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Brand Matters Issue 4 | February 2015

Brand Matters

Welcome to the latest edition of Brand Matters, our new e-bulletin focusing on issues that affect brand owners and advisors.

Editor's Note

Regardless of sector – from retail, fashion, sport and media, through to life sciences, finance and real estate – a brand is one of the most valuable assets that a business or an individual can own. But navigating the world of brands can be a minefield, particularly in light of technological advances and the international nature of modern business.

We welcome your feedback, so if there is anything in this newsletter that you wish to discuss further, or any ideas for future issues, please do not hesitate to contact me or any member of the team.

Astroturfing on review sites

Mishcon de Reya recently acted for a long-standing client, Pimlico Plumbers, in relation to suspicious reviews on Yelp, a popular website that publishes crowd-sourced reviews about local businesses. Fake reviews on such sites are commonly known as "astroturfing".

The comments by three users in particular didn’t seem to correspond to actual work completed by Pimlico Plumbers. Further, each review in question was the first review that the users had made on Yelp, and the users did not have any 'friends' on the site. These factors combined made Pimlico Plumbers very suspicious that the users were not real clients posting genuine comments, but were in fact competitors with fabricated reviews.

So what are your options?

In this case, we wrote to Yelp asking them to remove the reviews and – under the relevant clause of the Defamation Act – to provide the contact details of the users who had made them. Yelp refused. After a great deal of correspondence, we informed Yelp that we would seek a Norwich Pharmacal (third party) order if they did not provide the users' details. Under such an order, Yelp would be ordered by the courts to provide this information. Yelp did not agree and, left with little choice, we made an application for a disclosure order against Yelp, served out of the jurisdiction as Yelp's European headquarter is based in Ireland.

At this point, two of the reviewers instructed solicitors and agreed to take down the reviews only if our client agreed not to pursue an action in defamation against them. Naturally our client refused to give that undertaking, seeing this request as a clear sign that the reviews were fictitious. Yelp then – surprisingly – provided us with details of the third user. The two other users subsequently capitulated, giving up their identities, taking down the reviews and agreeing not to disseminate such statements again. Pimlico Plumbers is delighted with the result, but the case illustrates the difficulty that companies face when dealing with online attacks, despite the changes in the law under the Defamation Act.

Our top tips if your company is being attacked on a review website:

  1. Check the terms and conditions of the site itself. There should be a mechanism for making complaints and for reviews to be taken down while your complaint is investigated.
  2. Make your complaint, explaining clearly why you believe the review should be taken down.
  3. If the site refuses to do so, contact us.

Please contact Dina Shiloh or Harry Eccles-Williams with any queries relating to this case.

Boxed in by trade mark laws

The legal battle between Brands Incorporated (Brands Inc) and Meraas Holding (Meraas) over ownership of the BOXPARK brand in the UAE shifted gear this month, when Brands Inc turned to social media in the hope of reaching a resolution.

Brands Inc opened BOXPARK, its award winning East London pop-up mall made of shipping containers, in 2011. However, it did not file for registered trade mark protection in the UAE after the launch. In the UAE, trade mark rights are granted on a first to file basis, which meant that when Meraas filed its own application for the BOXPARK trade mark in the UAE in 2014, it obtained exclusive UAE rights in the brand. Meraas, a UAE based property company, has since announced plans to launch a similar mall, also called BOXPARK, in Dubai later this year.

As it has no legal rights in the UAE, Brand Inc has been unable to stop Meraas so far. In a novel move, it has released a video on Youtube and Twitter asking Meraas not to use the BOXPARK name, hoping to persuade the public to put moral pressure on Meraas to changing the name of its container park. We will have to wait and see if Meraas takes notice of the campaign.

Brand Inc's video highlights the issues faced by businesses seeking to stop "copycats" in the UAE and other territories. It is important to file trade marks as early as possible and in all countries of potential interest, to limit the chance of your business encountering a similar fate to Brands Inc. However, this alone is not enough. Defensive registrations are not permitted in many territories and unless you use the mark in the territory filed within your registration, it will be open to challenge within a few years of its registration (three years in the UAE).

Although some businesses may decide to enter the relevant market place on their own, an increasingly attractive alternative is to enter into franchising and licensing arrangements with local partners. This option offers the advantage of working with partners who have already built up contacts and have local and cultural knowledge on their side which could help you to enter the market place more quickly than you would otherwise be able to.

Immaterial of the territory or means of expansion, there will always be various hurdles for an growing business to consider and overcome, so appropriate advice should always be obtained prior to embarking on any international expansion plans.

This case serves as a reminder not only of the importance of taking early steps to protect your business and brand globally, but also making sure that you understand any local prerequisites for maintaining that protection, such as actual use in the territory. Failure to do this can allow others to take advantage of your branding and reputation, and prevent you from expanding your business internationally.

If you have any questions or enquiries on the issues that may affect your business when considering international expansion, please don't hesitate to contact our Brand Protection and Franchising teams.

