Your trade mark may be tarnished if somebody else uses the same, or a similar, word or sign in a way that portrays it in a negative light. Branding experts say that an unfortunate association with a name can scar a business reputation, even if the connection is coincidental. As a result, you may be left with a battered brand, which can prove detrimental to the livelihood of your business.

Given the success of a brand is so often dependent on trade marks, this article takes a look at the law protecting you against trade mark tarnishment, and provides examples where, in the face of trade mark tarnishment, businesses have successfully salvaged their brand.

‘Dilution’ of a trade mark

To appreciate the law protecting the tarnishment of a trade mark, it is useful to discuss ‘dilution’. Some countries provide specific legal protection from dilution. For example, the United States Federal Trademark Dilution Act (15 USC 15 §1125) defines trade mark dilution as:

the lessening of the capacity of a famous mark to identify and distinguish goods or services, regardless of the presence or absence of
1.   competition between the owner of the famous mark and other parties, or
2.   likelihood of confusion, mistake or deception.

These types of laws protect the identifying or distinguishing power of a trade mark. In general, dilution of a trade mark can occur through two mechanisms:

  1. blurring: the ‘association arising from the similarity between a mark or trade name and a famous mark that impairs the distinctiveness of the famous mark’; or
  2. tarnishment: the ‘association arising from the similarity between a mark or trade name and a famous mark that harms the reputation of the famous mark’.

Trade mark dilution is expressly recognised in the United States, the European Union, several countries of Central and South America, South Africa, India and Japan. Many other jurisdictions recognise a similar concept under other names. For example, Canada recognises the concept of ‘depreciation of goodwill’ (R.S.C., 1985, c. T-13).

In Australia, the concept of trade mark dilution is not expressly recognised. However, well-known marks are granted added protection by allowing their owners to oppose registration of the same or similar marks (even if the well-known term is not registered), to seek ‘defensive’ registration (even if there is no real intention to use the mark in connection to those goods or services), and to initiate an infringement action if a person uses the same or similar mark in relation to unrelated goods or services and it is likely to be taken as to indicate a connection with the well-known mark. As such, avenues exist whereby well-known (i.e. famous) trade marks can be protected from tarnishment in Australia.

Famous trade marks tarnished

There are numerous entries on the Australian Trade Mark Register that encompass the term “Isis”. Isis itself references the mythical Egyptian goddess of magic and life, and may have served as the inspiration for developing trade marks and business brands. However, if your trade mark, business name or brand include this term, it is likely to be suffering from a completely coincidental and unavoidable association with the Islamic State of Iraq and Syria terrorist organisation.

Clearly your trade mark is susceptible to tarnishment, because the similarity between the ISIS terrorist organisation and your mark impairs the distinctiveness of your mark, and calls undesired associations to the minds of consumers. The question is whether the trade marks laws – in Australia, the US, or anywhere else – are of any assistance to you in these circumstances.

The senior director of Verbal Integrity at Interbrand, a global branding consultancy, Lynne LaCascia has been reported as stating that ‘No name is free of all negative associations in all geographies and languages, and any can fall prey to unrelated news or conversation that happens after launch’. Further, ‘News and topics like ISIS generally die down over time,’ LaCascia added, ‘So while it’s always a good idea for brands like Isis Wallet to communicate about what value and experience it offers its customers, it’s unlikely anyone would assume affiliation or mistake one entity for the other even without that communication’.

So what should your business do? Under normal circumstances, the registered trade mark owner would be entitled to bring an action for trade mark infringement. However, under such extreme trade mark tarnishment circumstances, a business will often choose to deal with the matter independently – and the quicker the better – either by changing the name and branding of the business, or by taking other steps to ensure that the consumer’s association isn’t devastating to your brand.

Take the ‘ISIS Mobile Wallet’, the cashless payment solution from US companies Verizon, AT&T and T-Mobile. In September, it was announced that the technology start-up would change its name to ‘Softcard’. CEO Michael Abbott stated that ‘However coincidental, we have no desire to share a name with this group, and our hearts go out to those affected by this violence’.

