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In this week’s case analysis we study the case of Gene and Betty Hoots, who came up with the name Burger King in 1957 in Illinois, before the national franchise founded in Florida turned up in Illinois. The pair trademarked the Burger King name (it being an original and creative intellectual property) in Illinois, so when the Burger King franchise wanted to open a restaurant in the area, they were sued by the Hoots, who ended up winning the case. The verdict still holds to this day: the national franchise is not allowed to open a restaurant within 20 miles radius of Mattoon, IL, the town of the original Burger King.
Intellectual property (IP) is any original idea or creation of the mind. IP can be protected in multiple ways depending on the substance of the property.
1. A trademark is any distinctive mark, color, sound, phrase, picture, or design that the creator uses in correlation with their product (for example the yellow arches with red background for McDonald's), and the consumer associates it with said product. The use of a trademark by a different company is unlawful under the Lanham Act.
2. A copyright is the protection of the fixed form of a creative and original idea, such as a song, a movie, a book, an article, and so on. Sharing copyrighted products without the permission of the author constitutes as infringement and is punishable by law. An exception to this is the fair use doctrine, which allows the use of part of the copyrighted product for criticism, research, teaching, etc.
3. And finally, a patent is a protection that is mostly used for technological or medical advancements. For an invention, product, machine, process, plant, vaccine, etc. to be patented, it has to be new, useful to the society, and nonobvious (Kubasek, Browne, Herron, Dhooge, & Barkacs 2016).
Now, the Lanham Act is an important set of laws for multiple reasons. The original Burger King was a small restaurant that relied on local customers and were marketed by word of mouth, whereas by the time the national franchise Burger King got to the point to wanting to open a restaurant in Illinois, they were already a pretty big business that could have easily made the Hoots’ restaurant close its doors. By trademarking their business name and suing the franchise, they made sure that they won’t have competition in the close proximity (at least not with the same name, so people don’t get confused about which is which).
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The reason the Hoots won that case was that they trademarked the Burger King name under the Illinois law and actually used that name before the other Burger King showed up, not knowing that there is another Burger King. However, their trademark does not cover the whole state of Illinois, because by that time they only had that one restaurant (later they opened one more), and the national franchise (with several dozens of restaurants country-wide) trademarked the name Burger King under the Federal Trademark Act, which trumps the state law. They sued each other at state court and then at federal court, for infringing each other’s trademark. But no matter how sure the Hoots’ were that they are being protected state-wide, the Florida Burger King, by the time their case got to the Seventh Circuit Court of Appeals, had over 50 joints in Illinois, so ultimately their natural growth gave them the advantage. In the end they ended up settling on the ruling that the franchise cannot open a restaurant in the Mattoon, IL area, and the original Burger King cannot operate under this name outside of the Mattoon, IL area (Burger King of Florida, Inc. v Hoots, 1968, Garbis 2013).
This case is significant in the U.S. trademark law jurisprudence, because it sets a precedent for trademark infringements by being a staple example of how the Lanham Act works. It is important to know as business owners, that trademarking something at the state level has only so much power, because it has much more limitations than a federal trademark. It is better to trademark a name federally, as there are no limitations to that. If the Hoots did the same, they would have had much more power and a much larger market today.
There are similar cases out there, even outside the United States. As Black (2019) states in an article for the Belfast Telegraph, Supermac’s, a Northern Ireland based burger joint sued McDonald’s for trademarking all sorts of words with the preceding “Mc” and storing them for future use, calling it “trademark bullying”. Supermac’s won the case in Europe, the court ruling that McDonald’s did not prove genuine use of the trademarked words. This case exemplifies that trademarking has to be done in a smart way, and with knowing that the trademarked word or symbol will be used in the near future. Burger King’s trademarking was genuine, because they knew they are growing so fast country-wide, that they needed to federally trademark their name to not run into other problems such as the one with the Hoots’.
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Similarly, if you’ve ever watched the movie Coming to America, the fast-food restaurant McDowell’s is a great example of how to dodge trademark infringement. The name is similar to McDonald’s but different enough, the logo is also similar, but not exactly the same, the specialty (Big Mick) also resembles the Big Mac, but it’s not the same, and so on. It is a fictional place, but in reality it would be legal (Drumm 2018).
Trademarking is a complex topic which requires serious studying to understand every facet of it. These are some interesting examples to read about, but there is so much more to it. The bottom line is that if a business is successful on a national level, then they need to federally trademark their intellectual property, but just in case they will actually use all the trademarked property; and the trademarked property also has to be creative enough that the customers will not confuse it with something else.
References
Kubasek, N., Browne, M. N., Herron, D. J., Dhooge, L. J., & Barkacs, L. (2016). Dynamic business law: The essentials (4th ed.). New York, NY: McGraw-Hill Education.
Burger King of Florida, Inc. v. Hoots. United States Court of Appeals for the Seventh Circuit
403 F.2d 904 (1968)
Garbis, A. (2013, July 8). King of the land – Importance of Federal Trademark Registration. https://www.garbislaw.com/king-of-the-land-importance-of-federal-trademark-registration
Black, R. (2019, January 16). Burger chain in trademark victory over McDonald's. Belfast Telegraph. https://advance-lexis-com.libraryresources.columbiasouthern.edu/document/?pdmfid=1516831
Drumm, M. (2018, April). Golden Arcs? Franchise trademarks: Is it time to revisit your intellectual property cornerstones? p.34. Franchising World. http://eds.a.ebscohost.com.libraryresources.columbiasouthern.edu/eds/pdfviewer/pdfviewer?vid=1&sid=73566fd8-1862-4b85-87d2-edd8c814c985%40sdc-v-sessmgr02
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