Lessons from a trade mark war

They say that imitation is the sincerest form of flattery, but it isn’t always welcome, as independent organic food supplier Honest to Goodness will tell you.

The Sydney business was mortified when Woolworths launched a major marketing campaign starring celebrity cook Margaret Fulton and the phrase Honest to Goodness, and the minnow alleged that the supermarket giant was infringing on its trade mark.

Business owner Matt Ward sent a letter to the Woolworths board raising his objections to their use of the phrase. He says this fell on deaf ears, so he decided to take his objection to the Federal Court, seeking an injunction to stop Woolworths using the phrase.

Woolworths maintained throughout the court proceedings that the phrase is commonly used and therefore it can be freely used. Its lawyers convinced the judge to allow it to continue running its expensive marketing campaign, believed to cost around $2 million.

Mediation between the two parties has now failed and they are headed for trial over the matter in July.

Ward estimates he has forked out $150,000 in legal fees in an attempt to stop Woolworths using the phrase Honest to Goodness, adding that the preparation for the final trial hasn’t even started.

Ward says he pursued the case because he believed his company would lose its brand identity altogether and Woolworths’ use of the phrase would cause confusion to his customers.

He and his wife started the business from their family home, about nine years ago. The retailer, wholesaler and online trader has more than 700 products in its range.

“It’s quite remarkable that we have to risk everything we have worked for in nine years in order to protect it,” Ward says.

“Small companies like ours should be protected under the laws that exist in Australia for both registered and unregistered trade marks. This isn’t a battle for the Wards and their Honest to Goodness brand; it is a battle for trade marks and small business in Australia generally.”

Other trademark battles

Ward is not alone. There are plenty of other high profile trade mark battles that have been waged over the years.

Small businessman Danilo Spagnuolo won an 18-month fight to block national hotel giant Mantra from registering the name of an iconic Gold Coast tower Q1 as its own.

Spagnuolo, who owns two apartments in the Q1 tower, operates Q1 Holidays Gold Coast, which leases apartments in the building to tourists. He told SmartCompany at the time that commonsense had prevailed and that “sometimes, the big company doesn’t always win”.

One of Australia’s most successful beauty industry exports, the Melbourne-based Aesop, has also faced such action. The business was founded in 1987 under the name Emeis Cosmetics, but a UK company with a similar name threatened legal action, forcing Emeis to fork out more than $150,000 registering the new Aesop trade mark and rebranding.

Then there was the case waged between Mars Australia and Nestle last year, which resulted in the Federal Court allowing Mars to register the purple colour of its Whiskas cat food as a trade mark. The court was told that the colour was created from scratch to market the products.

The case followed a series of recent colour trade mark claims, with companies rushing to secure their colours after a landmark court decision that allowed Cadbury to trade mark five shades of purple for its packaging.

More recently, famous fashion designer Collette Dinnigan has launched legal action against a lesser known Australian businesswoman with a budget line of jewellery, Colette Accessories, claiming she should have sole use of the name.

Time is of the essence when it comes to trade mark battles if you want to protect your brand, says Melbourne branding expert Andy Wright. the general manager of branding agency Interbrand.

Damage can be done to your brand if you choose to stand still and allow the other brand to align itself with yours, he says.

“You have to go back to what made your brand successful in the first place. If someone has copied, you need to decide if this will actually help reinforce your own position or will be detrimental to it. What’s the next logical step and how can you use it to your advantage?” Wright says.

How to avoid a trademark war

Problems around trade mark can occur when entrepreneurs don’t do their homework in the set-up phase, says Sam Hajjar, founder of The Saljar Group, which helps entrepreneurs turn an innovation into a commercial reality.

The Sydney man was an IP lawyer prior to launching The Saljar Group and offers commercial and IP-related advice to clients.

Things like words, marks, symbols, sound or even smells can be trademarks, he says.

“However, too often companies think that registering a business name means they automatically have a registered trade mark, which isn’t the case. A business name and a trade mark are two separate issues.

“Although it is not legally compulsory to apply to register a trade mark, applying for one definitely makes life easier when it comes to preventing competitors from using the same or similar marks to yours,” he says.

And while it is possible to register a trade mark yourself, Hajjar says that hiring an IP lawyer or trademark attorney can save a lot of grief down the track.

“It’s very easy to get confused when trying to decide the class of goods or services that your business falls into, which is something that needs to be done as part of your application process. If you don’t tick the right boxes, you could find that other businesses you deem to be competitors could pick a similar name to yours and it may be difficult to stop them,” he says.

A business that plans to expand into overseas markets should also think about widening its trade mark protection, which a lawyer can assist with, he adds.

“Just because you have a trade mark registered here in Australia, that doesn’t mean you’re protected overseas.”

If you suspect trade mark infringement

There are steps you can take if you believe someone is infringing on your trade mark.

IP lawyer Clare Mirabello of Sydney’s TressCox Lawyers says the first step is to write to offending business immediately. If your trade mark is registered, a letter from a lawyer or patent attorney may be all that is needed to deter the infringer.

“If you have that piece of paper showing that your trade mark is registered, you automatically have a far stronger case,” Mirabello says.

If the matter does end up in court, it could cost a minimum of $20,000 but could easily cost $50,000 to fight it, she says.

The IP Australia website says consider if a trade mark is substantially identical or deceptively similar to another by studying previous court cases and precedents.

Mirabello says you do have rights as a business even if you don’t have a registered trade mark, but without official registration, you will need to prove your reputation as a business in court, which can be difficult, she says.

Staying out of trouble in the first place

When picking a business name or trade mark, a search of databases like ASIC register, IP Australia’s website and also a Google search is paramount, Hajjar says.

“You should conduct a thorough background search to make sure no one else is already using that name. If they are, it still may be possible to use that name if you are in a different segment of the market, but again there are certain rules around this, so you should make sure you get advice on the issue before proceeding.”

Hajjar says a distinctive or different name is the best bet.

“There are rules around what you can and can’t register, and every day expressions are difficult to register. Words that simply describe the goods or services being offered are also difficult to register and protect.”

IP Australia’s website says that trade marks that are difficult to register include those that indicate the quality or quantity of service that a business offers, words that indicate the worth, surnames, trade marks that refer to a timeframe and in some circumstances, the geographic origin of the business.

Canberra mumpreneur Jenny Tifen was on the receiving end of a legal letter. She admits she didn’t do her due diligence before launching a business a few years ago. With a business name registered, she thought she was fine to begin marketing her business.

However, she didn’t have a trade mark registered. Tifen admits she was in the wrong and has since rebranded.

“It’s awful. I wish I knew more about trade marks before I fell into business. The process has been a great learning curve and now I am helping other small businesses to ensure they’re not encroaching on other’s intellectual property,” Tifen says.

To protect your branding, Wright advises that businesses assume that a trade mark issue will occur at some point and plan accordingly. He says businesses should check their legal standing now, before it happens. Businesses should also scenario-plan their response if they’re accused of infringing a trade mark.

“We used to say that brands were built to last. Those days are on their way out. We now build brands to change,” Wright says.