What’s in a name? Plenty if you ask the two footwear companies engaged in a David vs Goliath legal battle over the name ‘Ugg’.
One of the businesses heading to court in the United States is a small Sydney manufacturing company that has been making Ugg boots since the early 1990s. It’s opponent is giant US footwear manufacturer Deckers Corporation.
The dual serves as a harsh reminder of the serious and costly consequences of not adequately protecting a brand name.
Australian Leather Pty Ltd makes about 50,000 pairs of the ‘quintessentially Australian’ Ugg boot every year, using only Australian sheepskins.
But in 1999, “UGG Australia” was successfully registered as a trademark of Deckers Corporation, which has an annual turnover of $2.4 billion. The trademark is now registered in the US, China and the EU.
Deckers wants to stop Australian Leather from sayings it’s sheepskin boots are ‘Ugg boots’.
Australian Leather says that for the past seven years, it has missed out on overseas orders to the value of about $20 million. It argues that while Deckers advertises its boots as ‘UGG Australia’, there is nothing Australian about the boots at all, because they are made in China.
Deckers’ has brought court action calling for all of Australian Leather’s ‘Ugg boot’ stock to be delivered to Deckers in the US for destruction, and for all funds in the company’s bank accounts to be transferred to Deckers. The company is also seeking millions of dollars in punitive damages.
Australian Leather says that if it loses, it will undoubtedly have to file for bankruptcy, and all Australian Ugg boots will need to be taken off the shelves.
Should Our Government Step In?
South Australian Independent Senator Nick Xenophon has weighed into the battle, accusing Deckers of legal bullying.
He believes the Australian Government has a role in protecting small business, and is proposing legislation to protect the word ‘Ugg’, saying the situation is no different to the French protecting he word ‘champagne’.
Competition and consumer law experts are also calling on the ACCC to get involved and investigate the way Deckers is marketing products in Australia in light of concerns the company may be engaging in misleading or deceptive conduct.
Australian Leather says that if you asked just about any Aussie you pass on the street, they’ll tell you Ugg boots are as Australian as Vegemite. Indeed, the boots originated in Australia and New Zealand, only gaining popularity in America as a fashion trend in the 1990s.
But while the heritage of the boots is not in dispute, the right to use the name certainly is; and this is the very crux of the issue.
‘Ugg’ may be considered in Australia as a generic term for a style of boots, but intellectual property experts say that because it is a registered trademark of Deckers Corporation, the company is well within its rights to protect it.
The Battle Begins
The first US District Court hearing is two months away, and Australian Leather spokesperson, Eddie Oygur says he’s an Aussie battler not afraid of a fight.
“Australian dealers have attempted to pass off their boots as Deckers’ UGG Australia brand boots… and to deceive or confuse consumers outside of Australia.
“…In appropriate circumstances, Deckers takes action against dealers in Australia and elsewhere that are engaged in such deceptive trade practices. Deckers welcomes fair competition and has entered into agreements with some Australian sheepskin boot dealers that facilitate lawful competition.”
It’s unfortunate, but often the winner in these cases is the one with the deepest pockets. In some cases, battles over brand names and trademarks can last years, costing millions of dollars and making lawyers very rich. Often, the only way to come out on top is to take pre-emptive action, and be the first to register and protect all aspects of your product or service’s name.
This is not cheap either, but in the long run, up-front investment can protect against others passing off (eg copying a name), or even save a small business from going under.