A Feilding fish and chip shop named after a spinach-eating cartoon character caved to a name change demand from global food chain Popeyes last week – but did they need to?
Legal experts say, well, it’s complicated.
Owners of the Manawatū store, Bill Cao and May Zhou, have operated their business since 2008. When they bought it, it was already named Popeye’s. However, they had never thought to register the name.
That wasn’t a problem until last week when US fried chicken chain Popeye’s, which has more than 4000 outlets worldwide, arrived in New Zealand, opening a takeaway store in Auckland’s Takanini.
A lawyer’s letter from specialist trade mark firm AJ Park followed, telling the couple they couldn’t use the Popeye name any longer.
Cao and Zhou said the cost of lawyers and the fact that they would need to close the store during proceedings would be too big a hit to the business. So they took down their signs and the business has been renamed “North Street Takeaways”.
The claim from the US company’s lawyers is understood to centre on a concern that consumers would mistake the two businesses as being connected as they offer similar services.
They also pointed to the Popeyes name being registered in 2022. The name “Popeyes” was also first registered as a trademark in New Zealand in 1976 by Popeyes Louisiana Kitchen, Inc. This trademark is listed as a company supplying ingredients and food to restaurants. It was also registered in 2012 as “restaurant services”.
‘Popeye’s Louisiana wouldn’t win’
Speaking to 1News, intellectual property law expert and barrister Earl Gray said he believed the Feilding company “weren’t obliged to change their name”.
He said this was because the business had “prior rights” and had been “trading continuously” under the same name.
Gray said a likely defence in court would come under section 96 of the Trade Marks Act – where a defendant can claim that the use of a trade mark, even if they haven’t registered it themselves, did not infringe a registered name if they have been continuously using it since before the trade mark was registered.
He said that if it were before a court of law, “you’d think that Popeye’s Louisiana wouldn’t win, to put it simply”.
“If before a court, the first question would be whether it has been used. And if it hasn’t, then it’s vulnerable to be removed from the register.
“The only thing that might save them a bit is that 1976 trade mark registration.”
He called the US companies’ lawyers’ strategy “slightly high risk” because they “potentially could have lost one or more of their trade marks” as a result of the action.
Gray drew comparisons to a case from 1971 when Burger King was forced to rebrand as Hungry Jacks in Australia because a local restaurant was already named Burger King.
“The lawyers would have known of those risks, so they obviously worked out a strategy for this Feilding company and, so far, it seems to have worked,” Gray said.
He believes Popeyes should have compensated the Feilding store owners for the cost of changing their name.
Popeyes Louisiana ‘has trade mark rights in NZ dating back to 1976’
However, Auckland University law lecturer Alexandra Allen-Franks took a different interpretation of the law. She said it was likely a “straightforward” case for the US franchise.
Referring to the company’s 2012 trade mark registration, Allen-Franks said: “A registered trade mark can be infringed if a defendant, here the fish and chips shop, uses a ‘sign’, like a name, logo, etcetera, which is identical to the registered trade mark on identical goods or services for which the trade mark is registered,” she said.
“So here, the fish and chips shop is using an identical sign, the name Popeyes, for identical services – restaurant services. That’s trademark infringement of [the 2012] registration.”
She said there could also be infringement of the 1976 “Popeyes” trade mark registration “if the [fish and chip shop’s] use is likely to deceive or confuse the public”.
“So while the New Zealand fish and chips shop has been operating longer physically, Popeyes Louisiana has trade mark rights in NZ dating back to 1976.”
She said that while the takeaway might be able to make a defence on Section 96 for the 2012 trade mark registration, “that doesn’t work for the 1976 trade mark registration”.
Allen-Franks said she would be interested to see whether Popeyes Louisiana knew about the fish and chip shop previously.
“Because if they’ve known about it for a long time, then sometimes that leads to a defence because the court says effectively, we aren’t going to help you because you should have done something about this sooner.”
If the case had gone to court, she said: “I would also expect Popeye’s fish and chips shop to counterclaim and attempt to cancel Popeyes Louisiana’s trade marks.”
However, she said it would be difficult to challenge the US company through a counterclaim “because, in New Zealand, we have a law that says that after seven years since registration, a trade mark is deemed to be valid unless it was obtained by fraud or should not have been registered.
“Popeyes fish and chips shop would have to argue that a 2012 word mark should not have been registered because of the fish and chips shop. The trial would take at least a week and would be expensive.”
Allen-Franks advises businesses to get legal advice. “Although it is sad for the fish and chips shop that they are renaming, it looks like the most pragmatic response here given the existence of Popeyes’ trade mark registrations.”
1News approached Popeyes Louisiana Kitchen for comment but hasn’t received a response.