Home Articles Monopolization of names: David vs. Goliath

Monopolization of names: David vs. Goliath

Trademark protection often turns into blackmail, extortion and attempt to choke off the competitors.

Company name and trademark are the main symbols of any company. Just as in case with people’s names, they let consumers know with whom they deal and what product or service they can get. Some trademarks became so popular that they began to be used completely apart from the company itself – the xerox (from the name of the Xerox company) became a synonym of a copy machine, and the jeep (from the Chrysler Group’s Jeep) replaced the term “SUV”. But if people’s names can be repeated (so many Maries and Johns appear in our surroundings), then companies consider trademarks to be their property, and any hint of repetition or allusion is an attempt on this property.

Businesses have the right to protect their trademarks from being used by third parties. Sometimes they excercise this right in cases when allusions to their trademark are too far from being apparent, however. And sometimes young startups become victims of either large monopolies that are afraid of competition, or little-known regional companies that use judicial precedent and demand compensation for damage.

House of cards may collapse

The world-famous television series about the political game in Washington, with Kevin Spacey and Robin Wright starring, first appeared on the screens of Netflix video service in 2013. In parallel, the producer of the series, Media Rights Capital, tried to register the trademark in the United States Patent and Trademark Office, but in vain. After two and a half years, the media found out why they could not register it: a little-known company from Massachusetts D2 staked out this name for the designation of goods and services from the entertainment sector back in 2009. Although the “House of Cards” is known worldwide as a series about a quirky US presidential candidate, the lawsuit between Media Rights Capital and D2 still goes on.

Transnational giants vs. regional players

Large corporations with a full staff of lawyers, attorneys and patent specialists often go with lawsuits for small producers operating in one country or region, forbidding them to use not only trademarks, but also similar color symbols. For example, Retail Royalty Company, the parent company of clothing manufacturer American Eagle, sued a local retailer, Pantaloons, with the High Court of Delhi (India). The American manufacturer indicates in his lawsuit that the brand and logo of the Indian company are very similar to the American Eagle Outfitters logo, which depicts a flying eagle. According to lawyers, small companies should be especially careful when choosing a trademark, logo, slogan or brand, as large international companies carefully guard their market share and are ready to sue at the slightest suspicion. On average, trademark litigation costs companies between $ 250,000 and $ 750,000.

David vs. Goliath

These are not only regional companies, but young startups that are at risk of falling victims to large corporations. The globally integrated provider of financial services and the subsidiary of the German stock exchange Deutsche Börse – STOXX – jealously guards its trademark, which in practice turns into lawsuits against any company with a name which is partially consonant with “stox”.

So, one of the latest STOXX lawsuits was against a cryptocurrency startup Bistox. Interestingly enough, the Swiss Federal Institute for Intellectual Property registered both the STOXX trademark and the BISTOX trademark without finding any contradictions in the registration process.

It is worth noting, that international practice regarding consonant brands is not on the side of STOXX. Thus, the US Patent and Trademark Office (USPTO) considers the use of a trademark illegal if only it can mislead users. In other words, only those trademarks, which are confusingly similar, are considered to be a violation.

So far, claims are being discussed in the pretrial order, but Bistox has announced plans to protect its trademark, which was issued in accordance with the Swiss law.

China guards the market

A unique situation with trademark protection has developed on the Chinese market. In contrast to other regions and countries where small and medium businesses become victimized by large transnational companies, foreign companies in China often face lawsuits from little-known companies which have their brands registered in the country, these brands having much in similar to that owned by a foreign company. Thus, a major Australian wine producer Penfolds – Treasury Wine Estates – received a subpoena from Chinese citizen Li Daozhi, when trying to enter the Chinese market with wine called Ben Fu. Australian media found out that Li is a well-known hunter for well-known wine brands, who is suing a foreign wine producer not for the first time. For example, a year before the litigation with the Australian company, Li won a lawsuit against the French wine producer Castel, which was forced to pay 33.73 million yuan (about $5 million) by the Chinese court for using someone else’s trading name.