BRANDS and trade marks are valuable symbols that reflect an organisation's image and benefits. Companies have fought tooth and nail over the rights to marks that represent them. Although imitation is a form of flattery, confusion in the marketplace may tarnish the image and dilute the revenue of the brand whose mark was copied. Importantly, confusion may mean that market share is suffered by the company whose mark was copied, as customers do not know any better that they are not patronising a brand they had in mind.
As competition gets stiffer, more cases of disputes over brand name and logo arise for a larger piece of the market pie. In China, one of the noteworthy cases is between international coffee chain giant Starbucks and a local chain called Xing Bake. It was a tale of outrageous imitation. Not only did the local company use the Chinese name of Starbucks ('Xing' to mean 'Star' and 'Bake' being the Chinese phonetic translation of 'bucks'), its retail ambience of having cushy armchairs was so like the master of coffee chains.
Additionally, Xing Bake's logo was also round and in green. These similarities were deemed by the Chinese courts to be sufficiently close to create customer confusion and encroach on Starbucks' identity and sales.
Another interesting case involved a French and Singapore company. The fight over the right to use the crocodile insignia - the trade marks of French clothing manufacturer Lacoste and Singapore-based Crocodile International - was played out in the Chinese court where it was ruled that the Lacoste brand cannot be used in China, as the Singapore firm had registered it as a trade mark earlier.
In a case of tit for tat, Lacoste prevented Crocodile from registering two trade marks in Australia featuring crocodiles device marks similar to its widely-used moniker.
While these cases demonstrate success with one company prohibiting its rival from using a similar-looking logo, a recent case in Singapore involving Channel NewsAsia (CNA) and Astro AllAsia Networks resulted in Astro being allowed to use a trade mark similar to CNA's. Both networks have a red inverted 'V'. The differences are that CNA has a hook for its base to the inverted 'V', while Astro does not, and Astro features blue and yellow swirls that CNA does not. Both are in the media industry.
Likelihood of confusion
The Singapore High Court, although agreeing that there were some degree of similarity between the two trade marks, found that there was no likelihood of confusion, because the target customers of businesses and organisations, not ordinary customers, are considered to be sufficiently discerning and careful in their choice of service provider. Hence, they are less likely to confuse one network from the other.
My colleagues and I at the NUS Business School studied another case involving global fast-food chain McDonald's. Over the years, McDonald's has vigilantly sought protection worldwide for its 'McLanguage' brand naming system - 'McChicken', 'McDonuts', 'Mac Fries', 'Chicken McNuggets' and 'McCafe'.
In the US, the rival marks of 'McBagel' and 'McPretzel' were held to infringe McDonald's trade mark rights.
With globalisation, however, McDonald's attempt to protect its trade symbol has not always been successful, for instance in jurisdictions such as the UK, Canada, Australia, Singapore and Malaysia. However, in a recent Court of Appeal decision in Singapore, McDonald's successfully opposed a trade mark application of 'MacCoffee' by a local company Future Enterprises (who has been engaged in a long drawn battle of more than 10 years with McDonald's over the use of marks incorporating the 'Mc/Mac' prefix).
Why is McDonald's successful this time around? Some of the considerations in the judgments include:
45Visual similarities: 'MacCoffee' and 'McCafe' both appear similar.
45Aural similarities: Both 'MacCoffee' and 'McCafe' have three syllables. The two prefixes are homonymous and synonymous. Taken as a whole, the two marks sound remarkably similar.
45Conceptual similarities: Both 'MacCoffee' and 'McCafe' evoke the idea of coffee. Even when the marks are from different industries, McDonald's international reputation may suggest that another company using 'Mc' is riding on its goodwill.
McDonald's fight to keep third parties off the use of its 'Mc/Mac' prefix in marks took an interesting twist in neighbouring Malaysia. McDonald's sought to stop the use of 'McCurry' in the name of a Malaysian eatery. In court, the owner of the Malaysian eatery explained that 'McCurry' stands for 'Malaysian Chicken Curry'.
Nevertheless, the lower courts found that the 'McCurry' trade mark was similar to McDonald's red and yellow signage and that 'McCurry' took unfair advantage of the goodwill of McDonald's.
After eight long years, the case has finally come to a closure recently in a surprising 'David and Goliath' win for the 'McCurry' eatery. The Malaysian Court of Appeal overturned the lower court's ruling, because there was no evidence showing that McCurry Restaurant was passing off McDonald's business as its own.
McCurry's signboard has white and grey letters against a red background with a picture of a smiling chicken giving a double thumbs-up, while McDonald's has a red and yellow 'M' logo. McCurry serves only Indian food, not competing directly with McDonald's Western offering. Significantly, the Court of Appeal held that the lower courts erred in holding that McDonald's had a monopoly in the use of the prefix 'Mc' on signage or in the conduct of business.
How do these court rulings affect businesses? Businesses that face naming decisions for new products, sub-brands and brand extensions should carefully consider the wisdom of using prefixes commonly found across diverse types of businesses and in different countries.
Although the family brand naming system allows for the transfer of goodwill from one product to another, it can also act as an Achilles' heel: it is open to imitators.
The irony is that the better known a mark is, the less the difference is needed to avoid association or confusion. Businesses that have followed the family branding system should guard the brand and its family of products, at least in the brand's core business area.
For example, Apple should work towards protecting the brand name and image built around its core products - iMac, iTune and iPhone.
While it is expected for businesses to pull all stops so as to protect their trade marks and brands, it is equally important to guard against an indiscriminate policy to oppose all third parties' use of marks remotely similar as this may generate substantial negative publicity and ultimately damage the equity in these brands, which businesses are trying so hard to protect.
The writer is with the Department of Business Policy, NUS Business School
