by Douglas Arthur Workman

McDonald's vigorously protects its global brand against a basketball player, an Australian topless bar, a satirical website and even the Merriam-Webster dictionary.

McDonald's well-known brand has driven the company's 50 years of successful revenue and earnings growth around the globe.

As fast-food sales continue to gain traction in billion-dollar international markets including Brazil, Russia, China and Germany, McDonald's enforces its trademark rights in many serious legal cases. Some cases may seem trivial while others are even laughable. Each challenge, however, poses high-stake consequences for the company's brand-name, image and reputation in the minds of millions of consumers worldwide.

Consider the value of McDonald's logo, the Golden Arches. Any copycat opening a hamburger restaurant using McDonald's colors and the shapes of its trademarked images would surely increase consumer acceptance of its burgers. Trademarks protect a company's colors and shapes, provided that they serve no purpose other than to identify the source of the goods and services. If it can be proven in a court of law that the colors and shapes serve a function - for example if the Golden Arches color became strictly associated with healthy food items with less than 300 calories and no transfat - then that functionality would make the trademark open for challenge by copycats. In the July 28, 2003 edition of The National Law Journal, Jeffrey L. Eichen cites the pink color of Pepto Bismol as a case in point. No trademark is enforceable on Pepto Bismol pink because its color was ruled as soothing to someone with an upset stomach and is therefore functional.

As American basketball player Ariel McDonald found out when he starred in an Israeli commercial for Burger King, copycats need to tread carefully on pretty well McAnything, McAnywhere. In the TV skit, Ariel is allowed to enter a Burger King restaurant only after he removes his basketball shirt labelled with his name McDONALD. The player then appears wearing a jersey bearing the Burger King mark and says "Listen to McDonald: Burger King is the one." McDonald's responded with a commercial of its own, featuring a previously published magazine interview in which player McDonald said that he enjoyed life in Tel Aviv and dined at McDonald's.

The player sued McDonald's for using his name and quotations from the magazine without his authorization. Micky Dee launched a countersuit, arguing that the Burger King commercial infringed on the McDonald's trademark, damaged company goodwill, and constituted both false advertising and unjust enrichment.

Israel's Supreme Court decided in favour of McDonald's. The court ruled that Ariel McDonald's name and statements in the magazine article were freely made and that the world's largest fast-food restaurant chain had a right to use the magazine interview in response to Ariel's comments in the Burger King commercial. And although the player has a right to use his name, it is not an absolute right particularly where one is gaining economic benefit at the expense of a business competitor.

Copycats need to meticulously study what they plan to say and do if it pertains to the Golden Arches. In 1990, McDonald's sued an unemployed postman and gardener in London, England for distributing leaflets alleging that the company served unhealthy food, was cruel to animals and bad for the environment, and exploited workers. Why would a US$23-billion-a-year giant sue 2 low-income workers for libel, amassing some 50,000 pages in court documents related to the case? Of prime importance is the claim in the leaflets that McDonald's type of food (i.e., high in fat, sugar, animal products and salt) is linked with breast and bowel cancer as well as heart disease. McDonald's simply cannot afford to have its offerings associated with cancer in the court of public opinion.

McDonald's brand faced a more anatomical association when an Australian restaurant featured topless wenches serving under the name McTits. McDonald's deep legal resources immediately fired off a cease-and-desist order.

McDonald's is just as tenacious in defending its trademarks in cyberspace. Micky Dee's legal machine successfully shut down the website www.mcmurder.com, citing unauthorized and misleading use of McDonald's trademarks including the Golden Arches logo, the McDonald's mark and the Ronald McDonald character. Although mcmurder.com purports to be a humorous site, McDonald's successfully argued that an unsuspecting consumer wouldn't be able to distinguish the humour in the website's false allegations that McDonald's is systematically murdering people in Los Angeles and New York City on behalf of the United Nations. Big Mac also cited unproven claims of harassment and abuse against the company. The website has been forced to predominantly feature McDonald's legal cease-and-desist order on its home page. That order asserts that while America's First Amendment affords the right to free speech, it doesn't protect the gratuitous and deceptive use of trademarks as mcmurder.com does.

McDonald's has even gone after the Merriam-Webster's Collegiate Dictionary when it included the term McJob, defined as low-paying and dead-end work. No less than McDonald's CEO Jim Cantalupo wrote an open letter to Merriam-Webster, arguing that the term is an inaccurate description of restaurant employment and insults the 12 million workers in the restaurant industry. McDonald's legal team advised Merriam-Webster of impending legal action, pointing out that McJOBS is the trademarked name for McDonald's training program aimed at mentally and physically challenged people.

And The Winner Is...

Next to Coca-Cola, McDonald's is probably the most recognized brand in the world. That the company vigorously protects its trademarks is sound management practice when one considers that McDonald's trademarks are of immense value to consumer sales around the world.

Furthermore, the most profitable side of McDonald's business is its franchised restaurants that demand strong legal brand protection as well as strict policies and procedures. Fees from franchised and affiliated restaurants include startup payments, ongoing rent and service fees, royalties from foreign affiliates and developmental licensees, but exclude capital costs like real estate that less-profitable company-owned restaurants must pay.

Compared with the average margin of 15% from company-operated restaurants, franchised operations retain an average of 80% of revenues in profit. The list below shows profit margins for franchised McDonald's restaurants around the globe. After studying the list, we can see why McDonald's is motivated to go the extra mile to protect its intellectual property rights globally.

McDonald's Profit Margins for Franchised Stores (by Geographic Segment)

• Australia/Asia-Pacific ... 86.7% of revenues
• United States ... 81.4%
• Europe ... 76.9%
• Canada ... 76.8%
• Latin America ... 68.5%

So copycats around the world, beware. If you infringe on the Golden Arches trademarks, Micky Dee is going to send a lot more firepower than Ronald McDonald to deliver its cease-and-desist orders.

Sources: McDonald's Cries Foul by Joel Karni Schmidt of Cown, Liebowitz & Latman; Fast Food Giant Slowly Nibbling at the Greens, McDonald's Tries to Deep Fry McMurder.com