Case Study: Reputations and Trade Marks

Are you looking to buy over a business or a trade mark that has an established reputation? You will need to plan carefully and make sure that the public connects the dots – that your business continues the reputation of the business or the trade mark that you have recently acquired. Failure to do so may have adverse consequences for you!

In MGM Grand Hotel LLC v Surfside Estates Pty Limited, Surfside Estates Pty Limited, an Australian company based in Queensland, made an application to register the trade mark “studio 54 nightclub”. The MGM Grand Hotel, a famous hotel in the United States of America, lodged an objection to the application and made two applications of its own to register the “Studio 54” trade marks in Australia.

MGM had owned and operated a night club in its Las Vegas Venue called “Studio 54” , which was a replica of a similarly named, infamous New York night club that operated in the 1970s. The original night club had exchanged hands a number of times and eventually shut down in the 1980s. MGM was the current owner of the trade mark in the United States and had operated its Las Vegas venue since 1997.

It is important to note that MGM had never traded or operated under this trade mark in Australia. Nevertheless, MGM argued that the trade mark “Studio 54” had gained an international reputation, and that this reputation should be protected. MGM submitted evidence of this reputation by providing evidence of the fame of the original night club as well as the fame of its current night club in Las Vegas. MGM tried to demonstrate that Australians would have known of the trade mark through the use of the internet as well the number of Australians who stayed at its hotel over the years.

The hearing officer considered the matter but determined that there was not one but two reputations  – the reputation of the original night club, and the reputation of the current night club operated by MGM. The hearing officer found that while there was some evidence of Australians being aware of the reputation of the original night club, there wasn’t enough evidence to support the assertion that Australians were aware of the reputation of the night club in Las Vegas. In addition to this the hearing officer found that the original night club closed in the 1980s, and that MGM only started operating its replica in Las Vegas in about 1997. The hearing officer concluded that most people thought that the two night clubs were not one and the same, but were different.

Ultimately, the hearing officer thought that MGM’s Studio 54 in Las Vegas had not earned a well-known reputation in Australia. Accordingly the hearing officer dismissed the opposition.

One of the lessons to be learnt from this case is that if you are opposing someone else from registering a trade mark that is similar or identical to yours, unless your trade mark has already been registered, you will need to show the court strong evidence of your trade mark’s reputation or use in Australia. Naturally, if you are proactive and if you register your trade mark first, this issue might be easier to deal with.

The other lesson to be learned is that when purchasing a business or a trade mark that has acquired a certain reputation, you will need to plan carefully to make sure that the public sees a continuity in the business or trade mark. In MGM’s case the public thought that the two night clubs were different – this led to it’s loss. It is important to make sure that the trade mark’s reputation is consistent throughout the life of the trade mark. Failure to do so could have adverse consequences!