Down on the Corner… out in the Street – Battle of the Trade Marks: McDonalds v Swancom

The McDonalds Golden Arches trade mark is one of the most recognisable trade marks in the world.

In an increasingly health-conscious world, innovation in the fast food industry is imperative to stay in touch with consumers and maximise brand value.

Accordingly, to strengthen its healthy food options range and related reputation, McDonalds swapped the hash browns and burgers for smashed avocados and salads at The Corner by McCafe; fittingly located next to the Royal Prince Alfred Hospital in Sydney.

Unfortunately for McDonalds, their adventure into the health food space and subsequent deviation in branding has resulted in a four year (and still ongoing) trade mark battle for “The Corner”, which may result in them being left out in the street!

Battle Origins

McDonald’s and Swancom, which operates well known Melbourne pub The Corner Hotel, have been battling it out over the use of the word “Corner” and “The Corner” in their trade marks for the provision of restaurant services in Class 43.

Both parties have made applications for the following trade marks in relation to their respective businesses:

 

In April 2018 Swancom initiated proceedings against McDonald’s for trade mark infringement.

A few months later, while not admitting to trade mark infringement, McDonald’s agreed to change their yellow “The Corner” logo mark, which is still under examination.

However, surprisingly, McDonald’s went on to file a new trade mark application for “TheCorner McCafe” Logo on 17 August 2018.

Almost one year later, on 28 March 2019, McDonald’s fired back filing a cross-claim to have Swancom’s “Corner” and “The Corner” trade marks cancelled.

McDonald’s claims that the trade marks should be revoked because they aren’t suitably adapted for the services that they provide in class 43.

They’re also claiming that at the time these trade marks were registered the trade marks did not sufficiently distinguish the services that Swancom provided.

This will need to be a carefully crafted argument as McDonald’s are seeking registration of their two “The Corner” trade marks and they will not want to file arguments in this case that may adversely impact on the potential registration of their trade marks.

Lessons to be learnt from the battle

In Australia, common law trade marks are protected on a first to use basis.

This means that the first person to use the trade mark in the course of trade owns the right to use (and authorise others to use) the trade mark.

However, the common law rights must be considered in conjunction with the statutory rights obtained by registering the trade mark with IP Australia.

Statutory trade mark rights are obtained by filing a valid trade mark application with IP Australia and prosecuting it through to registration.

This registered statutory right is a complete defence to any allegation of trade mark infringement and can be used to prevent third parties from using the trade mark, subject to pre-existing common law rights – these may permit a third party to continue using the trade mark to the same class of consumer in the same geographic locations in which it has been previously using the trade mark.

For anyone registering a trade mark, it’s critical to search the register and see if any similar trade marks (pending or registered) exist and under in relation to what goods or services they are registered (seeking registration). This will enable you to determine whether your trade mark is available for your use (and registration, if you so desire).

The issue with the current dispute between Swancom and McDonalds is that they both want to use trade marks featuring the words THE CORNER in relation to the provision of restaurant services.

Swancom claim that McDonald’s have been infringing their registered trade marks since the inception of the McCafe cafés in 2014 (which incidentally is before the priority date of Swancom’s “The Corner” registered trade mark, but subsequent to the official priority date of its “Corner” registered trade mark.

In the cross-claim, McDonald’s are arguing that Swancom’s use of “Corner” and “The Corner” does not actually distinguish its provision of restaurant services.

McDonald’s have also claimed that they registered “The Corner” because they were aware of the application filed by McDonald’s to use that mark.

Ultimately, the battle is over who is entitled to use the trade mark and will be decided on the basis of use.

Is the fight worth it?

On the surface it may seem like McDonalds and Swancom are fighting over semantics – what difference can a single word make?

The reality is that trade marks are big business and for a company like McDonald’s.

The Corner by McCafe is a pilot café with national expansion plans; it will not be a trade mark fight that McDonald’s will simply forfeit.

For Swancom, The Corner Hotel is one of Melbourne’s oldest pubs and a staple in the music scene – its key identifier has always been the use of the words “The Corner” and a rebrand is not likely a feasible option.

Despite the arduous and costly trade mark claims both sides are running, the value of these trade marks as brand identifiers outweighs the disadvantages associated with the cost and time of the legal proceedings.

The trial has been set down for 23 September 2019, where Federal Court Justice Michael O’Bryan will decide who get The Corner, and who’s out in the Street!

If you have a new brand you wish to use and require a freedom to operate search to be done, you are concerned about trade mark infringement proceedings, or you are looking to protect your brand, Macpherson Kelley can help.  Our IP team is well recognised for its trade mark protection and strategy work.

Key Takeaways:

  • Trade Marks are brand identifiers and a significant asset for any business.
  • Common law rights in trade marks in Australia are protected on a first to use basis.
  • To gain full protection of the law trade marks need to be registered with IP Australia, which bases rights on a first to file basis (subject to the pre-existence of any prior common law rights).
  • Trade Marks are registered with classifications that indicate what type of business you’re offering – it’s vital this is done right to ensure protection for the correct trade mark rights is secured.
  • A strong brand protection strategy is key to ensuring that your trade marks maintain, value which includes preventing others from being able to use them.

This article was written by Mark Metzeling, Special Counsel – Commercial and Intellectual Property and Nicola Stewart, Law Graduate – Commercial.