How fried chicken food truck YFC ran afoul of KFC's trademark lawyers

Explainer: An entrepreneurial teenager ran into trouble when his fried chicken business was called out by KFC. Why does a giant global corporation care so much about similarity to their logo?

It all boils down to intellectual property rights, and businesses big and small wanting to protect their brand.

What happened with YFC?

Riccarton high school student Ben Yang started up his own business last year selling Korean fried chicken and more. The 17-year-old called it "YFC" - as in 'Yang Fried Chicken' - and gave it a red logo featuring a cartoon of Yang.

However, fast food giant KFC objected to the similarity to its own logo, sending out legal documents ordering him to cease and desist. Yang has been told to change the name of his food truck by August and has started a contest to help rebrand.

Why does KFC have to go after the 'little guy'?

The teenager ran afoul of intellectual property rights by coming so close to the well-known KFC logo.

Ben Cain, an intellectual property lawyer at Auckland law firm James & Wells, said it doesn't matter how small your business is in cases like this.

"Companies like KFC take their IP rights in their brands, be they trademark rights, copyright rights or 'get-up' rights in how the brand is graphically represented, very seriously and they do so for good reasons."

Rob Batty, co-director of the New Zealand Centre for Intellectual Property and an associate law professor at the University of Auckland, said enforcement action against trademark infringement often boils down to not wanting to confuse customers.

"Consumer confusion can potentially lead to loss of sales," he said. "The prospect of consumers being confused by the use of the same or a similar sign can also potentially damage the reputation associated with a trademark."

And while a teenager's food truck may be small, there are bigger principles at stake, Cain said.

"The size of the business which is enforcing their rights is really irrelevant in this context - small or big, no one likes a third party copying their IP, so every business should take enforcement of their rights seriously. If a business doesn't, it can lose bottomline value in its IP rights by what is called 'loss of distinctiveness'."

Batty noted there have been many cases where a trademarked term loses its uniqueness and becomes a generic term, such as aspirin, trampoline or escalator.

"It is possible that a prolonged failure to police a trademark by a registered trademark owner could lead to genericide," he said. "Genericide describes a situation where a trademark loses its distinctiveness entirely, and becomes the common descriptive term of a particular good or service."

Cain said that Yang's design ultimately comes too close to the more famous logo.

"He's done something he shouldn't, perhaps naively: he's emulated the KFC name, logo and brand colours and as a consequence received a standard letter from a business asking him to stop and change. Such a letter is standard practice for a company the size of KFC - not calling an alleged infringer and saying 'hey, please stop'."

Yang told RNZ he was surprised to get the legal orders.

"It's quite shocking to see that KFC, this really big brand, would find out about this small food truck that's just parked down the road ... and just send legal documents without ... talking to us beforehand, without any communication," he said.

A spokesperson for KFC earlier refused to comment on the YFC case to RNZ.

How do they even find out?

In the age of social media, it doesn't matter how small or remote your business is.

YFC's logo, prominent on Instagram and other social media, was eventually spotted, and "someone saw his branding and told someone who told someone", Cain said.

"Larger organisations may have specific individuals whose responsibility it is to monitor for conduct like this."

Hasn't this sort of thing happened before?

Small New Zealand businesses running afoul of bigger companies is nothing new.

"'Policing' a registered trademark can protect against 'dilution'," Batty said.

"This is where the distinctiveness of a trademark - that is, the ability of a trademark to be identified by consumers as marking out goods and services as having a particular trade origin - is weakened or eroded."

The takeaway shop Popeye's in Feilding changed its name last year to North Street Takeaways after the US fast food giant of the same name objected. The American Popeye's opened its first outlet in New Zealand last year.

In 2023, New Zealand homeware retailer Bed Bath & Beyond lost a trademark battle in the High Court against the Australian Bed Bath 'N' Table over a number of intellectual property-related claims.

Back in 2015, the Christchurch cleaning firm Minions and Me ran into trouble with Hollywood's Universal Pictures for using images of the animated characters featured in the movie series Despicable Me. The business continues to use the name but had to drop all reference to the animated characters from its branding and advertising.

Another famous copyright battle in the 1980s ensued between Harrods department store in London and a Palmerston North restaurant, which drew global media interest, while Australia and New Zealand had a long-running stoush over who could use the name mānuka honey.

Well, how do you protect your business name yourself?

"Being first matters," Batty said.

"When you have come up with a new brand name or a new logo for your business, you should check whether the same name or logo (or a similar name or logo) has been registered as a trademark by another trader."

The Intellectual Property Office of New Zealand offers assistance in searching for and registering trademarks. It can also do "distinctiveness reports" to see if your name or logo comes a bit too close for comfort to another.

Cain also suggests getting help from a professional intellectual property expert.

"The first thing you should do is ask an IP lawyer to conduct a clearance search of identical and similar trademarks of all the countries you're intending to trade in. It's tempting to do the searching yourself but unless you are experienced it's not a good idea as there are many pitfalls.

"Many start-ups and small businesses don't do any searching before they choose their name and come unstuck," he said, and they then lost time and money dealing with rebranding.

The New Zealand Trade Marks Act 2002 also looks at situations where a person started using a trademark before another person registers or starts using a similar or identical one.

"The first user will have a defence to trademark infringement," Batty said.

KFC, originally calling itself Kentucky Fried Chicken, first opened in New Zealand back in 1971.

"Some traders register their trademarks in New Zealand well before they start using them," Batty said.

"For example, an application to register the words KENTUCKY FRIED CHICKEN was filed in 1981 (trademark registration number 139149). A logo (showing a portrait of Colonel Harland Sanders) is recorded on the Register as being filed in 1964 (trademark registration number 76669, now expired)."

What options do you have if you get served up with a letter telling you you're infringing on someone's trademark?

Yang has chosen to rebrand his fledgling business, rather than engage in a lengthy legal battle like some of those other examples.

"Your options are pretty simple: fight back or change," Cain said.

If you had a good defence over your trademark claim and can afford legal fees, it could be worth the battle, but ultimately boils down to how far you want to go, he said.

"If you have no or a poor defence, don't quibble about it - just agree to change and change. Consumers will move on and accept your new brand before you know it."

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