's, it could be attracted by the fact that the mark had practically the same prefix and reproduced the same structure as the McDONALD'S mark and could associate that mark with the "Mc" family of marks.

The final question of proving whether use of the later mark was with or without due cause fell to the owner of the contested mark. Future Enterprises' argument that the MACCOFFEE and McDONALD'S marks had co-existed peacefully in certain Member States was rejected because that could not be inferred from an absence of formal opposition to the national registrations.  The fact that McDonald's had brought the application to cancel the MACCOFFEE EU trade mark registration was in itself evidence of it defending its rights within the appropriate time limits. The MACCOFFEE mark had not been used before the McDONALD'S mark so Future Enterprises did not have just cause to use the mark.

Conclusion

Whilst reputation may not come into play in the same way for all brands, we expect that trade mark owners will welcome the decision in this case.  It demonstrates the value of strong and consistent branding and it sends out a message to would-be infringers, and to those seeking to associate with successful brands, that a dim view will be taken of attempts to ride on the coat tails of such brands.

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