Fifty Shades of Pay

Brand owners should take note of a recent Intellectual Property Enterprise Court (IPEC) decision which emphasises the need to carefully consider all settlement offers. The claimant, having won its claim for infringement of its UK registered design in a metal frame used in bondage activities, was ordered to pay costs to the losing defendant that were more than three times the amount of damages awarded to the claimant.

This was because the claimant had rejected a number of well thought out Part 36 offers made by the defendant. A Part 36 offer is a specific type of offer that may be made before and during legal proceedings. If a party rejects a Part 36 offer and then fails to beat the offer at trial (even if they win on the merits), then there are serious costs consequences. The party that failed to beat the offer is required to pay the other side's cost from the date on which it should have accepted the offer (21 days after the offer date). It is designed to encourage parties to make sensible offers to settle at an early stage.

During the course of proceedings, Part 36 offers had been made on both sides. The defendant, Mr Ball, had made an initial Part 36 offer of £15,000, which was subsequently withdrawn but later restated. At no time did he explain how this sum was calculated. UWUG rejected these offers, making its own Part 36 offers to accept first £60,000, and later £28,000.

UWUG was successful at trial but was awarded damages of only £2,859.20. This failed to beat Mr Ball's Part 36 offer and as a result, UWUG was only granted its costs (subject also to the IPEC costs cap) up to the expiry of Mr Ball's initial Part 36 offer (even though the offer had been withdrawn). Mr Ball obtained his costs (subject to the costs cap) from the date of expiry of the restated offer (£12,210). UWUG was therefore ordered to pay the net sum of £9,710 in costs to Mr Ball. It is worth noting that had Mr Ball not withdrawn his initial offer, he would almost certainly have been able to recover even more costs from UWUG.

This case highlights the importance of making well thought out Part 36 offers and the dangers of failing to take them seriously. Parties will always benefit from taking a realistic view as to the likely outcome at an early stage in proceedings. (UWUG Limited & Anor v Ball [2015] EWHC 74 (IPEC)).

For more information about the case please click here or contact Suzi Sendama.

The domain name game

The domain name space is changing dramatically. Hundreds of alternatives to the original generic top level domains (gTLDs) are now available, ranging from ".sport" to ".fashion", so brands can replace .com, or .net extensions with an address that more accurately describes their business. Colin Darbyshire of domain name management specialists BrandIT provides an overview of the newly launched domains.

ICANN, the non-profit entity which administers the internet, began a policy development process in 2005 to consider the introduction of new gTLDs. This allowed companies and organisations to choose essentially arbitrary top-level internet domains, also allowing the use of non-Latin characters such as Cyrillic, Arabic, Chinese and so on. The aim was to enhance competition, consumer choice and innovation. After many years of debate the new gTLD application period opened in January 2012.

Most applications can be grouped into four different sections – geographic, community, brand or generic.

There are three different types of registries: open, restricted and closed. Anyone can register in an open registry. With restricted registries, the applicant will have to meet a certain set of criteria. Restricted registries are often community or geographic registries, meaning that you can register a domain, provided that you belong to the community or to the geographic area defined by the registry (such as .london). Restricted registries are also being seen in other domains; for example, Amazon plans to offer .book to authors within their own Kindle community. Closed registries are mainly used for brand extensions, so the registration will be controlled by the brand for obvious marketing and trade mark reasons. In these instances, the brand acts as registry, registrar, and registrant, keeping control of the new gTLD at all levels.

As of December 2014, more than 1,900 applications for new gTLD had been submitted, of which over 500 have been introduced into the internet. The top three names were .xyz, .club and .berlin, with .london coming in at 10th place. Despite the volume of new TLDs being released, infringement appears to be relatively low. There are a number of ways that brand and trade mark owners can file a complaint with ICAAN. These include the Uniform Rapid Suspension System (URS), which is a fast and cost-effective dispute resolution procedure for clear cases of cybersquatting.

Statements from the Google Search team state that there is no advantage in registering new gTLDs. However, recent SEO and Google Adword studies appear to demonstrate an advantage, at least short term. Google applied for 101 extensions of its own.

The domain name changes will potentially increase brand protection budgets, but also provide new marketing opportunities. There are hundreds of variables to account for as it applies to protecting and promoting your brands on the internet. Different brands will have different strategies for deciding whether or not to register their brand with any of the new gTLDs. The best course of action when it comes to new gTLDs is to monitor the growing gTLD space and work closely with both your trade mark and domain name representatives to ensure you have the most appropriate coverage for your brand.

Article provided by Colin Darbyshire of BrandIT UK.

Blog: Business Shaper - Luke Lang

Luke Lang co-founded Crowdcube, the world’s first and most successful investment crowdfunding platform. It enables entrepreneurs to bypass the traditional business angel, venture capital or bank finance routes, giving them greater control and access to more investors. The company has amassed a community of more than 120,000 savvy investors, raising over £51 million of equity finance for 178 British businesses. Click here to read the full blog.

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