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A star-crossed brand

DVD rental owner defends shop against Telefónica O2's "bizarre" trademark suit

By František Bouc
Staff Writer, The Prague Post
May 30th, 2007 issue

Telefónica 02

Who: Worldwide
telecom giant with 52.9 billion euros of revenue in 2006
Clientele: More than 145 million mobile phone users, including Movistar customers in Spain and Latin America
Name claim: Launched Movistar-branded mobile network worldwide in 2005

Movie Star


Who: Two DVD rental shops in Prague
Clientele: A small number of repeat
customers
Name claim: Opened first Movie Star store in 2004

These days, Markéta Kazdová could be enjoying the comfortable feeling of running a well-developing business. The two DVD rental shops that she owns in Prague have secured a stable pool of customers and turn profits.
But the current calm of Kazdová’s prosperity could soon be followed by a harsh storm: she has been legally challenged by the telecommunications giant Telefónica O2 over what the Spanish company says is a violation of one of its registered brands.
It is the first case of a major multinational taking legal action against a small Czech enterprise over a breach of its brand. Previously, only the Budějovice-based brewery Budvar had faced numerous disputes with Anheuser-Busch over the Budweiser brand name.
About half a year ago, Telefónica O2 filed a suit at the Prague 2 Municipal Court complaining about the rental store’s name: Movie Star. The name resembles Telefónica’s brand for its mobile networks in Spain and Latin America — Movistar — the company said. Telefónica has registered nine various combinations of the brand, including Movie Star, all over Europe, and it is now forcing DVD shops across the Continent to change their brand names.
Any court decision forcing Movie Star to change its name would be tough for the small chain to take.
“We’ve been developing [our] brand for a while, without knowing about any Spanish telecommunication networks in the world,” Kazdová said. “Dropping it virtually overnight would seriously harm our business.”
Neither Telefónica’s Spanish nor Czech subsidiaries would comment on the case, but the Municipal Court’s spokeswoman, Lenka Grollová, confirmed that the court is tackling the issue.
“Telefónica has filed a suit over breaching its registered brand name, and we’re now dealing with the case,” she said, though the judges have not yet started considering Telefónica O2’s challenge. “So far, the court has been putting together all evidence. The hearings could start within a few months.”

Common sense solution?

Before starting Movie Star in February 2004, Kazdová had considered several possible brand names.
“The first idea was to label the business Video Star,” she said. “But we realized that VHS home systems were on the decline and that the rentals were swapping video cassettes with DVDs and other media. That’s why we eventually decided on the Movie Star brand.”
Since there was no other Movie Star entry in the country’s business register, the company quickly moved ahead with the brand. Subsequently, Kazdová spent tens of thousands of crowns on branding costs.
“The name Movie Star and our logo have been printed on all of our membership cards, wrappings, in our outlets, etc. It was not a cheap thing for us,” she said, while declining to elaborate on the company’s revenues, except to admit that a need to re-brand would significantly drop revenues.
Kazdová first encountered problems with the Movie Star brand six months after registering her company.
“We received a notification from the patent office that Telefónica had raised objections against our brand,” Kazdová said. “It was the first time that I ever learned of Movistar.”
Telefónica did not contact Kazdová in an attempt to settle the dispute outside of court. Instead, it proceeded directly to filing suit.
Early this year, Kazdová received a notification from the Municipal Court asking her to provide comments on the complaint Telefónica had filed.
“I repeated the same thing that I keep telling everyone,” she said. “The whole challenge is bizarre. Not only is our name different from the Movistar brand that Telefónica O2 has been using, but we also do business in quite different fields and we are no competitor to Telefónica.”
She said that her last hope in the upcoming legal dispute was the common sense of the judge who will consider the case.
“I’ve got no idea what the process will look like,” she said. “But I hope when the judge reads through the suit, he will think to himself: ‘This is nonsense. I won’t waste time on that.’ ”

František Bouc can be reached at fbouc@praguepost.com


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