This article has been written by Ashutosh Singh, a student of BA.LLB (Hons), at Amity Law School, Amity University Kolkata. The article analyses the Bentley dispute to understand the need for registering the trademark and the need for a rebranded Intellectual Property.
Table of Contents
Introduction
Trademark protection is very important and is given by the nature of a company’s business. It is very important for the venture-backed, high growth of business enterprises and it shouldn’t be overlooked. If a business is considering getting a brand then it is important to understand that Intellectual Property (IP) is parked at the intersection between marketing, business, and branding. Copyright, trademark, and design are the relevant IP areas to brands in the market. Identifying the IP right is a better way rather than discussing the contexts in which IP is relevant. Building a brand on solid foundations involves taking account of IP risks and opportunities very early on, so one can avoid the need to undo ill-considered actions.
There is an image problem with Intellectual Property and this is why its importance towards branding is often misunderstood. If one wants to create a brand that will win over people or one is going on a branding exercise then it is important that one focuses on the intersection between marketing, trademarks, branding, and IP. For example, the business of Bentley Clothing was founded in 1962. In 1982, its trademark was registered under class 25 which covers clothing at the UK Intellectual Property Office,1982.
Like many other car brands, Bentley Motors too decided to manufacture a line of clothing under its leading brand name which led to a trademark dispute with Bentley 1962 Limited and Brandlogic Limited (together called Bentley Clothing). The dispute started when Bentley Clothing had approached the car giant in 1998 about the clash regarding branding. In the recent High Court case of Bentley 1962 Ltd. with Bentley Motors Ltd, the Court emphasized protecting intellectual property and the power of trademarks. This article analyses the importance of the Bentley dispute and the need for a rebranded Intellectual property.
The companies involved in the dispute
Bentley Motors Limited
The British origin Bentley Motors Limited is a manufacturer and luxury carmaker which is a subsidiary of the Volkswagen Group since 1998. It is headquartered in Crewe, England. W.O. Bentley in 1919 found Bentley Motors in Cricklewood, North London. It soon became known for winning the 24 Hours of Le Mans in 1924, 1927, 1928, 1929, and 1930.
Bentley Clothing
In 1962, Bentley clothing was founded by Gerald Bentley, 43 years later than Bentley Motors which was already established by then. It is headquartered in Wembley, West London. The Lee family bought the firm in 1990 and it moved to Manchester in the coming years. It did not mass manufacture clothes for the general market but for the customers of the high-end luxury market. Its wider fashion group manufactured and designed garments for Burberry, Gieves & Hawkes and Aquascutum, etc. It has also created country wear, sold in Harrods, Farlows of Pall Mall, and Barneys New York. Lees’ clothing group had factories in Rusholme, Wigan, Ripponden, Stretford, and Ashton-under-Lyne. It had also employed 400 staff at its peak.
Bentley litigation
The problem arose when Bentley Motors, an established car company, decided to manufacture a line of clothing under its leading brand name resulting in a trademark dispute with Bentley Clothing. In 2017, the litigation proceedings began at the High Court in London, but both the parties could not resolve the dispute between them. There were also many unsuccessful attempts that were made by Bentley Motors to cancel the Bentley clothing’s trademark.
Bentley Motors’ name and logo
When in 1962 Bentley Clothing was established, it filed three trademarks in the UK for ‘Bentley’ in 1982, 1998, and 2008 which were related to its clothing, headgear, and accessories under class 25. The Bentley Motors’ branding on its clothing line up till 2000 was its famous ‘B-in-Wings’ logo that is featured on the bonnet of the Bentley cars. Later on, it distributed the clothing line with the catalogues using the ‘Bentley’ trademark alongside its ‘B-in-Wings’ logo. Both the parties attempted to negotiate the overlapping trademarks but the discussions failed. Then Bentley Motors tried to cancel Bentley Clothing’s trademark rights at the UK Intellectual Property Office. After that, Bentley Clothing started a trademark infringement proceeding against Bentley Motors.
The appeal decision
The High Court in London, in 2019 ruled that Bentley Motors had infringed Bentley Clothing’s trademark saying that it could not use the name ‘Bentley’ on its UK clothing range. Moreover, Bentley Motors was told by the court to destroy all clothes carrying the Bentley Motors logo. After this, Bentley Motors appealed to the Court of Appeals (London) and lost.
