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Now, Complaints of Brand-Name 'Piracy' Go Both Ways

By Joel Millman, Wall Street Journal, July 11, 2005

On a hot summer day, families strolling in plazas from Tijuana to Cancún often stop at stalls selling La Michoacana ice-cream bars, a brand synonymous with frozen treats in Mexico for decades. These days, identical-looking bars are for sale in the U.S., too, and are being scooped up by Mexican immigrants longing for a taste of home.

In both cases, the bars' packaging and design are nearly the same. That's raising a cross-border dispute.

La Michoacana of Mexico, the originators of the brand, say it has never sold its product in the U.S. and has never authorized anyone to use their well-known logo, a girl in a pink dress holding an ice-cream cone. "It's robbery," says Alejandro Andrade, an executive at Industrias Alto SA, of Tocumbo, Mexico, the Mexican firm that markets the La Michoacana brand. (La Michoacana means "the girl from Michoacán," a state on Mexico's Pacific coast.) Mr. Andrade says he has registered the name and logo with Mexico's intellectual property agency, but not with U.S. authorities.

[Mexican (left) and U.S. (right) logos for this ice-cream brand look similar.]
Mexican (left) and U.S. (right) logos for this ice-cream brand look similar.

La Michoacana is not alone. With the explosive growth of immigration in the U.S., many old-country firms are discovering that their brands are being appropriated here. It may be unethical for a U.S. company to use a brand developed by a foreign firm outside the U.S., but U.S. law doesn't make it illegal -- unless the original brand has registered its trademark here. "Brands are trademarks, and trademark rights only extend as far as the jurisdiction in which they are obtained," says Beth Goldman, an intellectual property specialist at the law firm of Heller Ehrman in San Francisco.

For years, complaints of piracy were a one-way street: U.S. and European makers of clothing and computer software pressed trade officials to crack down on companies in developing nations that used their brand names. But now the complaints are going both ways. John M. Mings, a trademark attorney at Houston's Fulbright & Jaworski, says in 2001 he represented Costa Rica's biggest dairy, La Cooperativa de Productores de Leche Dos Pinos R.L., in a successful effort to stop a New York firm run by entrepreneurs from El Salvador from registering the Dos Pinos name with U.S. trademark authorities for a line of milk products.

In the case of the Mexican ice-cream bars, the U.S. treats are produced by a Mexican immigrant, Ignacio Gutierrez, whose company, Paleterias La Michoacana Inc., is located in Modesto, Calif. The company disputes the Mexican company's rights to the brand's name and logo in both the U.S. and Mexico.

Paleterias La Michoacana's Web site does seem to confuse the two companies. Even though the California company was founded in Modesto in 1991, the site says, "La Michoacana is a family company founded in Tocumbo, Michoacán in the 1940's. Since then, we've continued to make premium ice cream, fruit bars, and drinks that give the flavor and tradition of Mexico." Despite making the Tocumbo connection, the company says it isn't claiming to be part of the original family, only that it produces its ice cream in a typical Mexican style. "We just chose a name we knew Mexican people would know," says Patricia Gutierrez, who works as a secretary at Paleterias La Michoacana and is married to Mr. Gutierrez.

Paleterias La Michoacana ships its version of the ice cream to supermarkets and convenience stores around the U.S. and also supplies La Michoacana snack carts -- basically freezer boxes mounted on bicycles. According to U.S. federal records, Mr. Gutierrez applied for a trademark for his product in 2003, which his Mexican rivals didn't contest. The trademark is scheduled to take effect this year. The U.S. company says it trademarked the name after other companies tried using it, too.

Kevin Seibert, the attorney for the Modesto manufacturer, says his clients' logo has "significant differences" from the one commonly seen in Mexico, adding that despite similar imagery, "there is no likelihood of confusion with the Mexican company logo."

The Mexican firm fears there is little now it can do legally in the U.S., where it never tried to register the La Michoacana name or logo. "We never imagined this could happen to us," says Mr. Andrade, who says he would like to set up a licensing deal with Mr. Gutierrez. The California company says it is not interested.

Registering a trademark in the U.S. is relatively easy. Any foreign company, even one that doesn't have a U.S. presence, can hire a lawyer in its home country to file the application and pay the $325 fee to the U.S. Patent and Trademark Office. It can take up to two years to clear and must be renewed between the fifth and sixth years, and then again five years after that. Alternatively, the application can go through the World Intellectual Property Organization, an international advocacy group based in Geneva. Protection outside the U.S. must be applied for on a country-by-country basis.

But registering a trademark doesn't ensure that interlopers won't try to copy a brand's name or identity. Tres Hermanos, a shoe store owned by Estilos Modernos Del Bajio SA de CV, Mexico's largest footwear chain, has registered its trademark in the U.S. since 1976 -- though it doesn't operate here -- and says it is still targeted by pirates. It stopped one Orange County company from selling shoes in the U.S. under the Tres Hermanos name in 2002, and vigilantly watches for other infractions. "It costs us $30,000 or $50,000 to go after someone every time we hear about it, in Mexico," says Benito Muñoz, Tres Hermanos' controller, who says he currently has several cases pending in Mexico. "It's twice that in California."

Now, another company, Tres Hermanos Inc., is using the name (tres hermanos means "three brothers" in Spanish), for a chain of 26 stores that sell discount clothing and Mexican cowboy-style shoes and boots in California, Nevada and Arizona. In this case, the owners are actually three brothers -- although they were born in Lebanon. The U.S. chain uses nearly the same logo as the one in Mexico. On Anaheim's South Euclid Street, the heart of a sprawling immigrant neighborhood, shoppers say they were attracted to the store bearing the same name they knew from home. "I know it from TV," in Mexico, says a housepainter named Fernando Contreras, who emigrated from the central Mexican state of Hidalgo.

"It's piracy. What else can you call it?" fumes Arnulfo Padilla, who founded the Mexican Tres Hermanos chain in 1955. But the owners of the American Tres Hermanos say they are doing nothing wrong. "They're in Mexico, and we're in the U.S.," says Monir Awada, the youngest of the three brothers. The Mexican firm says it hopes to negotiate a settlement.

Philippine companies have also fought over names. In 2000, the Philippine Islands' largest conglomerate, San Miguel Corp., lost a long legal fight to stop a California company, Ramar Foods International Corp., from selling Magnolia brand ice cream, a brand San Miguel owned. From its Oakland factory, Ramar produces flavors that were nearly identical to Magnolia's -- lychee, avocado, corn-cheese and urbe yam -- and uses packaging and logos similar to the Filipino company. But San Miguel, which hadn't registered its Magnolia trademark abroad, eventually dropped the case.

"They didn't have the vision to know they could sell to Filipinos here," says Primo Quesada, president of Ramar Foods, based in Pittsburg, Calif. A spokesman for San Miguel in Manila says the company does not comment on past or pending litigation.

Last updated 08 February 2008. ©Fred Miller, 2008
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