Going global: How reputation can boost brand protection prospects

Even before retail was pushed further online due to the pandemic, the highly connected global marketplace was seeing greater consumer awareness of brands that might not be available locally. Consumer awareness of international brands and an eagerness to engage with them makes such brands desirable targets for potential infringers.

Brand owners looking to prevent local traders from taking advantage of their hard-won status should take stock of their international influence and consider whether this can become another tool in the brand protection arsenal.

In this article, we take a whistle-stop tour of some recent developments and important considerations for using brand reputation in key markets around the world:

Australia – spill over reputation

In certain circumstances Australian courts recognize that the reputation a business has accrued from trading in overseas markets is so significant that consumers in Australia are taken to have sufficient awareness of that business. This is known as spill over reputation.

Spill over reputation is often raised in support of a tortious claim of passing off, or a statutory claim of misleading and deceptive conduct under the Australian Consumer Law – neither of which require a claimant to have locally registered trademarks. While reliance on the doctrine is increasing, international brands must be able to particularize their reputation among the relevant class of Australian consumers through evidence. The recent case of In-N-Out Burgers, Inc v Hashtag Burgers Pty Ltd & Ors [2020] FCA 193 demonstrates this.

In that case, the Federal Court of Australia sided with the popular US burger chain In-N-Out, which claimed a local trader operating in Sydney infringed their registered trademarks and engaged in passing off and misleading and deceptive conduct. To establish that the local trader had engaged in misleading and deceptive conduct (which here, included falsely representing an association between it and In-N-Out), the relevant class of Australian consumers must have been capable of being misled, i.e. they must have an awareness of In-N-Out in the first place, notwithstanding that In-N-Out did not (and does not) have any permanent stores in Australia.

In-N-Out was able to bring substantial evidence of a reputation built among Australian consumers over a number of years. Among this evidence: local media mentions about the US chain, including journalists encouraging Australians to try In-N-Out when next in the US; the prominent positioning of its Californian outlets in high-traffic tourist areas such as airports; and statistics relating to pop-up events In-N-Out had run in Australia over several years, with the Federal Court accepting that these activities established sufficient awareness.

Asia – brand protection regime

China’s brand protection regime is very registration-focused and limited recognition is given to unregistered rights in China. Unregistered trademarks need to be either well-known or have achieved a certain level of influence/reputation through use in China in order to qualify for protection. Chinese authorities do not normally consider evidence of overseas reputation or recognize spill over reputation, which presents a huge evidentiary barrier for foreign brand owners which may be internationally renowned but have a limited reputation in China. However, while the evidential threshold remains high, recent decisions show that the Chinese courts are becoming more willing to protect unregistered marks owned by foreign brand owners. In the case of Southcorp Brands Pty Limited v. Huai’an Huaxia Manor Brewing Co., Ltd, Penfolds scored victory in its trademark infringement battle against a Chinese brewing business, and the Chinese court went further to recognize “奔富” (the Chinese brand name for Penfolds) as an unregistered well-known trademark in China. While the ruling was predominantly based on Penfold’s established reputation in China, Penfold’s global reputation as one of Australia’s most renowned wine brands compelled a finding that the defendants intended to exploit the goodwill and fame that Penfold has amassed in the market.

For foreign brand owners who struggle to demonstrate extensive use and reputation in China, it is worth noting that the PRC Trademark Law was recently amended to further curb bad faith filings. Notably, the newly amended Article 4 provides that a bad faith trademark application without intent to use should be rejected, and Article 7 provides that trademarks should be registered and used in good faith. Administrative and judicial practice has shown that Articles 4 and 7 could be a potent weapon in brand owners’ arsenal against any pirate or copycat marks in China.

Europe – reputed and well-known marks

In Europe, there are two main scenarios in which a brand lacking registration may nevertheless be protected:

• Reputed trademarks are registered for certain goods or services, but lack registration for others. Their scope of protection may be extended to any “unregistered” goods or services, provided such trademarks (i) are known by a significant part of the public and (ii) the use of the infringing sign without due cause takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the trademark. For example, in Viaguara v OHIM – Pfizer (General Court , January 25, 2015, T-332/10), it was ruled that the owner of the trademark Viaguara, registered for beverages, took unfair advantage of the reputation of the brand Viagra (which was not registered for beverages), benefiting from its power of attraction, reputation and prestige.
• Well-known trademarks are unregistered trademarks which may nevertheless benefit from protection if they are well known to the public of the country where relief is being sought. This principle is derived from Article 6 bis of the Paris Convention for the Protection of Industrial Property.
• Whether a brand may be deemed “well known” or “reputed” must be decided by the courts on a case-by-case analysis. The burden of proof rests on the brand owner, who may provide any indications such as advertising brochures, sponsoring contracts, market studies or declarations about the volumes of sales to support his claim. The renown or reputation of a brand does not have to exist in the whole territory of the Member State where protection is being claimed, it is sufficient that it exists in a substantial part of it.

The EU Member States recently had to transpose the 2015 Directive. In this context, some Member States have introduced new provisions on the enforcement of reputation into national law. For instance, in France, since November 2019, the infringement of a reputed trademark outside of its “registered scope” is now aligned with the legal regime of regular trademarks, while the protection of a well-known trademark is now enshrined into French law through dedicated tortious liability provisions.

US – Generic marks and consumer perception

A generic term – the commonly used name of a class of products or services – is ineligible for federal trademark registration in the US. But a generic term combined with ".com” can create a federally protectable trademark, even if the generic term alone could not. Recent case law shows consumer perception is an important factor in this.

Booking.com is a business that maintains a travel-reservation website by the same name. Booking.com tried to register booking.com as a trademark. The US Patent and Trademark Office (USPTO) had previously adopted a nearly per se rule that when a generic term is combined with a generic internet-domain name suffix like “.com,” the resulting combination, ie, a "generic.com" mark, must automatically be deemed generic and, therefore, ineligible for trademark protection. Applying that rule, the USPTO concluded that Booking.com was a generic name for online hotel-reservations and refused registration. Booking.com sought judicial review. The District Court determined that Booking.com – unlike the term “booking” standing alone – is not generic. The Court of Appeals for the Fourth Circuit affirmed, rejecting the USPTO’s per se rule that combining a generic term like “booking” with “.com” yields a generic composite.

In a recent decision in USPTO v. Booking.com B.V., U.S., No. 19-46, 6/30/20; 591 US_(2020), one of the last opinions written by the late Justice Ruth Bader Ginsburg, the US Supreme Court affirmed, similarly rejecting the USPTO’s per se rule. Instead, the Court explained that consumer perception will determine whether a term is a generic term for goods and services or is a protectable trademark. Because survey and other evidence showed that consumers perceive Booking.com as a brand name, not a generic term, the Court concluded that it was entitled to be registered.

The decision underscores the importance of consumer perception evidence for those seeking to claim trademark rights in arguably generic terms, regardless of whether they are domain names or other terms. Various sources of evidence may help determine whether consumers perceive a term as one that identifies a class of goods or services, in which case it would be generic, or whether they perceive it as capable of distinguishing among different sources of those goods or services, in which case the term may be eligible for trademark protection. Practitioners will, therefore, want to consider all forms of consumer perception evidence that may be at their disposal when trying to demonstrate that an arguably generic term is understood by consumers to be a brand.