The Court of Appeal’s(London) Justice Marcus Smith, Lord Justice Lewison, and Lord Justice Arnold upheld the High Court’s decision collectively. They unanimously held that there was no basis for the Court of Appeal to overturn the lower court’s decision. Bentley Motors and Bentley Clothing had simultaneously sold clothes for many years but, Bentley Motors’ attempts to both revoke and develop a clothing line in direct competition to Bentley Clothing’s trademark that too by using an identical brand name would lead to confusion between the brands.
The law behind the judgment
As per the laws in the UK, a registered trademark is infringed when the infringer uses an identical sign which can be a logo or a name without obtaining consent from the registered trademark holder, for its goods or services. This is despite the possibility of confusion created about the trademark for the average consumer. Despite repeated attempts to invalidate Bentley Clothing’s’ trademark and by developing merchandise side-by-side in direct competition with Bentley Clothing using their identical brand name, Bentley Motors had unintentionally abetted in creating confusion between the brands. As a result, while Bentley Motors and Bentley Clothing have sold clothes contemporarily for many years, this case proves that the peaceful coexistence of trademarks is not an option. The main issue in the case was whether the BM mark was one sign or two separate signs combined together i.e. the ‘B-in-wings’ being one sign and the word ‘Bentley’ being the other.
The bench found the following grounds for infringement in this case which are as follows:
- Double identity as per Section 10(1) of the Trade Marks Act, 1994 – In the Court’s view, the average consumer would sense the BM Mark to be two separate and distinct marks. What this means is that Bentley Motors’ combination sign would be considered as two distinct signs but used simultaneously. So, it was found that an identical mark to Bentley Clothing’s ‘BENTLEY’ sign was infringed concerning clothing and headgear in the UK.
- Likelihood of confusion per Section 10(2) of the Trade Marks Act 1994 – The dominant part of the Combination Sign is the word ‘BENTLEY’. Thus, there was a likelihood of confusion between Bentley Motors’ combination sign and Bentley Clothing’s signs. This was considered to be an infringement concerning clothing and headgear in the UK. On this issue, the Court again ruled in favour of Bentley Clothing. It determined that, despite Bentley Motors’s extensive reputation, on the assumption that Bentley Clothing had made a notional and fair use of its trademarks, there was certainly a likelihood of confusion between Bentley Clothing’s marks and the BM Mark.
Defence about the transitional provisions of the Trade Marks Act 1994 –Bentley Motors advertised in their catalogue of clothing products like jackets, silk ties, caps, and scarves but did not use the mark on the goods themselves, before the Trade Marks Act 1994 came into force. Before the 1994 Act, Bentley Clothing only had protection for knitted clothing, shirts, and waistcoats. The judge said in this case that the defence only allowed Bentley Motors to continue using the mark on jackets, silk ties, caps, and scarves in promotional literature. They were not allowed on the goods themselves meaning that Bentley Motors could not use the combination-sign on clothing at all.
Bentley dispute : an example that IP is due for a rebrand
IP matters a lot in a business of brand extension, and this case amply illustrates that the Davids can easily beat the so-called mighty Goliaths of this world provided they build their businesses on strong intellectual property foundations. On 1 November 2019, Judge Richard Hacon in the High Court finally settled a 20-year long dispute between one of the world’s most prestigious and recognizable car brands, and a small Manchester-based UK clothing company.
The Bentley case highlights the impending dangers of brand extension from one marketplace where the proprietor’s trademark is exceptionally unique and well-known (cars/motors), into a new marketplace (clothing), where the regular consumer may not comprehend that the relevant goods are associated with that particular proprietor. The effect results in potential confusion in the market, as seen in the Bentley case.
Bentley Motors can’t be blamed for thinking that their brand was too powerful to ever be challenged. The long and steady trespass by Bentley Motors into the clothing sector, despite knowing of the existence of Bentley Clothing’s prior rights, demonstrates a thoughtless arrogance. The loss faced by Bentley Motors shows that even large, reputable trademark proprietors must approach brand extension cautiously. Needless to say, stepping out of an established market sector into a new area comes with risks. This case is a typical example of a win by David over Goliath.
