British trade marks and unfair advantage

The UK High Court has dismissed an appeal filed by Monster Energy to register its ‘RED DAWG’ trademark. The court found that he could take unfair advantage of the trademark of the famous brand of energy drinks “RED BULL”. The case (Monster Energy Company v Red Bull GmbH [2022] EWHC 2155 (Ch)) was initially held before the UKIPO before Monster Energy appealed to the High Court.

The trademark

In 2020, Monster Energy applied for a UK trade mark registration for ‘RED DAWG’ relating to soft drinks. Rival Red Bull opposed the application on the grounds of likelihood of confusion among members of the public – a common ground for opposition by an earlier trademark holder.

The UKIPO decision

At the hearing at first instance, the UKIPO considered that with regard to the objection relating to the likelihood of confusion raised by Red Bull, there would be no confusion between the marks in the eyes of consumers, even on identical products, namely energy drinks. UKIPO therefore rejected Red Bull’s opposition.

However, UKIPO noted that the mark ‘RED DAWG’ would likely seem familiar to consumers and cause them to associate the mark with Red Bull products. In turn allowing Monster Energy to establish its brand without incurring the marketing and advertising costs that would otherwise be a free bypass of the goodwill established by the earlier Red Bull brand. UKIPO therefore upheld Red Bull’s opposition for undue advantage.

The call

In its appeal to the High Court, Monster Energy argued that there was no evidence to support the UKIPO’s finding that there was potential for ‘free riding’ by ‘RED DAWG’ on the “RED BULL” mark or from which a risk of “free riding” could be inferred. Monster Energy argued that it is not enough that the proprietor of the ‘RED BULL’ trademark can receive a benefit, there must also be a nexus that renders the benefit unfair.

UKIPO had already expressly rejected the allegation that Monster Energy intended to mislead or confuse consumers. Furthermore, advantage or injustice cannot simply be presumed, but rather must be proven by evidence, and UKIPO did not engage in any analysis of evidence to arrive at its decision. Monster Energy effectively argued that the High Court needed to find the higher threshold of faulty intent in Monster Energy’s application for the mark to find an unfair advantage.

In response, Red Bull argued that it is not necessary to demonstrate the subjective intention to profit from an earlier mark. They argued that a finding of undue advantage may be drawn in circumstances where the use of a sign has the objective effect of creating such an advantage. Red Bull also argued that UKIPO arrived at its decision by drawing rational conclusions.

The High Court was not persuaded by the arguments put forward by Monster Energy. In particular, it determined that Monster Energy chose to use the “RED DAWG” trademark so that it would have commercial significance among its energy drink competitors and impact consumers of energy drink products. The High Court held that when encountering ‘RED DAWG’ goods, consumers would remember the earlier mark ‘RED BULL’, although they would not necessarily be confused with one another. This would mean that Monster Energy would be able to establish and sell its energy drinks more easily, without the necessary marketing expense. Therefore, even if Monster Energy had no subjective intention to take unfair advantage of its competitor’s brand, “RED DAWG” would benefit from a “free-ride” and gain an undue commercial advantage.

In addition, the High Court also considered the issue of the legal principle of ‘undue advantage’ and its interpretation by UKIPO. She noted that the analysis and application of the law was clear and correct. On the argument of lack of evidence supporting UKIPO’s decision, as Monster Energy did, the High Court held that it is entirely permissible to draw conclusions on the basis of inherent probabilities, and that will not be treated as speculation. It often happens that there are competing factors in a case assessment with some factors pointing the other way, but that does not mean that the overall decision is incorrect. As such, the High Court was not convinced that UKIPO’s decision was clearly wrong and was therefore not susceptible to challenge.

No free spins for trademarks?

The decision recalls that the interpretation of undue advantage is objective. This means that owners of established marks are able to protect themselves from any free riders seeking to register new marks, without having to prove their actual subjective intent to benefit from a prior mark.

Furthermore, the case highlights once again that UK courts are reluctant to interfere with decisions made by UKIPO as the threshold for doing so is high.

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