The Future Lawyer Weekly Briefing – W/C 23rd September 2024

In this week’s briefing:

Corporate Homicide: Corporate manslaughter laws exist in many domestic jurisdictions, but there is a significant gap in addressing the transnational operations of MNCs.

Understanding the Ticketmaster Pricing Controversy: Critics argue that Ticketmaster’s use of dynamic pricing lacks the necessary transparency in how prices are communicated to consumers.

McDonald’s Big Mac Trademark Battle: McDonald’s loss is a wake-up call for large companies hoping to use broad trademarks as a tool to suppress competition — the courts are no longer on their side.

McDonald’s Big Mac Trademark Battle: A Win for Small Businesses in the EU

Article by Charlie Suzannah Cromwell-Pinder

In a landmark ruling by the European Union General Court, McDonald’s has lost its exclusive right to use the “Big Mac” trademark on chicken sandwiches across the EU. The ruling came as a result of a legal challenge initiated by Supermac’s, a small Irish fast-food chain, signalling a significant shift in how EU courts are approaching the scope and protection of intellectual property rights, especially trademarks.

The case has captured widespread attention not just because of the David-and-Goliath nature of the legal battle, but because of its broader implications for businesses, intellectual property law, and market competition across Europe.

The Origins of the Dispute

The story begins in 1996 when McDonald’s registered the “Big Mac” trademark in the European Union for an expansive range of categories, covering all food, drink, and restaurant-related activities. For years, McDonald’s enjoyed its monopoly over this famous trademark without any direct challenges.

However, things began to change in 2015 when Supermac’s, an up-and-coming Irish fast-food chain, applied to register its own name as a trademark in the EU, with plans to expand into European markets.

McDonald’s swiftly opposed Supermac’s trademark application, arguing that “Supermac’s” was too similar to “Big Mac” and could confuse consumers. The multinational corporation’s move seemed aimed at preventing competition by leveraging its existing intellectual property portfolio.

In response, Supermac’s countered by filing an application in 2017 to cancel McDonald’s exclusive use of the “Big Mac” trademark in the EU, citing the company’s failure to use the name on products other than the iconic beef burger. In 2023, the European Court ruled in favour of Supermac’s, significantly narrowing McDonald’s rights to the “Big Mac” name.

Trademark Squatting

At the heart of this case is the concept of “trademark squatting” or overreach. This occurs when a company, often a large corporation, registers trademarks for an overly broad range of products or services that it does not actively sell or market. McDonald’s had registered “Big Mac” to cover a wide variety of food products, including chicken sandwiches, but was unable to provide evidence that it had used the trademark for chicken-related offerings over the past five years.

Under EU law, trademarks must be continuously used in the categories for which they are registered. If a company fails to demonstrate genuine use, the trademark can be revoked.

The court ruled that McDonald’s use of “Big Mac” was limited to its beef burgers and other related items, not chicken sandwiches, thus limiting its trademark protection. The ruling also suggested that McDonald’s had registered trademarks too broadly, possibly with the intention of stifling competition from smaller players like Supermac’s.

Empowering Small Businesses

The decision sends a clear message to large corporations: owning a trademark is not enough. Companies must actively use their trademarks in the marketplace and be prepared to prove it.

The ruling represents a victory for smaller businesses, particularly those looking to expand into new markets where they often face the legal and financial might of industry giants. By curbing trademark overreach, courts are levelling the playing field and allowing smaller competitors to challenge overly broad trademark registrations.

Pat McDonagh, the managing director of Supermac’s, heralded the ruling as “a significant victory for small businesses throughout the world.” McDonagh, who has plans to expand Supermac’s into the broader European and potentially British markets, stated that the decision removes unfair obstacles that global corporations like McDonald’s often place in the path of smaller competitors. The case thus sets a precedent that could inspire other small businesses to challenge the intellectual property claims of larger rivals.

The Role of Law Firms: Guiding Clients Through Trademark Strategy

For law firms, this case highlights the importance of advising clients on proper trademark strategy. In light of this ruling, companies should not only be diligent about registering trademarks for specific, well-defined categories but also ensure that they can demonstrate continuous and genuine use in those categories.

Firms representing businesses, particularly those in the food and beverage industry, should be prepared to track and document trademark usage rigorously, including sales data, marketing efforts, and product development.

Furthermore, law firms may increasingly find themselves involved in trademark litigation, both defending and challenging the scope of existing intellectual property rights. As the EU court becomes more willing to strip companies of overly broad trademarks, firms must advise clients against filing for trademarks that are too broad, as this could invite costly legal challenges from competitors. By helping clients narrowly tailor their trademark filings to their actual business activities, firms can help avoid unnecessary litigation and protect intellectual property more effectively.

