For more than half a century McDonald’s has been a recognisable brand in just about every country you can think of. According to its website, the chain has restaurants in 101 countries. Its 36,000+ restaurants serve around 69 million fast food fans every single day.

With stats like this, and McDonald’s easily recognised by just about anybody, the recent EU trade mark ruling has surprised many. McDonald’s has just lost its EU trade mark for the Big Mac in what is dubbed a ‘David and Goliath’ battle with a small Irish chain.

How did McDonald’s lose its Big Mac EU trade mark?

When Supermac’s took on the might of McDonald’s in a trade mark battle, it was assumed by many that the smaller chain would lose. While Supermac’s may not be a household name in the UK, however, it’s much loved in Ireland.

Now the largest fast food chain in Ireland, Supermac’s began in 1978 and today has more than 110 franchises and restaurants all over the country. Founded by Pat and Una McDonagh, it was named after his nickname, ‘Supermac’ when he played Gaelic football. They also own Claddagh Irish Pubs & Restaurants through Supermac’s Ireland Ltd.

The EU trade mark battle

Supermac’s has been locked into an ongoing fight with McDonald’s since 2015, when it announced plans to expand into the EU and UK. McDonald’s initially objected to Supermac’s registering a number of trade marks for products and its name. They argued that the names McDonald’s and Supermac’s are too similar and would cause customer confusion. McDonald’s further argued that the Supermac’s brand name is visually too similar to their trade mark.

Supermac’s responded by pointing out that they had happily traded at the same time as McDonald’s in Ireland for more than 30 years with no signs of confusion on the part of customers.

Initially, McDonald’s won a part-victory when the European Union’s Office for Harmonisation in the Internal Market (OHIM) decided that Supermac can continue to trade in its own name within the EU. However, it rejected the Irish company’s trade mark applications for various products and menu items, saying that consumers might “be confused as to whether Supermac’s is a new version of McDonald’s”, given that there are near-identical products sold by both restaurant chains.

Revoking McDonald’s EU trade marks

In January 2019, the European Union Intellectual Property Office (EUIPO) made a decision that allows victory to Supermac’s after all. By ruling that EU trade marks owned by McDonald’s are to be revoked, Supermac’s is clear to expand into the rest of the EU.

The landmark decision went into effect immediately, on the basis that the EUIPO rules that McDonald’s had failed to prove “genuine use” of its Big Mac trade mark as a restaurant or menu item.

Unsurprisingly delighted, Pat McDonagh says: “Never mind David versus Goliath, this unique landmark decision is akin to the Connacht team winning against the All Blacks. This is the end of the McBully. Just because McDonald’s has deep pockets and we are relatively small in context, doesn’t mean we weren’t going to fight our corner.”

How the fight played out

In April 2017, Supermac’s requested that the EUIPO cancel McDonald’s trade mark for ‘Big Mac’ and ‘Mc’. The chain also accused the US giant of “trade mark bullying” by registering and gaining protection for names, but not actually using them to stamp down any potential competition.

On its part, McDonald’s legal representatives provided signed affidavits from high level executives and showed examples of packaging and adverts to demonstrate it serves Big Macs right across the EU, and therefore deserves to retain the EU trade mark for that specific product.

However, the EUIPO deemed this “insufficient” in its judgement. As trade marks are registered at national level and at the EU, McDonald’s does not lose all of its protection for the Big Mac. They also have the right to appeal, which we suspect they are likely to do.

Supermac’s forges ahead

For Supermac’s, all eyes are on the future. Mr McDonagh says: “This now opens the door for the decision to be made by the European trade mark office to allow us to use our SuperMac as a burger across Europe.”

A representative from EIP, an intellectual property law firm, Carissa-Kendall Windless, says: “This decision is a significant one, partly because it serves as a warning to multinational companies that they can no longer simply file trade mark applications without a genuine intention to use it”.

It’s inevitable that McDonald’s will exercise its right to appeal, and it will be interesting to see how this David and Goliath battle goes on this year.

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Although the spotlight is on the trade war between the United States and China, one aspect that is currently ignored by the media is represented by signs of weakness in the European continent.