The perils associated with brand extension can be assuaged with careful and considered research of the potential relevant new market. For this, trademark registries and simple online searches are a good place to start. Being open to a series of meaningful discussions with the competitors, when a potential conflict is found, is an overriding factor in avoiding lengthy battles. If the discussions between the parties had not been allowed to break down, in this case, and if Bentley Motors had seriously taken the protection afforded by Bentley Clothing’s Trademarks, this dispute could have been settled long before it reached the High Court. In true David versus Goliath fashion, a small family-run clothing business (Bentley Clothing based out of Manchester), had reigned over Bentley Motors (Volkswagen owned luxury car makers) for the second time in a long and time-consuming trademark dispute.
There is a lot of learning to be done from the Bentley dispute. This case focuses on the importance of the early registration of trademarks. As seen in this case, registering first can enable even the smallest of the companies to succeed against the largest multinationals. Bentley Clothing registered its trademark first and continued to use it. It established a monopoly over the word ‘Bentley’ for its clothes in the UK, over some time. However, registration of a trademark alone is not sufficient reason for the protection of the trademark. A business/company would have to continue the use of the trademark to retain it till its validity period. Had Bentley Clothing stopped selling its clothesline under the ‘Bentley’ mark, Bentley Motors would have had no trouble taking the brand name.
Let’s take ‘Maruti’ as an example. If a typical consumer sees the word ‘Maruti’ on any object, such as pencil, incense sticks, pair of shoes, or even a type of food, the consumer is likely to think that the product was in some way associated with the popular car brand. This would be the case despite the possibility of there being an unrelated ‘Maruti’ family in regional India running a pencil manufacturing business for example. In this hypothetical ‘Maruti’ example, and in the ‘Bentleys case’, the current system does not assist the average consumer in dispelling confusion but actually contributes to it. The courts will hold the decision in favour of the party that has registered the trademark first, even if the average consumer associates that trademark with a different (but more famous) brand.
An example of a similar approach, where litigation was avoided, can be seen in Burger King’s Australian operations.
Burger King to Hungry Jacks – the Australia case
‘Burger King’ was already registered and in use by a takeaway food shop in Adelaide, Australia. This is the reason for the known brand ‘Burger King’ to operate under the name ‘Hungry Jack’s in Australia. When the well-known international brand Burger King was founded in 1954, it was originally called Insta-Burger King and it grew quickly through franchising and simplified its name to Burger King and the fast-food restaurant created its flagship burger, the ‘Whopper’, in 1957.
Today, all over the world, Burger King is operating in over 18,000 locations. One can walk into a Burger King anywhere and be assured of getting the same standard of food and their whopper everywhere but one won’t find Burger King in Australia because it’s the only place in the world where Burger King is called Hungry Jack’s. When Burger King came to establish in Australia in 1971, it was learned that there was already a local restaurant called Burger King operating there. So, the local Burger King franchisee of the international brand chose to go with the name Hungry Jack’s instead. However, when one walked into a Hungry Jack’s restaurant, it was absolutely identical to Burger King outlets in the rest of the world in every way, except for its name.
Hungry Jack’s tried to purchase the trademark from the local Burger King over the years but failed. Hungry Jack’s became the largest Burger King franchisee outside of the US, even though it didn’t do business under the Burger King name. After a few years, the relationship between Hungry Jack’s and the Burger King Corporation became strained.
In the mid-90s, the local Burger King trademark in Australia expired. The international head office of Burger King seized the opportunity to open many outlets, immediately in Australia. Hungry Jack’s (alias Burger King) suddenly found itself competing with the international Burger King and Burger King tried to terminate its deal with Hungry Jack’s. This resulted in the two brands having a contentious relationship for more than a decade. However, in 2001, Hungry Jack’s finally won the Burger King rights to all of Australia but surprisingly after all those years and many attempts to acquire the name, the fast-food company decided to keep the Hungry Jack’s name even though it finally had the right to name the entire Australian chain Burger King. It did that as it was slowly building a brand value in the Hungry Jack’s name. The advantage it had was that it was local and firmly established in Australia. To switch after all that time would have been bad business.
Louis Vuitton v. Louis Vuiton Dak (2016)
This case is one shocking example of international trademark infringement.
A South Korean fried chicken restaurant recently lost a trademark conflict with designer Louis Vuitton (LV) where the infringing party could have easily avoided the legal battle, not to mention the huge fine. The fried chicken restaurant Louis Vuitton Dak (LV dak), made the mistake of naming its business very similar to the popular fashion brand Louis Vuitton.
