Daniel R Bereskin QC of Bereskin & Parr LLP provides examples of how the internet has been used to infringement and enforce trademarks.
A well-known trademark is at once a strong and fragile asset. Its strength stems from its commercial magnetism, and its fragility from its vulnerability to erosion by unauthorised acts of third parties. The more famous the trademark, the more tempting it is for rogues to cheat.
It is therefore understandable that most owners of well-known trademarks diligently pursue unauthorised users, from blatant counterfeiters to petty larcenists. Doing nothing to combat outright piracy is not an option, because eventually this would lead to diminution of the value of the trademark. That said, the opposite extreme of litigating every supposed violation, however trivial, can create even more harm to the trademark than doing nothing.
Before writing a demand letter or commencing action, it is important to gauge the effect that action or inaction may have on consumer perceptions of the trademark intended to be protected or of its owner, and to calibrate carefully one’s reaction to the impugned conduct, taking into account the severity of the conduct, the likelihood of success, and the possibility of retaliation in social media. J Thomas McCarthy put it this way: “The real question is public perception of plaintiff’s mark, not a battle count of how often it has sued others.” (McCarthy on Trademarks and Unfair Competition, §11:91 4th ed 2012.)
Most companies desire to be seen as “good corporate citizens”. A few recent examples show how overzealous enforcement can damage the public’s perception of the trade mark owner, potentially with far-reaching adverse effects.
A US restaurant chain Chick-fil-A who own the trademark “Eat Mor Chikin”, sent a cease-and-desist letter to a Vermont T-shirt vendor for selling T-shirts bearing the legend “Eat More Kale”, on the improbable ground that such usage would cause confusion. The T-shirt vendor created a Facebook page and an online petition asking for support. Thousands of people are said to have signed the petition, and he has raised thousands of dollars to defend himself.
Hansen Beverage Company, the owner of the trademark “Monster Energy”, for a variety of energy drinks, sent a demand letter to Rock Art, a small Vermont brewer, over the use of “Vermonster” for beer. Likely due to wide internet exposure and resulting negative publicity, stores in various cities starting pulling Hansen’s energy drinks from their shelves. Eventually, the parties reached a coexistence agreement.
Nadia Plesner, a Danish artist, produced a painting entitled Darfurnica (after Picasso’s famous Guernica), which was intended to draw attention to the tragedy of Darfur. A small but important component of the painting depicts (ironically) a young girl carrying a purse that resembles a Louis Vuitton Audra handbag. Louis Vuitton first sued over the use of an image of the girl on T-shirts sold by Plesner to raise money for Darfur victims. Plesner did not defend the first action. Louis Vuitton then sued her again for displaying Darfurnica on her website, and for using a detail, taken from the painting, of the young girl holding the purse with a logo that read “simple living”, and obtained an ex parte injunction. The injunction order was dissolved on appeal on the ground that Nadia’s freedom of expression trumped any of Louis Vuitton’s IP rights. Louis Vuitton was ordered to pay €15,000 in costs. The case generated widespread negative publicity for Louis Vuitton and substantial positive publicity for the artist, who before Louis Vuitton’s intervention was relatively unknown.
Industries Lassonde Inc, the owner of the trademark OASIS for fruit juice beverages, sued a small company called Oasis d’Olivia Inc for trademark infringement over their use of OASIS for soap. The claim was dismissed, but the Court found that Lassonde “engaged in the improper use of the Court to thwart the right of the defendant to the lawful use of its corporate name and trademark” and ordered Lassonde to pay the defendant $100,000 in legal costs and $25,000 in punitive damages. The damages award was set aside on appeal, but when it became public knowledge that Lassonde had pursued Oasis d’Olivia for eight years over this supposed insult to its trademark rights, Lassonde incurred substantial negative publicity, including an article in the prominent Montreal newspaper La Presse, and social media sites such as Facebook and Twitter. In an attempt to mitigate the damage to its reputation, Lassonde has offered to pay all of the defendant’s legal costs.
In Mattel, Inc v Walking Mountain Productions, Mattel brought an unsuccessful claim for trademark and trade dress infringement against a photographer who used a Barbie image in his parodic artwork. The Court granted the defendant costs of $241,800 and more than $1.5 million in attorneys’ fees. The Court found that “Plaintiff had access to sophisticated counsel who could have determined that such a suit was objectively unreasonable and frivolous. Instead, it appears Plaintiff forced Defendant into costly litigation”.
The Saul Zaentz Company and the Tolkien Estate demanded that the operator of The Hobbit pub in Southampton, England, cease and desist from using the name The Hobbit and the names of various drinks named after characters from The Lord of the Rings, despite a history of some 20 years of similar usage. The pub’s landlady, Stella Roberts, began telling her customers about the demand and that, if it was complied with, she would be out of business. Eventually she gained some 50,000 Facebook supporters. Sir Ian McKellen, who starred in the Lord of the Rings trilogy, and Stephen Fry, who appears in the forthcoming film adaptation of The Hobbit, offered to help Ms Roberts. Soon thereafter, Zaentz offered an annual licence on nominal terms.
An example of an enlightened approach to trademark enforcement is The Coca-Cola Company’s reaction to an unauthorised Facebook page that eventually gained more than 3 million “fans”. The success of the Facebook page was unprecedented, although the creators did not fit into the traditional role of operating as a fan club or a group of enthusiasts of the brand. Instead of sending a demand letter to the two creators of the page, Coca-Cola instead paid their travel costs to meet with them in Atlanta, following which the matter was resolved amicably with the creators retaining control over the Facebook page.
The lesson to be learned from these (and many more examples like them) are that any communication relating to alleged trademark infringement should carefully take into account the possibility of retaliation in social media.
The following rules of thumb are suggested:
• When sending a demand letter to an entity that is deliberately sailing as close to the wind as they dare, particularly if the same entity has a history of misconduct, there is no reason to hold back, although even then it would be well to think about how the letter would look to disinterested observers if posted online. However wrongful one considers the conduct to be, and however great the provocation, it seldom pays to couch the demand in shrill or insulting language.
• If the conduct to be complained about is borderline, it is particularly advisable to express one’s position in polite language that does not overstate one’s rights. In close cases it is often better to ask for more information concerning the current usage, and the other side’s future plans, before suggesting what they ought to do to. On occasion, calling the person by telephone and speaking in a conciliatory tone can achieve more than a letter written in legalese.
• When the conduct your client wants you to dispute is entirely lawful, and you see no realistic chance of success in litigating the issue, you should consider your responsibility to the court not to participate in an abuse of court process, and you should remind the client of the risk that the intended defendant could fight back in social media and cause far more harm to them than is caused by their current activity. Moreover, there is a risk that a history of bullying small entities who have done nothing wrong, could end up influencing a Court negatively in a future borderline case where the trademark owner might otherwise have had a decent chance of success.