Germany slows down

After posting a -0.3% GDP contraction in the third quarter of 2018, the economic indicators released from Germany in 2019 cannot support a positive economic picture. The manufacturing sectors continue to show signs of weakening, with the Markit PMI Composite now at 51.6, down from 52.3.

Industrial Production had been contraction by 1.9% in November, and both imports and exports had been down by 1.6% and 0.4%, respectively. DAX trading had also suggested there is growing concerns among investors and the main German stock index peaked out in July 2018, being now down by 15%.

Germany relies mostly on exports, being the third exporter in the world, only surpassed by the United States and China. That is why the weakness we see in Germany is actually a symptom of what’s happening in other European countries as well.

Italy and France not too encouraging

The new populist government in Italy, formed by La Lega and The Five Star Movement faced a serious challenge to get the EU’s approval for the 2019 budget, as the already high debt-to-GDP ratio (currently at 131.8%) raises concerns on whether the country will be able to meet its debt obligations in the future.

There are also serious concerns about the banking sector, which despite mergers and acquisitions, and huge capital available from the ECB, were unable to solve their problems which emerged after the 2008 financial crisis. The future of Italy is very uncertain, and analysts predict that the new government will not be able to meet their economic promises, given that we are at the end of a business cycle.

Speaking of France, the problems are social at the present time. President Macron was unable to stop the “Yellow Vests” protests, despite promises to increase the minimum wage and the overall standard of living for the very poor. France’s debt-to-GDP ratio currently stands at 97%, but given the latest promises, there are concerns whether the country will manage to keep the budget deficit below 3% in 2019, as the European treaties demand.

Although there’s a single currency in Europe, in terms of fiscal policy things were very fragmented, which is why the economic recovery had been very slow and the reason why investors predict Europe will face the greatest challenges to solve its economic, political, and social problems.

German industrial power and quality levels became a national symbol in the latter part of the 20th century, and to some extent the lifeboat of post-war reconstruction. Even throughout the industrial rise of Asia at the end of the century, the German island remained sanctuarize from the competitive attacks of Eastern developing countries. But several German industries have been increasingly struggling in the past decade and gasping for air. Is Germany at the end of its prosperity cycle, for having rested on its laurels?

Germany, along with its wartime Japanese ally, impressed the world with its rise from its ashes in the latter half of the 20th century. Starting with the Marshall plan quickly followed by self-standing growth, Germany speedily re-built its industrial capacity, and its reputation for top-notch quality. As soon as in the 1960s, German brands invaded the global market with their sturdy reputation preceding them: if the product said “Made in Germany” then the customer could feel sure there was nothing better on the market. At the end of the century, a large share of the top global engineering segment was German: BMW, Bosch, Rheinmetall, Merck, the list is endless. Economic historian Werner Abelshauer describes [1] how the label “made in Germany” became a symbol of quality: “The label “Made in Germany” ultimately developed into a sign of quality, though it took a while.” But the era during which Germany levitated above the rest of the industrial world is coming to an end. While Germany remained unharmed by Asian competition for longer than its neighbors, it is now fighting on a level field with all other manufacturers in the field, and worse: it’s not doing all that well. Economic reporter Chris Papadopoullos placed [2] the start of the decline during the year 2015: “Total production, which includes construction, manufacturing and mining, dipped 1.2 per cent in August compared with July, German statistical office Destatis said. The production of capital goods fell 2.1 per cent while consumer goods dipped 0.4 per cent. Construction and energy output also posted declines “.

Of course, the Volkswagen scandal caused a major dent in the image of industrial Germany. Consulting group ALVA published an extensive study of the post-scandal consequences on the image of Volkswagen and German quality altogether, and wrote [3]: “After the emissions scandal revelations, we can see a very different picture, with all Advocacy drivers having moved into negative territory to a greater or lesser extent. This is indicative of a reverse halo effect in which a negative emotional response to a company due to an erosion of trust spills over and clouds rational judgement of all of its traits.” Until then, German car manufacturers had been above suspicion, thanks to their reputation for industrial quality and business performance: when one is the best, there is no need to cheat. Through the fraudulent emissions revelations, Volkswagen, one of Germany’s flagships, showed that “Made in Germany” wasn’t all it was cracked up to be, and that they had flown too high on borrowed wings. The scandal shed doubt over other German flagships in its wake, as reported [4] by automotive journalist James Mills: “German media allege that US authorities have discovered that Daimler, parent of Mercedes, developed software for its diesel-powered vehicles that would shut down vital emissions equipment after driving just a short distance. Daimler is reported to have come up with programs that would shut down certain functions of the selective catalytic reduction filter after just 16g/km of NOx is admitted.” And the damage extended beyond the automobile world, into the whole industry.

