Litigation and the risks of media coverage

All large manufacturers know that trademark protection means navigating a minefield of issues. Receiving protection in your local market is no guarantee of protection in neighbouring countries. Every jurisdiction has its nuances, including the prior rights of small local businesses. 

A frequent blind spot when designing strategies to best protect a company’s flagship marks is the reputational risk associated with media coverage of the legal proceedings. The media love a David and Goliath story, and this can affect the course of litigation.

Hyundai Motor Company (“Hyundai”) recently faced this issue following The Globe and Mail’s February 7 publication of an article by Chris Hannay titled, “Toronto menswear shop holds firm as auto giant Hyundai launches legal battle over Genesis name”.

The Genesis trademark for Hyundai’s line of luxury cars has been protected in Canada since at least 2007. Since then, Hyundai has registered many trademarks related to motor vehicles, its core business. The issue raised in The Globe and Mail article took form in 2016 as Hyundai was implementing its protection strategy for accessories linked to the Genesis brand. As part of that, Hyundai applied for trademarks to use the Genesis name in association with clothing products.

In January 2017, the Registrar of Trademarks objected to Hyundai’s application, citing potential confusion with the Genesis trademark held by Dimatt Investments Inc., which was doing business under the Genesis name (“Genesis Menswear”).

For the past 50 years, Genesis Menswear has been operating its Toronto store specialized in the sale of clothing imported from Italy. It was granted the trademark that blocks Hyundai’s application in 1988.

In response to the Registrar’s objection, Hyundai brought a motion for a summary judgment to expunge the Genesis Menswear registration. Under this threat of losing its trademark, the clothing store was forced to produce evidence proving it was still in use.

This is a fairly common strategy. It allows the instigator of the procedure to overcome an otherwise burdensome objection at little expense if the trademark owner fails to produce the required evidence. But for the strategy to have a chance of success, the trademark must no longer be in use or the applicant must produce faulty evidence.

That brings us back to what sparked The Globe and Mail’s article. After Genesis Menswear produced evidence in response to the motion for summary judgment, the process dragged on for several years. This forced Genesis Menswear to incur significant costs to defend its registered trademark.

In January 2021, the Registrar issued its ruling upholding the Genesis Menswear trademark. Hyundai appealed the ruling to the Federal Court.

The scope and length of the process did not go unnoticed in the media.

In his article, Chris Hannay reported that not long after The Globe and Mail contacted Hyundai for comment, Genesis Menswear’s owners claimed that the auto maker had expressed an interest in reaching a settlement. According to the docket of the Federal Court, the parties have since settled out of court.