The issue involved here is whether the use of LV’s ‘Toile Monogram’ in its food packaging by the South Korean fried chicken restaurant amounts to trademark infringement and counterfeiting? In the present case, LV sued the restaurant in Seoul Central District Court because it has a global reputation built through years of honest work and its mark has been misrepresented by LV dak.
The Seoul Central District Court stated that there has been damage caused to the image of LV due to misrepresentation by LV dak and hence it is liable for counterfeiting. The Court ruled in the designer’s favour after it concluded that the LV dak name was too similar to Louis Vuitton and in addition to the name infringement, the restaurant’s logo and packaging also were very similar to LV’s iconic imagery.
LV dak was penalized with a hefty fine for non-compliance, after changing their name immediately after the first ruling to LV dak. This case is a lesson for many brands which can avoid similarly expensive legal battles by avoiding mirroring their brand closely after another. The verdict was in favour of Louis Vuitton.
Starbucks v. Obsidian group (2016)
Starbucks in the month of January 2016, filed a lawsuit against a parent company of New York’s Coffee Culture Cafe after they launched a drink called Freddoccino. Starbucks alleges that the drink appears to be similar to Frappuccino and also that the structure of its name also contains a lot of similarities which can confuse the public market and as a result diminish Starbucks brand equity.
First of all, Starbucks owns the trademarked term Frappuccino. Further, Starbucks has also alleged that Coffee Culture has also created deceptively similar packaging to make the term ‘Freddocino’ look like it is trademarked when that is not the case. After the lawsuit was filed by Starbucks, Coffee Culture Cafe had changed the name of the drink to ‘Freddo’, but Starbucks still proceeded with the lawsuit against it. Coffee Culture had an opportunity to avoid trademark infringement by strongly guarding its trademark, which had an annual value of approximately 1.5 billion dollars.
Rebranding strategy for businesses
Companies keep on rebranding their products either for reactive or proactive reasons. A proactive rebranding of a product takes place when a company wants to show or introduce something new or add something new to the product line or modernize its image. On the other hand, reactive rebranding is done when one company merges with another and there is something negative that has come up about the company in the public or the company has received a cease-and-desist letter from the other company or has some brand marketing issue.
A business owner’s most common desire is to establish a brand that is attractive and well-received with their customers and represents their core values. Big businesses like Coca-Cola, Google, IBM, and 3M have taken this idea and made their brands on such a large scale that they are internationally recognized. On the other hand, smaller companies aspire that their brands and logos get recognized in the local markets. If a company considers investing to launch a new brand, then the company needs to think about the trademark rights of its competitors and also about protecting its trademark. Protecting and clearing branding is very important in this ever-increasing globalized business world.
Once a trademark is registered, it remains in force for ten years without any annual maintenance fees payable. A registered trademark can be renewed every ten years for moderate fees. If a trademark is registered earlier then it assures an exclusivity in the use and converts an intangible property into a personal property of the company or individual which can be, mortgaged or licensed to fund a future business activity. Before deciding on business rebranding, one must consider the legal issues involved. Otherwise, the rebranding strategy will be hollow and put your company’s brand equity in danger.
Protect the logo, name, and tagline
The intellectual property rights that cover one’s brand are copyrights and trademarks and it is important to understand how they apply to one’s rebranding strategy. Copyrights protect the brand; they do not stop someone from using similar branding but trademarks on the other hand stop others from using any related brand design or language. A registered trademark safeguards that an identifiable sign, design, or expression which categorizes one’s products or services of a particular source can only be used by the owner. This also ensures that taglines and business names are protected under the trademark law followed in the state/region/country. Copyright on the other hand grants the creator of an original work exclusive rights to its use and distribution and applies to the brand’s graphic elements. So, while copyrights protect the brand, they do not stop someone from using similar branding but trademarks can stop others from using any related brand design or language. Obtaining the proper copyrights and registering one’s business’s trademarks is one of the first steps of the rebranding process.
The logo of an enterprise will only be protected by registering both copyrights and trademarks. Very important to remember here is that copyright law grants ownership specifically to the creator of the logo. So, if the logo has been created by an external graphic designer, ad agency, or brand consultancy as part of the rebranding process, they will become the owners of the copyright unless their contract states otherwise. Therefore, everything must be in writing that the business commissioning the logo owns the copyright, not the contractor.
