Mmmmmmmmm, Donuts... the difficulties of successful brand translation in a global market

By Bill Ladas

Introduction

The House of Donuts case serves as a timely reminder that words that are descriptive to English-speaking consumers – in this case, DONUTS - can be registered, and function, as national marks in EU member states for those products (donuts), forming a barrier to use and registration of (for example) Community Trade Marks (“CTMs”) containing that word(1). A similar scenario was considered in the Matratzen(2) cases, involving the German word MATRATZEN (translated into English as mattress), registered in Spain for mattresses. But the perceived appropriation of an English word may cause greater concern from the parochial perspective of English-speaking brand owners.

The House of Donuts case

In House of Donuts International v OHIM(3) the Court of First Instance (“CFI”) has upheld oppositions against the registration of 2 CTM applications based on prior Spanish national registrations. This isn’t an unusual scenario given the lack of relative grounds objections from OHIM(4). However, the particular facts may give trade mark practitioners and brand owners alike some sleepless nights with regard to the CTM system.

The facts

House of Donuts filed 2 CTM applications on 27 February 1997 and 23 September 1998, respectively:

House of Donuts (474486) (938670)

These CTMs covered classes 30, 32, and 42.

Following acceptance, the applications were opposed by Panrico SA under Article 8(1)(b) of the Community Trade Mark Regulation(5) ("CTMR"), based on 5 prior Spanish trade mark registrations, 3 of which were for the word mark DONUT (399563, 100137 and 100138) the earliest dating back to 1962, and 2 of which were figurative:

donuts (643273) donuts (1582809)

The Spanish registrations of Panrico covered the same classes as those of the CTMs of House of Donuts.

The decisions from OHIM and the Court of First Instance

The Opposition Division held that there was a likelihood of association in Spain, as DONUT (not a generic term in Spain) made up an essential part of the earlier signs and the applied-for signs. It was held that none of the evidence filed demonstrated that Panrico’s DONUT marks were generic.

The Board of Appeal (“BoA”) rejected appeals, in which House of Donuts argued a lack of likelihood of confusion due to:

Internet searches for DONUT with high numbers of hits associated with Spain and Spanish cities;
Spanish trade name certificate No 41,330 mentioning 'donuts' as a product;
The requirement that the global assessment of the likelihood of confusion should take into account the distinctiveness of the earlier marks.

The BoA found that "the word "donut" is not to be considered generic in Spain because the appellant did not file convincing evidence that it is”. The BoA concluded that the other elements in the House of Donuts marks (the words “House of" and the umbrella devices in both, and the elements of Arabic script in the first mark, and the tag-line “The Finest American Pastries” in the second) were of secondary or ancillary importance. Overall the respective marks were similar and covered highly similar and largely identical goods and services, resulting in a likelihood of confusion.

House of Donuts appealed to the CFI on the issue of similarity between the respective marks. House of Donuts argued that if the descriptive nature of the Panrico marks was properly considered, there would be no likelihood of confusion.

The CFI rejected the appeal, holding that:

Excerpts from two bilingual dictionaries, introduced before the CFI, were inadmissible and "inapt as a means of showing to what degree the average consumer was familiar with a word of foreign origin";
The degree of familiarity of the Spanish public with the English language is generally low;
"if it were true that the distinctiveness of the common word element of the conflict marks is particularly weak, the applicant would undoubtedly have been justified in maintaining that that word element was not dominant in the marks applied for, and that it was appropriate to accord at least equal importance to the other elements, both figurative and word"

Other DONUTS cases(6)

Panrico(7) has been active in opposing and cancelling third party CTM applications/registrations containing DONUTS (or arguably similar words). It has successfully opposed/cancelled:

DONATH(8) in classes 29 and 30 (Case R 0432/2006-4).
DONUTS & COMPANY in classes 30, 32 and 42 (Case 2363/2001);
DOONY’S logo (above) in class 30 (Case 192/2005-1);
DOLLY DONUT in classes 25, 29, 30 and 42 (Case 673C)(9);
DEMON DONUTS in classes 30, 32 and 42 (Case 524C).

