A Cautionary Tale of Reputational Damage: Striking the Right Balance with Brand Protection

by David Barnett, Lan Huang and Alexandra Midgley
with thanks also to Ernriel Bell and Agnes Czolnowska

In early March 2020, a well-known European fashion brand found themselves on the receiving end of a protest campaign on social media. The background to the case was the fact that, in 2019, the brand had launched a cease-and-desist (C&D) action against a small, UK-based company in response to their use of similar product names and sale of associated clothing merchandise. This resulted in significant legal and rebranding costs for the company and is just one of several cases where the brand had targeted other small organisations.

Many observers have viewed these actions as heavy handed, and the subsequent online commentary has generated a significant amount of negative press for the brand. The case "shine(s) a light on the potential negative PR implications when undertaking a brand enforcement programme," an intellectual property expert commented. "Even where a brand is legitimately enforced, brand owners must be alive to where issues may arise in relation to smaller businesses or individual use."

This is not the only organisation to take an (over-)enthusiastic approach to their brand protection efforts. In 2015, the Millennium and Copthorne Hotels group sent a notice to the Village Association for Copthorne - a small village in the UK, and the company's founding location - protesting against their infringing use of the Copthorne name in the association's web address. The hotel group eventually backed down, stating the letter was sent in error^[1].

In another case, Scottish brewery BrewDog issued a C&D against the owners of a pub planning to name it the 'Lone Wolf' - one of BrewDog's product names. BrewDog also eventually withdrew the action, following a campaign accusing the company of behaving like a 'multinational corporate machine.' A branding commentator at the time indicated that the backtracking by BrewDog could ultimately work in their favour, stating, "We've now got a business owner calling off his lawyers and favouring the underdog. That feels right for a challenger brand. Perhaps there's still a win available for them^[2]."

So how should brand owners address the issue of protecting their IP? Here are our top tips for getting it right.

1. Register your brand terms

As a minimum, CSC suggests that brands register all active brand terms in all relevant classes (i.e. product areas) and geographic jurisdictions. If a brand is able to achieve well-known trademark status, this can also open up further avenues for enforcement, making it possible to defend IP rights even in product classes where trademarks have not yet been registered.

2. Have a clear set of goals for your IP protection programme

Just because you can launch an action in a particular case, it doesn’t mean you should. In cases involving, for example, small companies operating in unrelated areas, with minimal risk of confusion, it may be advisable not to enforce. As with the case reported here, the risk is that an enforcement action can cause a large corporation to gain a reputation as a brand bully, and it is important to consider the risks of exacerbating an already inflamed situation. A brand owner should always be clear on the goals of their IP protection programme, and be willing to answer the question - in cases where an action results in backlash - was it worth it?

3. Look at potential infringements case-by-case

At CSC, we advise against sending automated C&D notices; every case is different, and it is important to consider whether a notice is necessary and, if so, what the appropriate style of wording is. C&D language can be overly severe and may not be concise, leaving room for dispute. In cases where notices should not have been sent, there is the risk of counter-claims for groundless threat - in these instances, the brand owner could then be liable for any damage and costs arising from the claim.

Before taking any action on a potential infringement, it is advisable to assess the case against the following questions:

1. Is there prominent and unauthorised use of the trademark?
2. Is there a likelihood of confusion, i.e. is the disputed use likely to mislead a general consumer into believing that the products and services are offered by the brand owner who owns the trademark?
3. Does the use of the trademarked name constitute bad faith or piggybacking on the brand owner's established brands and goodwill (i.e. unfair use for commercial gain)?
4. Does the use of the trademark cause harm or damage to the brand?

If the answer is 'yes' to these four questions, it may be appropriate for a brand owner to take action.

4. Personalise your C&Ds

If a potential infringement is identified, but bad faith cannot be definitively established, it may be best to contact the concerned parties using a personalised C&D. This should include:

• Education on the importance of the intellectual property
• Why and how there is a conflict of interest and how they have infringed; specifically which aspects of the brand use are most concerning
• How this can be mitigated without invoking costly legal battles

It is often the case that legitimate businesses are more likely to comply with infringement notifications, whereas those clearly using a trademark in bad faith are less likely to co-operate.

The general principle should be to treat the most serious cases more aggressively, escalating to a legal route if necessary. Only consider legal action when the infringer refuses to comply without sufficient reason, or if there is a clear case of malicious intent to monetise the trademark. Less egregious offenders can be sent a softer C&D, incorporating educational information. A C&D done well can even positively boost a brand owner's image and public relations.

References

[1] https://www.dailymail.co.uk/news/article-3059658/Village-fights-use-Residents-association-Copthorne-threatened-legal-action-multinational-hotel-chain.html
[2] https://www.theguardian.com/lifeandstyle/2017/mar/27/brewdog-backs-down-lone-wolf-pub-trademark-dispute

This article was first published on 7 April 2020 at:
https://www.cscdigitalbrand.services/blog/brand-protection-balance/

Also published at:
http://www.circleid.com/posts/20200514-reputation-damage-striking-the-right-balance-with-brand-protection/