Earlier trademarks check
This can be done by making sure that the desired new brand is available for the taking. For many companies, their brand is their most important asset. The last thing one’s company needs is to invest in a new brand or product that is already being used by someone else. A trademark search and analysis is a useful tool not only to determine whether the mark is available to register but also to identify potential conflicts or even litigation from a brand owner with superior rights to the trademark. Only a registered trademark grants its owner brand exclusivity and guarantees that other businesses can’t register even the domain names with the trademark. Thus, it is important to ensure that one is not infringing on any other registered trademark, or else it is a waste of time, money, and effort on a rebranding that one can’t own because of infringement which is not even intentional. Making sure that one’s business has an exclusive trademark is a valuable keystone to any rebranding strategy which can be achieved by the following:
- One should search for earlier trademarks by checking the repository to see currently registered trademarks and pending applications in one’s region.
- Check in your region how one gets trademark rights. In the United States, trademark rights are granted to the first entity to use the mark and not to the first to apply.
- Applying early is significant as even a pending application can secure priority to trademark rights even though it hasn’t yet been used.
- Trademarks are country-specific and if one has an international rebranding strategy, then one must file for trademarks in each country separately.
Acting quickly in case of infringement
The longer branding disputes remain unresolved, the more costly and complicated they become. Thus, it’s in one’s best interest to act swiftly once any copyright or trademark infringement is discovered. Generally, an email or a letter is sufficient for others to stop, however, a formal cease and desist letter can be used just in case they don’t. It is important to ensure that one’s rebranding strategy covers enforcement.
Keeping some of these intellectual property considerations in mind when adapting the business and products, in modern times can alleviate the risk of disputes, and at the same time protect the valuable brand of the company and other business assets for the future.
Rebranding intellectual property
In today’s world, the plentiful supply of goods and services in the markets has made life very challenging for any type of business. Every business strives to create new and improved goods and services that will deliver greater value to its customers than those offered by competitors. To differentiate their products from their competitors, businesses depend on innovations that reduce production costs and also improve product quality.
IP needs a makeover in the modern world. It needs a rebrand because people see it as something boring and irrelevant to them. An aspect of rebranding IP is to ensure that IP and its importance are better understood. IP lawyers have a responsibility to speak in plain language, to be less obscure, and to explain IP’s significance whenever the opportunity arises. The problem arises because lawyers just carry out legal steps such as doing availability searches or registering trademarks or drafting agreements. But IP expert lawyers can do so much more to protect the business. People don’t know how much knowledge trademark lawyers have of branding, that could be available to them in alternative ways such as with brand strategy and choosing an appropriate mark.
Selecting a name that is appropriate for the business’ overall strategy requires expertise in trademarks. It is not just to search availability and register a trademark, but also to choose the right kind of name/mark/logo. The brand name of a business is the single most important decision to be made for its identity, yet what constitutes a good name and the right name for the business is poorly understood. It also pays to coach and mentors the people involved in this area.
All businesses, especially those which are well established and have a reputation in the market, have to rely on the effective use of one or more types of IP to have a significant competitive edge in the marketplace. Business leaders and managers now more than ever, require a much better understanding of the tools of the IP system to protect and exploit the IP assets they own.
Conclusion
In the modern fast-paced world of business, one has to be both innovative and nimble to stay relevant and accessible to their consumers. But, when trying to accomplish a quick marketing strategy, the launch of a new product line, or rebrand, one can easily let intellectual property considerations slip by. IP can be a major strength, or a major setback, if not managed properly.
When one operates one’s company under a name they have not trademarked, no matter how long one has been in business or how well-known their name is in the local market, they can expect to eventually receive a surprise which is a cease-and-desist letter from a company that owns the trademark to the name one is using for their company. Therefore, it is better to trademark anything important before developing it as part of your brand. Trademarks are irreplaceable assets of every business. They indicate the source of origin of goods and services and help the customers in distinguishing the goods and services of one business from that of another. Trademark indicates toward a superior quality to which the customer associates the product with and they help promote businesses by generating goodwill and brand value. It is on account of this fundamental quality that they have emerged as one of the most sought-after assets of the 21st century over which varied claims are staked every day before the various judicial and quasi-judicial forums/courts.
References
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