A service-provider specialises in branded goods, such as repairing a particular brand of car. The services are above-board, but there is no direct relationship with the brand-owner. Can the service-provider use the brand to advertise its services?
Legitimate rights clash: the manufacturer’s right to its brand, versus the service-provider’s right to describe its trade. Can the serviceprovider use the brand at all? If so, how? Is there any difference in words versus logos? How do service-providers stay on-side of the law, and when can brand-owners legitimately complain?
One question is whether the service-provider’s use of the mark implies it is a guarantee by, or economic link with, the manufacturer. To infringe, use of a trade mark must affect its guarantee of origin or quality. The EU Trade Mark Regulation provides an important defence, including use for the purpose of identifying the brandowner’s goods or services, in particular where it is necessary to indicate the intended purpose of goods or services, e.g. as accessories or spare parts. But this applies only where the use is in accordance with honest practices.
The law has changed recently. Previously, the use must have been “necessary”, but now that is just one example of the “intended purpose”. This should make it easier to use third-party brands. The cases below were decided before that change, although in these examples, the result may well be the same today.
In BMW v TechnoSport, a garage specialised in car repair, mostly BMWs. It used three BMW trade marks: “BMW” on shirts and Twitter; the “Roundel” on its premises and vans; and the “M” logo on its website. The English High Court found that use of “BMW” did not infringe – the public would recognise this as describing the garage’s services. However, use of the logos did infringe – it might affect the trade mark’s function or indicate an economic link, and was not in accordance with honest practices.
In another BMW case in Germany, BMW sued a spare parts company that manufactured plaques featuring the “BMW” logo. The Federal Supreme Court upheld BMW’s claims, as consumers would expect the plaques to originate from BMW or licensed dealers. The Court also decided that use of the mark was not merely descriptive. The plaque simply reproduced the trade mark, and lacked any statement about the purpose of the spare part.
In the USA, there are two types of “fair use” which may allow use of third-party brands.
Statutory fair-use arises when someone uses a third-party brand in an informative, conventional way to describe its own products or services. In KP Permanent Make-up v Lasting Impression, the Supreme Court held that Lasting Impression’s use of “microcolor” to describe its make-up constituted fair-use, despite KP’s “MICROCOLORS” trade mark. It decided that “microcolor” was descriptive of make-up, and competitors should not be deprived of descriptive words.
Nominative fair-use arises when someone uses a third-party brand to reference the brand-owner. This defence, from New Kids on the Block v News America Publishing, requires three elements: (1) there should be no easier way to identify the brand-owner; (2) only so much of the trade mark is used as necessary; and (3) it must not suggest endorsement or sponsorship. It can apply to news reporting, comparative advertising and parody, as well as service-providers.
In China, three factors are considered: (1) whether the serviceprovider acts in good faith; (2) the purpose of using the brand is to describe the service-provider’s services, rather than their origin; and (3) using the brand will not cause confusion. There might also be false advertising claims if it could mislead the public into believing the service-provider is authorized by the brand-owner.
In Audi v Beijing Zhong Han Fang Sheng Auto Services, the defendant provided car repair and maintenance. It used “Audi”, “ ” (“Audi” in Chinese) and the four-ring logo on its premises and promotional materials. The District Court decided it was reasonable for the garage to use the brands of the cars it repairs in order to indicate its business, provided it was in good faith and unlikely to cause confusion. However, in this case the use was excessive and would mislead the public. Therefore, it infringed.
Around the world, service-providers deploy third-party brands to describe what they do – but care is needed to avoid anything misleading. Much depends on what consumers might think, and so brand-owners and service-providers can take steps to shape perceptions.
■ Define your “bright line” between allowable and unacceptable third-party use. Develop a policy expressing it in simple terms.
■ Make sure authorised licensees comply with the policy.
■ Courts consider the real-world perception. Take steps to align that perception with your policy. Police the market and attack infringements that cross the line.
■ Distance yourself from suggestions of being authorised by brand-owners. Describe yourself as “Independent”, or use clear disclaimers.
■ Take care around logos. A word-mark to describe services might be necessary, whereas logos might not.
■ How do other service-providers promote themselves? This can steer what is and is not acceptable