Landmark ruling on brand names

A new European trademark ruling may give brands greater powers to stop companies using similar names or logos, even if they operate in completely different sectors.

A ruling from the Court of First Instance of the European Communities (CFI) has found in favour of Japanese electronic company TDK Group, which objected to Danish company Bestseller using the initials TDK on a range of clothing. The ruling, upheld by CFI after two previous EU court rulings in TDK’s favour, found that even though the TDK’s European trademark does not cover clothes, its sponsorship activities involve its logo appearing on clothing and other items.

The court decided, if someone else were to use TDK for a clothing brand, consumers might reasonably think TDK was making them or had licensed them. In such a case, the clothing manufacturer would be taking "unfair advantage… of the reputation of the earlier marks, a reputation which is the result of the activities, efforts and investments undertaken by [TDK] for more than 20 years."

The ruling effectively extends intellectual property rights into new areas, and may mean a trademark owner has greater powers to stop another company using a similar logo, even thought they operate in completely different business sectors.

Ilanah Simon, an intellectual property law expert and lecturer in law at Brunel University, says: "This is good news for owners of famous brand names."

Simon suggests the CFI’s decision shows that sponsorship can have benefits to a brand owner far beyond immediate sales boosts or short-term consumer attitudinal changes. But simply being involved in a one-off sponsorship deal may not be enough to trigger the added benefits.

The CFI noted that TDK had been investing heavily over many decades in sports and music related events, many of which had been televised or recorded.