Large companies and brands are going to greater lengths than ever before to expand their holdings and protect the ones they’ve already locked down.
From Disney to Mariah Carey to Starbucks, the list of megabrands coming down on small businesses for real or imagined infringement is growing nearly daily.
The latest entry in this list is Elon Musk’s Tesla, which just won a judgment against a small UK chicken-and-pizza business for trademark infringement.
But is this a case of fowl play, or is Tesla right to be chicken about potential market dilution?
And what does it mean for the future of small business when seemingly any word they use could trigger a high-dollar, high-stakes lawsuit?
Let’s take a closer look at why these actions are happening, why they matter, and whether they’re really a shady way of suppressing competition or a legitimate method of protecting a brand!
A Fowl Case
In 2022, Amanj Ali, of Bury, Greater Manchester, England, registered a trademark for Tesla Chicken and Pizza, in homage to one of his idols, Nikolai Tesla. Ali is quoted by Business Insider as having said about the name choice, “He was a kind of intelligent guy… in my young age, I was… reading about him, looking at his pictures.” While it may seem like a pretty offbeat choice for a name for a takeaway place specializing in wings and slices, Ali forged ahead with the trademark.
However, Elon Musk’s Tesla had previously requested international protection, including in the UK, for its brand name in the food and drinks category, as Ali learned in November of 2021. While Ali’s trademark was registered, it left Ali’s Tesla to face off against Musk’s Tesla in a winner-take-all battle in court–which Ali ultimately lost. UK courts found in favor of Musk, ordering Ali to pay Tesla the equivalent of roughly $5,000 USD for trademark infringement.
UK and US intellectual property laws are fairly similar in that they both require a period of public comment and objection before a trademark is awarded. Interestingly, Musk’s Tesla didn’t object to Ali’s trademark during the objection period, which would have been a key factor in the mark being awarded to begin with. However, Ali’s arguments failed to sway the court, who found in favor of Musk’s Tesla.
Ali says he would have appealed. But after racking up legal fees to defend himself against Tesla’s lawsuit, plus the stress and its impact on his business and life, he was choosing to cut his losses, pay the court-ordered award, and rebrand. Why could Tesla do this?
Use It or Lose It
Again much like the US, the UK’s IP laws have what is known in the vernacular “use it or lose it” clauses. In the US, IP laws require that IP holders be prepared to exercise and defend their intellectual property rights or risk losing them altogether. The UK’s laws run along similar lines, which shouldn’t be surprising as UK and US law share common DNA dating back at least to England’s Magna Carta of 1215.
Combine this with the fact that as much as 80% of a company’s market value could lie in its intellectual property holdings, such as trademarks, copyrights, and patents, and it’s no wonder that large companies would come down hard on smaller–and weaker–perceived competitors in court. This tactic serves to both preserve their market share as a result of their intellectual property holdings and to warn off other upstarts who may want to try taking a bite of their apple, because large companies tend to grab headlines whenever they make a move.
The question many people ask is whether these large companies can and should bring down the weight of the courts on smaller competitors when there’s no obvious possibility of infringement. While it’s not a huge mental stretch to picture Tesla putting out a signature vodka, for example, most people would probably find it downright odd to consider a Tesla cafe with Tesla-themed chicken wings, or a Tesla pizza. “I’ll have the Margherita with extra cheese and double microchips, go easy on the red sauce.”
Some lawmakers say that small entrepreneurs are at a natural disadvantage when dealing with larger corporations, which have far deeper pockets to fund a protracted legal battle and more options for swaying public sentiment in their favor. Bills to offer small businesses a less expensive method of fighting against so-called “trademark bullying” by large companies through the auspices of state and federal entities outside the courts have been offered multiple times over the past twenty years, but few have managed to stick around long enough to become law. In many cases, it’s probable that these bills were killed due to lobbying by large business concerns, who would see being placed on an equal footing with their nominal opponents as a clear and present danger to their ability to safeguard their IP against infringement. It is hardly surprising, therefore, that so many of these bills have failed.
The other problem is that IP law, both in the US and the UK, does not require that one trademark actually cause confusion with another to be invalidated–-only that the likelihood of such confusion might exist in the mind of a reasonable consumer. When the courts find that a reasonable consumer of average intelligence and market savvy might be confused by a trademark, that trademark cannot survive.
This doesn’t mean that big names have it all their own way when it comes to trademarks. Mariah Carey’s ill-fated attempt to seize the trademark, and the crown, for the title “Queen of Christmas” is a prime example of a situation where “the little guy” came out on top. Starbucks’ four-year attempt to go after a small mermaid-themed coffee company in Alaska made some waves in 2023, and when last we heard, the owners of that company were adamant in their determination to fight to the bitter end against Starbucks’ allegations of infringement. However, it does mean that smaller brands have to proceed with care and a certain degree of risk awareness when deciding that this is the hill they’re prepared to die on.
The Bottom Line
Legally speaking, Tesla did nothing wrong. The company did exactly what the law requires by defending its mark against potential infringement, even if the optics may have been questionable from a publicity standpoint. The issue, of course, is how that move is going to play in the eyes of the public and potential customers, or people who already have axes to grind against Tesla or Elon Musk for any reason. Too many moves like this, and even the strongest brand may earn itself a reputation for being a bully that even its staunchest supporters may find hard to stomach. And if that’s the case, they could easily win the battle–but wind up losing the war for the hearts and minds of the very consumers they rely on to keep themselves viably in business.
About John Rizvi, Esq.
John Rizvi is a Registered and Board Certified Patent Attorney, Adjunct Professor of Intellectual Property Law, best-selling author, and featured speaker on topics of interest to inventors and entrepreneurs (including TEDx).
His books include “Escaping the Gray” and “Think and Grow Rich for Inventors” and have won critical acclaim including an endorsement from Kevin Harrington, one of the original sharks on the hit TV show – Shark Tank, responsible for the successful launch of over 500 products resulting in more than $5 billion in sales worldwide. You can learn more about Professor Rizvi and his patent law practice at www.ThePatentProfessor.com
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