There are also a number of casualties (all withdrawn) shown on the OHIM database, for marks containing “DONUTS” that were opposed by Panrico SA or Donut Corporation Espanola SA:
Mister Donut

CTM 541920 in classes 29 and 30 for the Mister Donut Logo above
CTM in classes 42 for the DONUT INN Logo shown above;
CTM 2813319 in classes 30, 32 and 42 for DEMON DONUTS BAKED NOT FRIED;
CTM 2762526 in class 30 for KING OF AMERICA’S DOUGHNUTS.

The last of these cases may have been a pyrrhic victory. The owner of the KING OF AMERICA’S DOUGHNUTS application was HDN, of KRISPY KREME donuts fame. HDN happened to be the applicant in a case that Panrico(10) lost, and which may signal the end of its dream run of opposition/cancellation victories. That case was an opposition against HDN’s CTM the following logo (filed on 6 September 1999) in classes 25, 30 and 42:

"DOUGHNUTS" was disclaimed from HDN’s application under Article 38(2) of the CTMR.

Panrico’s opposition against HDN’s application relied on the word mark DONUT (399563), a word mark DOGHNUTS (1288926, covering class 30, not relied on in the House of Donuts case) and figurative marks 1582816 and 1582805:
Donuts

The Opposition Division of OHIM rejected the opposition, due to (inter alia) the dominance of KRISPY KREME in HDN’s mark over the word “DOUGHNUT” in that sign.

Panrico appealed, arguing that confusion was likely as KREME and KRISPY would be seen as descriptive indications. Ironically, Panrico argued that KREME and KRISPY are “foreign terms but are often used by food producers in Spain”. Panrico also argued that its DONUT mark had an enhanced level of distinctiveness(11) but the First Board of Appeal (quite differently from the DONATH case) was sceptical of their trade evidence(12). HDN argued that Panrico’s marks were "poorly, if at all, distinctive", and cited mentions of "donut" as a generic term in an article in El Mundo (the Spanish newspaper).

The BoA held that the marks were dissimilar, particularly on a visual comparison (which is most important for self-selected products). Phonetically, the First Board of Appeal was of the view that HDN’s mark would be referred to as KRISPY KREME rather than DOUGHNUTS. It was further held that it is not "self-evident" that Spanish consumers would see a relationship between DOUGHNUTS and DONUTS.

If HDN’s application (which is still listed as "opposed") does proceed to registration, then it will be to the great delight of donut-lovers(13), and may be seen to open the door to the registration of other CTM’s which incorporate the disclaimed word DOUGHNUT/S and even DONUT/S but which contain other visual and/or oral elements.

Revenge?

Panrico SL has never applied – as of course would be hopeless – to register DONUTS for ‘donuts’ or related goods/services as a CTM. However, it has registered DONETTES and the following DONETTES logo:

The logo is the subject of a cancellation action by Kevin Rogers, owner of the doomed DEMONS DONUTS CTM registration (as cancelled by Panrico SA) and a UK registration for the series DONETTE, DONETTES.

Further, Panrico SL’s word mark application for DONETTES has been opposed by Compagnie Gervais Danone, societe anonyme, but based on prior rights in Danone’s DANETTE mark.

Some final thoughts

Brand owners with marks containing a descriptive term (eg. in English) will need to do their home-work before seeking CTM protection. Obviously the best thing to do is conduct searches of national registers (not just the CTM register). These are very expensive, and not within reach of all brand owners. Another option is to simply file a CTM but ensure that OHIM’s search report (subject to significant limitations) is reviewed – this may provide some indication of the potential oppositions the CTM will face, albeit post-filing.

