A decision of the UK High Court shows that a trademark owner can prevent a third party from taking unfair advantage of their trademark. Monster Energy Company v Red Bull GmbH [2022] EWHC 2155 (Ch)
The Facts
Monster Energy Company, a well-known manufacturer of energy drinks, applied for the registration of the trademark RED DAWG in the United Kingdom in association with non-alcoholic beverages. Red Bull GmbH opposed the registration of Monster's mark based on its RED BULL registrations.
There were two grounds of opposition. The first ground was based on an assertion there was a likelihood of direct or indirect confusion between the marks. The second ground was based on the claim that using the applied for mark took unfair advantage of, or was detrimental to, the distinctive character or the repute of the RED BULL mark.
The Hearing Officer’s Decision
The Hearing Officer rejected Red Bull's objection based on confusion. He concluded there was no likelihood of direct or indirect confusion between the marks, even in relation to goods that were identical.
To succeed on the second ground, the opponent needed to establish:
i) that its mark had a reputation in the UK;
ii) that use of the contested mark would "call to mind" its mark, such that a consumer of the goods would make a "link" with the earlier mark; and
iii) as a result, one of three forms of injury would arise, namely (1) detriment to the distinctive character of the mark, (2) detriment to the reputation of the mark, or (3) taking unfair advantage of the mark.
The Hearing Officer said consumers would not be prone to the effects of direct or indirect confusion and would not purchase the applicant's goods in the mistaken belief they were provided by, or connected with, the opponent .However, on encountering the contested mark consumers would be reminded of the earlier mark; the contested mark will, appear instantly familiar, making it easier for the applicant to establish its mark and to sell its energy drinks without incurring the marketing costs usually required. The contested mark could attract more consumers to purchase goods offered under it than would be the case if the earlier mark was not brought to mind. This would essentially allow the contested mark to free ride on the reputation of the earlier mark and gain an unfair commercial advantage.
The Appeal
Monster appealed the decision to a Judge of the High Court of Justice. On the appeal it was argued that there was no evidence directly supporting free riding or risk that free riding could be inferred.
The Judge said reaching a conclusion of this nature was open to the Hearing Officer by making legitimate inferences based on the primary facts. This analysis was not dependent on the evidence of subjective intention or the like.
The appeal was dismissed.
The Canadian Position
It remains to be seen whether a similar finding of no confusion would be made but consideration should be given to section 22 of the Canadian Trademarks Act. The section makes an additional statutory right available to the owner of a registered trademark. The section provides that no person shall use a trademark registered by any person in a manner likely to have the effect of depreciating the value of the goodwill attaching thereto.
A claim under section 22 is quite different from a claim for infringement. To succeed with a claim under the section, the following elements must be shown:
(a) The plaintiff’s registered trademark or at least its distinguishing feature was used by the defendant in connection with goods or services, whether or not such goods or services are competitive with those of the claimant.
(b) The plaintiff’s registered trademark is sufficiently well known to have significant goodwill attached to it. The mark need not be well known or famous, but goodwill must exist.
(c) The plaintiff’s mark was used in a manner likely to have an effect on that goodwill (this is referred to as linkage). Linkage requires a mental association in the mind a reasonable buyer between the two parties and the mark. The likelihood of such a linkage is a matter of evidence, not speculation.
(d) The likely effect would be to depreciate the value of the goodwill (damage). Depreciation includes lowering the value of the goodwill and disparagement or tarnishing the trademark.
Under the Act before the 2019 amendments, it was possible to allege a breach of section 22 as a ground of opposition. Under the current Act it has yet to be determined whether a breach of the section is a possible ground of opposition but presumably it is.
Comment
The Canadian position appears to be somewhat similar to the UK. However, the observation to the effect that the linkage is a matter of evidence not speculation may represent a steeper hill to climb.
Toronto, September 2022
If you have questions, please contact me at mckeown@gsnh.com.
John McKeown
Goldman Sloan Nash & Haber LLP
480 University Avenue, Suite 1600
Toronto, Ontario M5G 1V2
Direct Line: (416) 597-3371
Fax: (416) 597-3370
Email: mckeown@gsnh.com
These comments are general in nature and not intended to provide legal advice as
individual situations will differ and should be discussed with a lawyer.