(This post has been co-authored by Pankhuri Agarwal. She has recently completed her LL.M. in IP law from the National University of Singapore)
Background
In a ruling that potentially provides McDonald’s, the U.S. fast food giant, with the exclusive right in Europe Union (EU) over the use of trademarks ‘Mc’ and ‘Mac’ for food and beverages, the EU General Court, in Future Enterprises Pte Ltd v. EUIPO & McDonald’s International Property Co. Ltd, has earlier this month held that the mark ‘MACCOFFEE’ cannot be used by Future Enterprises, a Singapore company, in the EU for its foodstuffs and beverages.
In 2010, Future Enterprises got a word sign ‘MACCOFFEE’ registered as a EU trademark in classes 29, 30, 32 of the Nice Agreement. In the same year, McDonald’s, filed an application for declaring this mark invalid based upon its various EU trademarks with the prefix ‘Mc’ like ‘McDONALD’s’ and ‘McFISH’ and those with the suffix ‘MAC’ like ‘BIG MAC’ and ‘PITAMAC’ registered for goods in the same classes as well as other classes. In 2012, McDonald’s application was accepted by the Cancellation Division and the mark was declared invalid pursuant to Article 53(1)(a) of Regulation No 207/2009 on the basis of mark ‘McDONALD’S’ alone. Consequently, an appeal was filed against this decision with the European Union Intellectual Property Office by Future Enterprises, but it was dismissed by the First Board of Appeal. Future Enterprises (“Applicant”) then approached the EU General Court for annulment of this decision.
Arguments and the ruling
Clause 1(a) of Article 53, dealing with relative grounds for invalidity, provides that a EU trademark shall be declared invalid where there is an earlier trademark within the meaning of Article 8(2) and the conditions set out in Articles 8(1) or 8(5) are fulfilled. As per Article 8(2) (a), a trademark whose date of application for registration is earlier than that of the mark whose cancellation is sought is an earlier trademark. Under Article 8(5), the conditions to be fulfilled are:
(a) the marks must be identical or similar,
(b) the earlier trademark has a reputation in the EU and
(c) use of the contested mark is without due cause and would take unfair advantage of, or be detrimental to the distinctive character or repute of the earlier trademark.
In the matter at hand, there was no dispute over the fact that the mark ‘McDONALD’S’ was lodged before ‘MACCOFFEE’ and was thus an earlier trademark. The applicant also did not contest that ‘McDONALD’S’ had a reputation in the EU. Nevertheless, it claimed that the Board of Appeal made an error in its assessment regarding the fulfillment of conditions (a) and (c).
Similarity
According to the Applicant, ‘MACCOFFEE’ was not visually, phonetically or conceptually similar to ‘McDONALD’S’. The court clarified that the degree of similarity required under Article 8(5) is not such that there exists a likelihood of confusion but only such that a link is established between them by the relevant public. Although the court accepted that there was no visual similarity, even of a low degree, it found that the initial part of both the marks i.e. ‘Mc’ and ‘MAC’ are pronounced as ‘mak’, the letter ‘a’ being a murmured vowel, at least by the relevant public. It added that even assuming that ‘a’ is fully pronounced in ‘MAC’, the pronunciation of both is highly similar and thus the marks are overall phonetically similar even though the final parts of the mark i.e., ‘DONALD’S’ and ‘COFFEE’ are phonetically different. The court further noted that the marks have certain conceptual similarity as well since both ‘Mc’ and ‘MAC’ are associated by the relevant public with the same idea i.e. the prefix of a Gaelic surname and also as meaning ‘son of’ by the English speaking part of the relevant public. While assessing the overall similarity, the court rejected the Applicant’s argument that visual similarity alone should be taken into account as the method of marketing is based on primarily visual selection. It noted that although visual similarity is more important in such cases, the importance of phonetic similarity does not become negligible because the goods may have been advertised on the radio or by other consumers. The importance of conceptual similarity also, although reduced in such cases, was said to be not negligible especially if the marks involved are word marks. On the point of similarity, the court concluded that the marks were overall similar to a certain degree taking into account the phonetic and conceptual similarity of the initial part of both the marks and thus that condition (a) was fulfilled.
Establishing a link
The second issue dealt with was whether the relevant public would establish a link between the two marks, which is necessary to establish the existence of the type of injury under Article 8(5). In deciding this issue, the court first considered whether the existence of the family of marks ‘Mc’ was a relevant factor. The court answered this in the positive because McDonald’s had provided evidence of actual use of a sufficient number of its earlier marks combining the prefix ‘mc’ with another word such that it had acquired its own distinctive character in relation to fast food restaurant services and the goods on the menu of fast-food establishments in the EU. Thus, the earlier marks constituted a ‘Mc’ family of marks and also ‘MACCOFFEE’ contained elements that were capable of associating it with this family. The court then considered whether the goods and services at issue were similar to a certain degree. It held that even though the Applicant’s foodstuffs and beverages and McDonald’s restaurant services do not have the same nature, intended purpose or method of use, they are similar to a certain degree because there are close links between the two as (i) they are complimentary as certain foodstuffs correspond to the goods offered in fast food restaurants, (ii) sale of foodstuffs and offering of restaurant services can happen at the same place and (iii) restaurants may provide food on a take away basis. It was thus concluded that the Board of Appeal was right in holding that the relevant public could make a mental link between the two marks.
Unfair advantage of reputation
As to the question of whether the applicant could take unfair advantage of ‘McDONALD’S’ reputation by undue use of ‘MACCOFFEE’, the court answered this in the positive. It rejected the Applicant’s complaint that the market realities were not considered since only a prima facie evidence of a future risk of unfair advantage had to be adduced and a conclusion could be deduced from probabilities and normal practice in the relevant sector. The use by the Applicant was not found to be with due cause as it had not been used before the ‘McDONALD’S’ trademark. The court thus dismissed the action in entirety with costs.
Conclusion
This ruling suggests that McDonald’s can prevent anyone in the EU from using ‘Mc/MAC’ prefix in relation to foodstuffs, beverages and restaurant services unless it is overturned by the Court of Justice of the EU in an appeal which may be filed by Future Enterprises. This is the second win for McDonald’s this year in the EU, the first being against an Irish fast food chain Supermac’s.
It is interesting to see that despite these clear victories in the EU, the results have been mixed for McDonald’s in India. In the second part of this post, we will run you through some interesting Indian decisions on actions filed by McDonald’s for enforcement of its trademarks.