“Depreciation of Goodwill” is a Valid Ground for Opposition according to Canada’s Trademark Opposition Board


Prabhjot Kaur 13/01/21 #copyright #patent #trademarks #infringement #intellectualproperty #IPR #IPRinfo #IPlaw #IPRrights #Trademarkclickcom #IP #lawfirms #lawyers #legalmarketing #entrepreneur #IPRBlog #IPBlog #McDonalds ##HiStar #McMortgage #CIPO #Canada #Mac #goodwill

Every brand has that one element that makes it entirely distinctive from the rest. That element is indisputably an integral part of the brand’s name and fame. In a population of 7 billion, it is not a rare phenomenon to spot a resembling name. Nevertheless, it goes without saying, the mindset behind the adoption of a like name could be an innocent or a cleverly planned one. The case being discussed here involves the internationally acclaimed fast-food chain McDonald’s versus a small-scale real estate and mortgage service provider, Hi-Star Franchise System, Inc. Looks like, in their wildest dreams the applicant must have thought its McMORTGAGE trademark application would sustain. Little did they know, the filing would lead them to war against the giant.

Precisely, four years and nine months ago Hi-Star Franchise System, Inc. filed a trademark application for the mark McMORTGAGE for a number of services including “Arranging and provision of credit, loans, insurance, currency exchange, and travelers’ cheques; agencies; insurance brokerage; insurance services; mortgage brokerage; mortgage refinancing; mortgage services; real estate agencies; real estate brokerage; real estate brokers” before the Canadian Intellectual Property Office (CIPO). In September 2017, the 65-year-old fast-food restaurant opposed the application on a number of grounds alleging the applied mark is likely to “depreciate the goodwill” of the well-known McDonald’s family of trademarks.

In particular, two major grounds were highlighted. Number one is that, by all means, McMORTGAGE looks very similar to the McDonald’s mark, making it indistinctive and highly confusing to draw a difference of originality between the two. Secondly, adoption of such a similar mark by Hi-Star’s “depreciates the (well-established) goodwill” vested in McDonald’s family of marks.

Since the very growth of McDonald’s, it has been making use of ‘Mac’ regarded as ‘Mc’ as a prefix on nearly every product sold. Foods like McGrill, McSwirl, McPuff, McChicken, McVeggie, etc are a clear indication of the foreword ‘Mc’ and its extensive usage. The very essence of ‘Mc’ is embedded in the brand making it entirely distinctive from all the others. ‘Mc’ element in the adopted mark McMORTGAGE would most likely create deception in the minds of the general public.

Canada’s Trademark Opposition Board sided with McDonald’s and concluded that “consumers upon encountering McMORTGAGE may as a matter of the first impression believe that this trademark is indicative of financial services provided to those who seek to own a MCDONALD'S franchise or the like or that the applied-for services are otherwise affiliated or connected with [McDonald's].”

It is the first case wherein Canada’s Trademark Opposition Board considered and allowed “depreciation of goodwill” as a valid ground of opposition in trademark opposition proceedings. Trademark Opposition Board while delivering this historical ruling opined that it looks like there is a direct connection between both the marks eventually creating a thrust of linkage thereby hampering McDonald’s goodwill. This way, the brand power of this well-known fast-food chain shall “whittle away”. In consideration of the above mentioned, the Board declined to register Hi-Star’s McMORTGAGE trademark.

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