In fact, this option of dropping the association to ISIS appears common among brand managers. The popular animated series Archer has completely dropped its reference to ISIS, which formerly denoted the program’s ‘International Secret Intelligence Service’ spy agency. The show’s creator, Adam Reed,commented that ISIS is ‘The most awful thing and we didn’t want to have anything to do with it’. The show’s characters now operate under the banner of the CIA.

In Australia, construction company ISIS has warned staff not to wear their uniforms, clearly labelled with ‘ISIS’, in fears for their safety. ‘We take the safety and wellbeing of our workers and subcontractors very seriously and are being proactive in managing any potential for negativity from ill-informed members of the public,’ stated Michael Barnes, chief executive. The company has not yet decided whether it will rebrand under a different trade mark.

However, changing the naming or branding of an established company can be a complex task, not to mention costly. For instance, ISIS Pharmaceuticals Inc has no plans to change its branding, which is based on a reputation built over 25 years. ‘We’ve been around for a while’, says D. Wade Walke, Vice President of Corporate Communications, ‘They [consumers] can easily distinguish between us and a Middle Eastern terrorist group’. Although almost certainly unconnected (unless investors were actuated by sympathy), the company reported a 43% surge in stock price over the three months that the terror group’s notoriety increased, well above its usual moving average.

Of course, an unfortunate brand association to ISIS is not the first instance of widespread tarnishment. SS Cars Limited was an incredibly popular British manufacturer of sports saloon cars in the 1930’s. While the exact source of the name ‘SS’ remains unclear, one thing is for certain, the rise of Nazi Germany, and the Second World War, were to change the company’s image forever. In fact, the association to the Nazi Party’s elite military unit the Schutzstaffel, a.k.a. the SS, was so devastating that on 23 March 1945, a general meeting resulted in the company’s name change to Jaguar Cars Limited. The chairman, William Lyons, stated that ‘Unlike S.S., the name Jaguar is distinctive and cannot be connected or confused with any similar foreign name’.

Prior to the rise of the Nazis in Germany, the swastika symbol evoked a feeling of prosperity and good fortune in almost every culture. Indeed, the word ‘swastika’ means ‘well-being’. Coca-Cola used the symbol, as did the Boy Scouts, and the Girls’ Club of America titled their magazine Swastika. It was even used by American military units during World War One, and could be spotted on RAF planes until the late 1930s. The symbol was pure and inspiring – and then the Nazi Party adopted it as an Aryan symbol to inspire a sense of ancient lineage for the Germanic people. Today, the symbol is widely despised and synonymous with fascism.

This proved particularly problematic for the Carlsberg Group, where the founder had registered a swastika as his trade mark in 1881. The breweries began using the trade mark less and less following the German occupation of Denmark. The company was faced with an all too familiar dilemma – they did not want to be connected to the enemy, but the trade mark was part of their proud history. So what did Carlsberg do?

By the end of 1945, the Carlsberg Group had completely stopped the use of the Swastika. The negative association had surpassed the positive image the trade mark once provoked. Even so, the company cannot completely shake its association with the swastika trade mark, with the symbol still appearing on the famous elephant gates, built in 1902, which mark the entrance to its famous Copenhagen brewery.

The best decision for your business

A brand is the intangible sum of a product’s attributes, and has been shown often to be the most valuable asset of a business – it is estimated that, on average, 75% of a business’ value is associated with its brand. One of the greatest challenges of becoming a successful business is establishing, and maintaining, a good brand. In most instances, a business’ brand is supported by one or more trade marks that legally protect aspects of this brand.

If you choose to rebrand your business, the years invested in establishing and maintaining a good brand will likely be reset. The consumer will no longer associate the brand with your core values and attributes. In essence, the business will be forced to re-attract their consumers, reassure them that the business values are consistent, and take the time to demonstrate this to the consumer. It is a hefty investment.

Conversely, and I think more logically, a business should trust that previous branding and marketing will hold them in good stead. That is, the consumer is fully aware of its values and attributes, and has confidence in the product or service you are providing. If a business has been previously successful in this way, then a consumer’s confidence in your brand will hopefully be resilient to all but the most extreme cases of tarnishment.