If it appears likely that there will be an opposition from a prior brand owner, and where validity issues are material in relation to the earlier right, the applicant should consider a pre-emptive strike – filing a cancellation action before the opposition. The opposition proceedings will then take a back-seat while validity is explored. Otherwise, if the applicant is content to deal with oppositions as and when, it should ensure that evidence as to the descriptive/non-distinctive/customary nature of the English word in the territory in question is compiled (including a survey if appropriate) and filed within the relevant time frames, so that that troublesome word is discounted as part of the global assessment.

And what about DONUTS/DOUGHNUTS marks in the CTM system? The question will be whether Panrico can stem the “creeping effect” of complex trade marks containing DOUGHNUTS or DONUTS (including when such elements are disclaimed) within the CTM system (as exemplified by the KRISPY KREME DOUGHNUTS Logo). If this occurs, then consumers in Spain may be exposed to – and educated about – the plain English meaning of DONUTS/DOUGHNUTS, and Panrico’s Spanish registrations may ultimately fall foul of Article 12(2) of the Directive, which could result in revocation.

If that occurs, then what began as a significant obstacle to those businesses wanting to register their mark containing the descriptor “DONUT” or similar using the CTM system, may ultimately fall by the way-side. In the mean-time the clear lesson remains: brand owners need to be counselled as to the risks of adopting a mark containing a descriptive word, particularly within the CTM context.

An abridged version of this article was published in the September 2007 edition of Trademark World.

Footnotes

The option of converting (Article 108(1) and (2) CTMR) a CTM into national registrations (eg. excluding the country where prior rights exist) will be available, but this is expensive and administratively burdensome, when compared to the convenience of the CTM system.Back to the article.
See Matratzen Concord AG v Hulka Germany SA [2006] ECR I-2303, considering a registration in Spain for a trade mark containing the German word for mattress, "Matratzen" and Matratzen Concord GmbH v OHIM [2004] ECR I-3657, involving an opposition to registration of "MATRATZEN Markt CONCORD" device mark based on a prior Spanish registration for "Matratzen". Back to the article.
Joined Cases T‑333/04 and T‑334/04, [2007] ETMR 52. Back to the article.
A practice that will be adopted by the UKIPO from 1 October 2007. See: Statutory Instrument 2007, No. 1976, The Trade Marks (Relative Grounds) Order 2007. Back to the article.
Council Regulation 40/94/EEC. Article 8(1)(b) of the CTMR prevents registration of a CTM when, in opposition proceedings, because there is identity or similarity between the respective marks of the opponent and the applicant, and identity or similarity of the goods or services covered, there exists a likelihood of confusion on the part of the public in the territory in which the earlier trade mark is protected; the likelihood of confusion includes the likelihood of association with the earlier trade mark. Back to the article.
This is not, and is not intended to be, an exhaustive review of cases involving Panrico or its predecessor, Donut Corporation Espanola SA. Back to the article.
And its predecessor Donut Corporation Espanola SA, which merged with other companies to create the newly formed Panrico SA. Back to the article.
The status of this CTM on OHIM’s website states "Opposition decision appealed". Back to the article.
Opposed by Donut Corporation Espanola SA, Gallega De Distribuidores De Alimentacion and AmbergerMartin, now cancelled after invalidity proceedings filed by Panrico SA. Back to the article.
This opposition was initially filed by Donut Corporation Espanola SA, which merged with other companies to create the newly formed Panrico SA. Back to the article.
For procedural reasons, its claim under article 8(5) CMTR was knocked out. Back to the article.
Instead the uses were of "the ubiquitous DONUTS", and the First Board of Appeal held that the marks DONUT and DONUTS were "separate marks enjoying separate rights". Cf Société des produits Nestlé SA v Mars UK Limited Case C 353/03. Back to the article.
However, Panrico’s opposition against HDN’s CTM 3000866 for DOUGHNUT THEATER in class 42 continues in earnest. Back to the article.

© Davenport Lyons 2007. All rights reserved.
This document reflects the law and practice as at October 2007. It is general in nature, and does not purport in any way to be comprehensive or a substitute for specialist legal advice in individual circumstances.

The Team:

Trade Marks