In a setback for McDonald’s (NYSE:MCD), Europe’s second top court has ruled that the fast food chain cannot use the term “Big Mac” for poultry products after not using it for five years. The General Court’s ruling is a partial win in favor of Irish rival Supermac’s, which has been involved in this long-running trademark dispute with MCD.
McDonald’s had registered the trademark in 1996 for meat and poultry products and services rendered at restaurants.
Supermac’s Trademark Dispute with MCD
Supermac’s is a fast food chain in Ireland that sells beef and chicken burgers. Earlier, the European Union Intellectual Property Office (EUIPO) had dismissed Supermac’s revocation application for the trademark and confirmed McDonald’s use of “Big Mac” for meat and chicken sandwiches.
This resulted in Supermac’s challenging the EUIPO’s decision in court in an attempt to revoke McDonald’s trademark. Europe’s second-highest court, the General Court, however, rejected McDonald’s arguments and partially annulled the EUIPO’s decision.
The court stated in its decision that MCD had lost the right to use the “Big Mac” trademark for poultry products due to lack of genuine use for a consecutive period of five years in the EU.
Following this decision, MCD has the option to appeal the decision in Europe’s highest court, the Court of Justice of the European Union.
Impact of this Decision on MCD
It remains to be seen how this decision is likely to affect McDonald’s revenues in international markets, specifically in the EU. The company’s revenues from its internationally operated markets made up more than 40% of its total revenues of $6.2 billion in the first quarter. MCD defines internationally operated markets as markets or countries where the company owns and operates and franchises restaurants.
Is McDonald’s Stock a Buy or Sell?
Analysts remain cautiously optimistic about MCD stock, with a Moderate Buy consensus rating based on 19 Buys and ten Holds. Year-to-date, MCD has increased by more than 10%, and the average MCD price target of $311.79 implies an upside potential of 18.7% from current levels.
