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IP Blog / Big cheeses: trademark defeat, AI heat and Romania’s UPC seat

Big cheeses: trademark defeat, AI heat and Romania’s UPC seat

Intellectual Property (IP) is often the secret sauce of business expansion, artistic expression and inventive excellence, which means a lot must be done to preserve and promote it. In this month's IP news roundup, we delve into a trademark battle of the burgers, the growth of the Unified Patent Court (UPC) in numbers and scope and how a coalition of some of the world's biggest music labels seeks to take artificial intelligence (AI) to task for copyright infringement.

BIG MAC trademark gets cooked

In the voracious scene of international brands, it pays to be big, but sometimes, it is better to be super. A seven-year trademark contest between U.S. fast-food titan McDonald's and Irish rival Supermac's has concluded in a partial yet significant victory for the latter.

On June 5, 2024, the General Court of the European Union revoked McDonald's EU trademark for "BIG MAC" with regard to chicken sandwiches, foods prepared from poultry products and associated services. The decision from the second of the EU's top courts annulled and altered in part a ruling by the Fourth Board of Appeal of the European Union Intellectual Property Office (EUIPO), dated December 2022. This legal back-and-forth confirmed the most impactful elements of the contested mark's original revocation by the EUIPO Cancellation Division back in January 2019.

The basis of Supermac's opposition was a failure to put the mark to genuine use. According to Article 58(1)(a) of the European Union Trade Mark Regulation (EUTMR), a registration shall be declared revoked if this has not been done "within a continuous period of five years, […] and there are no proper reasons for non-use." Though McDonald's provided evidence of use in France from April 11, 2012, to April 10, 2017, the submitted proof was found to be insufficient. In a press release, the General Court highlighted the deficiencies of the documentation insofar as it did "not provide any indication of the extent of use of the mark in connection with those goods, in particular as regards the volume of sales, the length of the period during which the mark was used and the frequency of use."

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Under Articles 19(1) and 10(3) EUTMDR, evidence of use must not only indicate place and time but also establish extent (accounting for the size of the relevant market) and nature (showing a clear connection to the goods or services).

Founded in 1978 in County Galway, Supermac's took its name from founder Pat McDonagh's moniker, given to him during his days playing Gaelic football at school. As managing director of the Irish chain, he welcomed the decision by the General Court in a statement published on LinkedIn:

"We knew when we took on this battle that it was a David versus Goliath scenario. The original objective of our application to cancel was to shine a light on the use of trademark bullying by this multinational to stifle competition." 

While this case does not affect McDonald's flagship beef burgers nor its ability to sell chicken-based versions, the multinational will have to eat a measure of humble pie in what is a reminder that market prominence does not absolve a brand of the obligation to put registered trademarks to genuine use.

The UPC: Romania in, Ireland on the sidelines

It has been just over a year since the Unitary Patent system came into effect on June 1, 2023, and so far, it has outperformed expectations. Despite this relatively recent debut, almost a quarter of all grants from the European Patent Office (EPO) have seen unitary effect requested – or over 27,500 registrations. The EPO attributes a notable measure of this success to uptake among European small and medium-sized enterprises (SMEs), together accounting for 35.5% of all Unitary Patents.

This trend indicates that the geographically broad, legally uniform protection, trimmed-down procedures and lower costs promised by the Unitary Patent are having the desired impact on the innovation scene. Combined with a 30% fee discount for micro-enterprises, individuals, non-profits and research bodies, the EPO's focus on widening access to IP rights is clear.

With such an auspicious year already completed, the eve of the UPC's first anniversary was an apropos moment for Romania to confirm its accession. By depositing its instrument of ratification of the Agreement on a Unified Patent Court (UPCA) on May 31, 2024, Romania will become the 18th participant in the EU patent system. This will expand the project to a market of more than 19 million people and beat out a referendum-weary Ireland. Earlier this year, Ireland announced a public vote to allow the transfer of patent jurisdiction to the UPC before deferring this constitutionally mandated action for the foreseeable future.

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Most current members of the UPC have not had to hold referenda on joining the system. Denmark is the only exception, which avoided a political impasse by going to its electorate in 2014 in order to sanction the transfer of sovereignty regarding patent litigation.

Originally set to coincide with European and local elections on June 7, 2024, it is likely voters' rejection of two constitutional amendments tabled in March contributed to the decision to adjourn the UPC referendum. Speaking on the postponement, Peter Burke, the Minister for Enterprise, Trade and Employment, suggested that "diverse issues" could "crowd out a debate on the Patent Court." Perhaps more tellingly, he went on to say that feedback points to the fact that "many people are unfamiliar with the Patent Court and there is not a significant level of awareness among the electorate."

At any rate, such concerns did not affect Romania's entry into the UPC, which is due to take effect on September 1, 2024. All Unitary Patents issued after that date will automatically cover Romania in addition to Austria, Belgium, Bulgaria, Denmark, Estonia, Finland, France, Germany, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Portugal, Slovenia and Sweden. However, pre-existing "first-generation" Unitary Patents will not expand their territorial scope after the fact, regardless of subsequent UPCA ratifications.

Consequently, if proprietors would like their new Unitary Patents to cover Romania as well, they can request a delay of the registration of unitary effect until September 1, 2024, but no later.

Taking music AI to court: a symphony of copyright infringement

A group of music labels filed suit against two AI companies on June 24, 2024, alleging copyright infringement "on an almost unimaginable scale" when developing generative models. The Recording Industry Association of America (RIAA) is managing the litigation that features some of the biggest names in the industry, including Sony Music, Universal Music Group and Warner Records. The plaintiffs, comprising a significant share of the global audio entertainment market, have set their sights on U.S. companies Suno and Udio, which offer AI systems to generate music based on user text prompts.

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Musicians in every genre have expressed deep concern that unrestrained AI systems threaten their income and job security. The time required to instruct a generative model pales in comparison to that for a human performer.

Lodged against Suno in Massachusetts and Udio in New York, the complaints hinge on the purported copying of recordings owned or controlled by the labels to "train" the AI models. This court action is the latest in a spate of IP litigation motivated by the development and deployment of generative AIs without a satisfactory legal architecture in place.

On top of indignation from authors, actors and news outlets, musicians lend their voices to the disquieted chorus. In April this year, more than 200 members of the songwriting community signed an open letter against "predatory" AI uses that, if left unchecked, would lead to "a race to the bottom that will devalue" human work and skill.

In all of these instances, the bone of contention is less the technology itself than the legal Wild West that defines much of the generative AI landscape. Echoing the positive side recognized by the likes of Elvis Costello, Sheryl Crow and the estate of Frank Sinatra, RIAA Chairman and CEO Mitch Glazier commented that the trade organization was "already partnering and collaborating with responsible developers to build sustainable AI tools centered on human creativity that put artists and songwriters in charge." However, he warned that these efforts could "only succeed if developers are willing to work together with us."

Against both defendants, the music labels are seeking damages of up to $150,000 USD per infringed work, with the alternative of the actual damages and / or profits from the infringement. Jury trials have been demanded in both cases, and given the collective weight of the plaintiffs, a decision in either Massachusetts or New York has the potential to be highly precedential.

There already exists legislation requiring developers to make known the datasets used to train generative models, namely the EU's new AI Act and the Generative AI Copyright Disclosure Act proposed in the United States. Nonetheless, neither example clarifies if and when this input process can violate existing copyright law. These fresh lawsuits could finally bring this issue to a head or, at the very least, expose where any shortcomings in IP law may lie.

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