Australia: Chill - Cease and desist letter a reminder for brand owners

Services: Intellectual Property & Technology

What you need to know

  • The court of public opinion recently awarded major points to Netflix, after it was reported to have sent an unorthodox cease and desist letter to protect its rights in the Stranger Things series.
  • The extensive commentary about Netflix's letter has entertained fans of the popular show and intellectual property lawyers worldwide, and also served as an excellent reminder to brand owners that there is no 'one size fits all' approach when it comes to the enforcement of IP rights.
  • Brand owners will have a spectrum of options available when determining how best to protect and enforce their rights – different circumstances may call for different measures, but it is always important for brand owners to be mindful of any 'groundless threats' provisions of the relevant jurisdiction in which they seek to enforce their rights.

Various news outlets have now reported far and wide that, after becoming aware of a pop-up bar said to have incorporated various themes from the Stranger Things series, Netflix's IP counsel sent the bar's owners a cease and desist letter which:

  • was infused with humorous 'in' references that would appeal to fans of the show
  • included a conversational and accessible explanation that "...it's important for us to have a say in how our fans encounter the world we build"
  • asked the owners not to extend the pop-up beyond its planned 6-week run, and to seek permission before doing anything similar in future.

This type of approach to a cease and desist letter is certainly bespoke, and hints at a clear awareness of the letter's target audience and the fact that the letter had the potential to go viral. Reports indicate that aside from impressing fans of the show and social media commentators, the letter resulted in a positive outcome for the parties (including the ability for the bar to continue trading for the remainder of the intended pop-up period, rather than shutting down immediately).

In the wake of all the publicity and hype surrounding this one-of-a-kind cease and desist letter, many brand owners may now find themselves giving fresh consideration to their own brand protection and enforcement strategies.

A reminder for brand owners about brand protection and enforcement

As we have explained previously here, brand owners should consider formal trade mark protection as the foundation of a solid brand strategy. A trade mark registration is the critical element that gives a brand owner a monopoly over the use of a sign in connection with its business, and the legal right to prevent others from using that mark (or something deceptively similar) in connection with similar or closely related goods or services.

Once a brand owner has gone to the trouble of investing in and securing the protectable elements of a brand, it is imperative that they monitor the market and restrain unauthorised use that has the potential to damage the business or alienate consumers.

But as savvy brand owners will also appreciate, the overall brand of a business extends well beyond its trade mark registrations. It also encompasses additional elements such as the style, tone and reputation of the business, and how customers experience and interact with it. All are critical to the image that a business creates for itself, and all have the potential to be impacted by a brand owner's approach in dealing with a third party that it thinks has overstepped the mark.

Whenever a brand owner is faced with an instance of unauthorised use, it is important to carefully consider the best approach in the circumstances. Before firing off a standard cease and desist letter citing chapter and verse the various laws and rights that have been impinged, it is worth pausing (even if momentarily) to reflect on:

  • the commercial realities of the situation, such as the seriousness or otherwise of the alleged infringement, whether or not it is intentional or repeated, and how 'commercially sophisticated' the alleged infringer really is
  • the ultimate objective that the brand owner wants to achieve

If these considerations suggest that a resolution can be reached amicably, a softer conciliatory approach may be appropriate and effective. This might include providing the alleged infringer with the option of a 'trade out period' which may relieve pressure and encourage cooperation.

More often than not, it may be necessary to take an approach at the tougher end of the scale, for instance when a third party is flagrantly and repeatedly misappropriating a brand for their own commercial benefit and the brand owner is at risk of significant damage or loss.

Whatever the particular circumstances, the 'groundless threat' provisions of the particular jurisdiction in which the IP rights are being enforced should be borne in mind. In Australia, section 129 of the Trade Marks Act 1995 (Cth) provides that a brand owner could potentially be taken to court by someone who is 'aggrieved' by a groundless threat of action that the brand owner has made for infringement of a registered trade mark. If a claim under the groundless threat provisions is successful, the complainant may be entitled to recover damages that have been sustained because of the threatening conduct. Clearly, any brand owner would want to avoid such a scenario which could cause reputational damage to the business and brand.

Of course brand owners and their advisors can't always be as 'chill' as Netflix. But where the unauthorised use of a trade mark tempts a brand owner to "Cry 'Havoc!', and let slip the dogs of war", it is worth remembering the value of thinking laterally and seeking counsel from their brand advisors before unleashing the dogs.

This article is intended to provide commentary and general information. It should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this article. Authors listed may not be admitted in all states and territories

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Authors
Stuart Green (formerly with Corrs Chambers Westgarth)
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