Looking Ahead: A Warning to Global Corporations

The ruling serves as a warning to large corporations about the risks of aggressive trademark tactics. Multinational companies often use intellectual property laws to protect their market dominance by registering trademarks across a wide range of products and services, even those they don’t actively sell.

This case shows that such practices will not always be tolerated, especially in the EU, where courts are increasingly scrutinising the use of intellectual property to ensure fair competition.

For smaller companies, the ruling offers hope. Supermac’s victory shows that it is possible to challenge large corporations, provided you have a legitimate claim and can prove that a trademark is being used anti-competitively. As courts across Europe take a more critical view of trademark overreach, we may see more cases like this in the future, reshaping the intellectual property landscape and fostering a more competitive market environment.

In conclusion, the EU’s ruling against McDonald’s in the “Big Mac” case represents a pivotal moment in intellectual property law. It empowers smaller businesses, curtails trademark overreach, and offers valuable lessons for both corporations and their legal advisors. This is a wake-up call for any company hoping to use broad trademarks as a tool to suppress competition — the courts, it seems, are no longer on their side.

Understanding the Ticketmaster Pricing Controversy

Article by Carla Braquet

At the end of August, renowned Britpop band Oasis announced their comeback in the form of numerous concerts schedule for the summer of 2025. This comeback would mark the return to stage for the British group for the first time since 2009.

Following ticket sales for the upcoming concerts, Ticketmaster’s “dynamic pricing” practices have once again sparked significant debate within the entertainment industry. Ticketmaster, the ticketing service in operating ticket sales on behalf of the Gallagher brothers, has faced criticism due to using what is known as “dynamic pricing.”

Dynamic pricing refers to the practice of varying the price of a product or service to reflect changing market conditions, particularly the change in customer demand. This practice is not exclusive to Ticketmaster; it has been widely employed across many sectors, including the hospitality and airline industries, where it has become common practice.

Anti-competitive investigations

This unexpected inflation of prices for the Oasis concerts has drawn attention not only from infuriated fans but from lawmakers in both the UK and the European Union.

The UK’s Competition and Markets Authority (CMA), the UK’s primary competition regulator and consumer protection agency, has initiated an urgent investigation to review the use of “dynamic pricing” in the sale of concert tickets.

The CMA has not been the first authority to investigate Ticketmaster: In May, the US justice Department launched legal proceedings against Live Nation (which owns Ticketmaster) and filed an antitrust lawsuit alleging anti-competitive practices.

Although the CMA’s investigation is reportedly focused on consumer protection law, the CMA notes that dynamic prices may breach competition law. As a result, the authority stated that it will maintain a broad scope in its inquiry. Furthermore, Ticketmaster is being scrutinised by the European Commission to ensure compliance with EU consumer laws.

Legality of dynamic pricing

It must be noted that dynamic pricing is not explicitly considered illegal under EU treaties nor UK legislation. However, it may, in specific circumstances, breach consumer protection or competition law.

Dynamic pricing should not be inherently regarded as abusive. Firstly, just as prices may increase due to high demand, they can also decrease during periods of low demand, potentially benefiting consumers.

What could render it an unfair commercial practice prohibited under the Consumer Protection from Unfair Trading Regulations 2008 is a lack of transparency in how prices are communicated to consumers. For example, if a consumer decides to buy plane tickets and is aware of the use of dynamic pricing, they can make the conscious choice to whether to pay the inflated price or not. The question is more whether the ticketing site (Ticketmaster for instance) provides clear and accurate pricing information to customers.

Critics argue that Ticketmaster’s use of dynamic pricing lacks this necessary transparency. Numerous fans have described a sudden increase in price on the website without prior notice, thus forcing them to decide within a matter seconds whether to pay the new inflated price or to give up on the ticket altogether.  From a legal standpoint, Ticketmaster could be found to have engaged in deceptive practices.

Implications for Law Firms and Legal Professionals

As regulators respond to the dynamic pricing controversy, new compliance requirements will emerge for businesses in the UK. Law firms would need to remain well-informed in order to advise their clients accordingly on how to adjust their pricing models to ensure legal compliance with new UK and EU regulations.

Given that dynamic pricing is commonly employed by industries such as airlines, hostels, and ride-hailing companies such as Uber, it is essential for law firms to keep their clients in these sectors updated on regulatory developments. What is certain is that the Ticketmaster scandal will likely lead to heightened legal scrutiny and a surge in consumer protection cases, competition law challenges and regulatory advice for law firms.

Corporate Homicide: The Legal Accountability of Corporations for Harm and Death

Article by Nabhan Zarif Sayeed

Corporate bodies are known for causing harm and even death during their activities, and many countries have introduced laws to deal with what is commonly termed “corporate homicide” or “corporate manslaughter.”

