The Vegetarian Butcher – or how to protect the goodwill vested in your trademark

Secvegetarian-butcheruring proteins from alternative sources than meat or fish is nowadays a topic in the centre of the debate. The Dutch Vegetarian Butcher has found a solution for this challenge by manufacturing and marketing meat-alikes. These are food products having the taste and bite of a meat product, but that are composed of non-meat ingredients such as soy. The trademark used for this type of products was at the basis of a recent decision of the Amsterdam District Court. However, this case contains some general learning for any food business operator caring about his trademark.

Outline Partnership

The Dutch Vegetarian Butcher was operating a butcher shop in The Hague and had concluded a collaboration agreement with a commercial partner to operate a similar shop in the centre of Amsterdam. The terms of the collaboration agreement stipulated, inter alia, that the Amsterdam based Vegetarian Butcher was allowed to use the Vegetarian Butcher trademark and trade name. In fact, the shop in Amsterdam was to operate as a flagship store of Vegetarian Butcher products in the Dutch capital. The contract therefore provided that the Amsterdam shop was only to a very limited extent allowed selling third party products.

Collaboration in practise

In practise, the collaboration between the parties did not work out as expected. During several test visits of the Vegetarian Butcher shop in Amsterdam, freezers turned out to be empty, the Vegetarian Butcher logo’s were used for products that had not been approved and an important number of third party products were offered for sale. After the parties failed to find an amicable solution for their dispute, the original Vegetarian Butcher had terminated the collaboration agreement, requesting that the Amsterdam based Vegetarian Butcher ceased the use of both the Vegetarian Butcher trademark and trade name. Furthermore, he requested assignment of the domain, being the Dutch equivalent for <vegetarian butcher in Amsterdam>. Finally, recovery of full legal costs (about € 25K) was requested on the basis of the Dutch legislation implementing the Enforcement Directive. In his counterclaim, the Amsterdam based Vegetarian Butcher disputed the termination of the contract and claimed a huge amount of damages (about € 250K), arguing that he could not recover his investments.

In Court

The case was dealt with by the Amsterdam District Court in summary proceedings, as the original Vegetarian Butcher had an urgent interest to put a term to the unauthorized use of his trademark. The Judge recognizes that this dispute boils down to a different interpretation of the collaboration agreement between the parties. In such situation, it is standard practise that the Court establishes what would be the most reasonable interpretation to be given to the agreement, taking into account all relevant circumstances of the case. As one of these circumstances, the Court states that the collaboration agreement was based on a Letter of Intent (LoI) drafted by the Amsterdam based Vegetarian Butcher. In this LoI, it was clearly stated that the original Vegetarian Butcher supplies should have an exclusivity position in the Amsterdam shop. Only in the situation that the original Vegetarian Butcher was not in the position to supply sufficient products to the Amsterdam shop, the latter was at liberty to sell third party vegetarian products, provided that the origin thereof was clearly indicated.

Contract based IP enforcement

Based on the above, the Court decided that the termination of the collaboration agreement was valid. As a consequence, the Amsterdam based Vegetarian Butcher was ordered to cease and desist from the further use of the Vegetarian Butcher trademark and trade name, explicitly including any such use on social media. Furthermore, the assignment of the domain was ordered. Legal costs were however only partially recovered, as the Amsterdam based Vegetarian Butcher had opposed the claim for full compensation of legal costs and these proceedings were not considered complicated. For such cases, the Dutch Courts rely on a nationally agreed (but not undisputed) schedule of fixed amounts. In the present case, only 25 % of the actual claimed legal costs were awarded as a result.

Counterclaim dismissed

To no surprise, the claim for damages made by the Amsterdam based Vegetarian Butcher was dismissed. In the first place because he was found wrong, but also because it is not possible to claim full damages in Dutch summary relief proceedings. In such proceedings, it is only possible to request an advance payment of damages, provided that the existence and scope of the damages are sufficiently plausible. This was denied in the present case, as the shop in Amsterdam was allowed to continue its business, however without the use of the name Vegetarian Butcher.

Lessons to be learnt?

What is the general learning to be drawn from this case? In the first place, it demonstrates the importance to draft clear contracts regarding the use of a trademark by a commercial partner. This is of importance for any type of partnership, including but not limited to licenses and franchise. If the commercial partner does not respect the contract in place, it is good to know that such can be efficiently enforced in preliminary relief proceedings in Holland. A hearing can be obtained at relatively short notice (between 2 days and 2 months, depending on the urgency) and a decision is rendered within 2 weeks at most. For the full recovery of legal cost however, it is of the essence that the work done is sufficiently specified and that is it clearly explained what makes one case stand out from a standard case, if any.

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