Of course, if the problem were limited to the automobile world, Germany could survive on the others. But the slipping in industrial standards, the resulting loss of performance, and finally the need to resort to unsavory business practices to survive, seems to have contaminated all fields of the German industrial apparatus. German shipbuilder TKMS recently illustrated the downfall: after decades of occupying high grounds on the submarine market, the engineering firm is facing such a severe string of problems that it is facing being sold off entirely and scrapped from the national heritage. After losing a major submarine contract in Australia, it delivered a few corvettes to the German Navy, which simply refused them on the dock, due to quality standards being overstepped. Wall Street Journal William Wilkes reported [5]: “Germany’s naval brass in 2005 dreamed up a warship that could ferry marines into combat anywhere in the world, go up against enemy ships and stay away from home ports for two years with a crew half the size of its predecessor’s. First delivered for sea trials in 2016 after a series of delays, the 7,000-ton Baden-Württemberg F125 frigate was determined last month to have an unexpected design flaw: It doesn’t really work.” Germany’s submarine fleet, also built by the same shipbuilder, is currently completely out of order [6]. In desperate need for new contracts, it resorted to bribing officials, resulting in a political and economic quagmire in Israel. In an attempt to secure a submarine purchasing contract in Tel-Aviv, TKMS allegedly transferred over 10 million dollars through shell companies to a top government Israeli official. News Site Haaretz [7] reports: “At least ten high-powered individuals have been identified as involved in the scandal, including very close associates of Prime Minister Benjamin Netanyahu. A multimillion dollar submarine deal with German shipbuilder ThyssenKrupp is the focus of a police investigation, which is probing possible wrongdoing involving Netanyahu’s personal lawyer and German shipbuilder ThyssenKrupp’s local representative.” For weathered investors, this time in which German manufacturers need to resort to cheating to make up for their slipping industrial standards is something completely new, and in some ways an earthquake. As a result, investments are scarce for start-ups [8], as well as for established businesses [9].

Germany’s downfall in the industrial world isn’t taken lightly by political forces, and the economic problem is turning into a political one, with worker unions stepping up their criticism of management, and politicians scrambling to stop the nosedive. Angela Merkel has been urgently addressing the problem, but so far too little or no avail. “Angela Merkel champions Industry 4.0, urging investment in new technology. German business isn’t heeding the call”, says Politico [10]. Unlike Angela Merkel, many in the country haven’t figured out that Germany had slipped from one industrial model to another: initially known for the superb quality of its products, it was caught up quickly by its direct competitors: United Kingdom, France, Japan and the United States in particular. The core of German’s added value today lies mainly in the machine-tools and high-tech subsystems of German equipment-makers. But as a whole, Germany no longer has the capacity to integrate large and complex systems such as aircrafts, frigates or new-generation submarines.

[1] https://www.dw.com/en/125-years-of-made-in-germany/a-16188583
[2] http://www.cityam.com/226018/german-industrial-production-sees-steep-decline
[3] http://www.alva-group.com/en/reputation-damage-vw-emissions-scandal/
[4] https://www.driving.co.uk/news/emissions-scandal-vw-mercedes-cheat-diesel-tests/
[5] https://www.wsj.com/articles/german-engineering-yields-new-warship-that-isnt-fit-for-sea-1515753000
[6] https://www.defensenews.com/naval/2017/10/20/all-of-germanys-submarines-are-currently-down/
[7] https://www.haaretz.com/israel-news/LIVE-the-israeli-submarine-scandal-what-we-know-1.5626626
[8] https://global.handelsblatt.com/companies/german-startups-drying-up-without-risk-ready-investors-863686
[9]https://www.reuters.com/article/germany-investment/big-investors-cautious-on-german-public-private-partnership-plan-idUSL5N0XK45Q20150423
[10]https://www.politico.eu/article/why-europes-largest-economy-resists-new-industrial-revolution-factories-of-the-future-special-report/