Corporate manslaughter refers to the legal accountability of companies and organisations for fatalities that occur due to gross negligence or misconduct. Various domestic laws have been established in different nations to ensure corporations are held accountable for such incidents.

UK Corporate Manslaughter Law

In the UK, the Corporate Manslaughter and Corporate Homicide Act of 2007 is a landmark statute. This law applies when a corporation’s activities result in someone’s death due to a gross breach of the duty of care owed to that person.

The Act focuses on the conduct of senior management in influencing the company’s operations. A corporate entity can be prosecuted if senior managers’ negligent decisions or practices lead to fatalities. However, this law only applies if the death occurs within the UK. Companies operating internationally cannot be held accountable under this Act for incidents occurring outside the UK.

The Act was introduced following high-profile cases, such as the P&O Ferries disaster, where there was a lack of individual accountability due to the “directing mind” principle. After the disaster, The Law Commission highlighted the challenges of prosecuting large organisations under existing laws and advocated for new legislation that would hold companies accountable for failures in management, particularly in relation to fatal incidents.

However, the Act’s scope is somewhat limited. It only applies to incidents occurring in the UK, and the prosecution of large corporations has been infrequent. Critics argue that the law has primarily targeted smaller companies, and larger multinational corporations (MNCs) often escape full accountability. The pending Grenfell Tower disaster case could lead to significant legal precedents and reforms in corporate manslaughter laws.

International Perspective and Challenges

While domestic laws like the UK’s Corporate Manslaughter and Homicide Act exist, there is no international legislation that deals comprehensively with corporate manslaughter on a global scale. Multinational corporations (MNCs) operate across borders, which complicates legal accountability. For example, in cases like the Bhopal disaster and Rana Plaza collapse, the corporations involved faced civil liabilities but not criminal prosecution, even though the incidents led to numerous deaths.

One of the key challenges in prosecuting MNCs for corporate manslaughter is the doctrine of corporate personality, which means that a corporation is treated as a separate legal entity from its directors and shareholders.

This doctrine often prevents the “veil” of corporate personality from being lifted, making it difficult to hold the parent company accountable for the actions of its subsidiaries operating in different jurisdictions. This issue was evident in cases like Das v. George Weston Limited, where the court ruled that the parent company did not owe a duty of care to the deceased workers of a subsidiary in another country.

There have been calls for the development of international treaties or conventions to address the accountability of MNCs in cases of corporate manslaughter. Some argue that principles similar to the Brussels Regulation or Regulation 1215/2012, which govern jurisdiction in civil and commercial matters, could be applied to corporate manslaughter cases on a transnational scale.

The Role of International Law and Human Rights

The United Nations Guiding Principles on Business and Human Rights (UNGPs), established in 2011, have increased the focus on the accountability of corporations, especially those headquartered in one country but whose operations cause harm in another.

The UNGPs encourage nations to implement legal frameworks that hold corporations accountable for human rights violations, regardless of where the violations occur. While these principles do not have binding legal status, they have set a foundation for discussions around corporate responsibility.

Despite the growing focus on corporate accountability, there is no universal consensus on how to impose criminal liability on corporations for acts of manslaughter. The International Criminal Court (ICC) was established to prosecute individuals for war crimes, crimes against humanity, and genocide, but it currently does not have the mandate to prosecute corporations. Proposals to extend the ICC’s jurisdiction to cover corporate crimes have been met with resistance, particularly due to the complexities of corporate structures and the legal doctrine of state sovereignty.

The Malabo Protocol, a regional African initiative, is one of the few attempts to grant international criminal jurisdiction over legal persons, including corporations. However, this protocol has not yet been widely recognised or adopted.

The Way Forward

Proponents of corporate manslaughter laws argue that criminal liability is necessary to hold companies accountable for gross negligence resulting in fatalities. Some nations, such as Australia, have adopted a model of organisational liability, which allows for the prosecution of companies based on their corporate culture or ethos. This model places emphasis on the internal practices and culture of the corporation, which may foster or enable negligence.

To address the issue of corporate manslaughter on a global scale, international cooperation is essential. The establishment of treaties that countries can sign to prosecute MNCs for their role in causing harm through gross negligence is a potential solution. Additionally, countries could adopt “failure to prevent” laws that hold companies accountable if they do not take reasonable steps to prevent harm, including human rights abuses, within their supply chains.

In conclusion, corporate manslaughter laws exist in many domestic jurisdictions, but there is a significant gap in addressing the transnational operations of MNCs. The development of international laws or treaties could play a crucial role in ensuring that corporations are held accountable for causing harm and death, regardless of where the incidents occur. Until such measures are adopted, corporate manslaughter will largely remain a domestic issue, with limited scope for prosecuting MNCs on a global scale.