Revealed: Blow for Trump Organisation in obscure legal fight as member numbers fall at Turnberry

The Trump Organisation has suffered a major blow as part of a long-running European legal fight to protect its trademarked use of the US president’s name for an array of goods and services, including areas of business for which it is synonymous, such as real estate development and golfing equipment.

Scotland on Sunday has learned that an official European Union agency has issued a series of far-reaching decisions which experts believe will impact on the Trump Organisation’s ability to enforce its rights over numerous products and services associated with the Trump brand.

The decisions could potentially open the door for any other third party to use - and monetise - the Trump name in Europe for the likes of golf equipment, and the construction, management and sale of commercial and residential properties.

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One leading intellectual property expert said if a slew of other Trump trademarks currently being challenged were revoked, it would amount to “a significant restriction of its registered rights in the European Union.”

Documents filed by attorneys for a Trump Organisation subsidiary state that member numbers are declining at Turnberry, the US president's prized international resort. Picture: John Devlin

However, Alan Garten, chief legal officer and executive vice-president of the Trump Organisation, told Scotland on Sunday it did not believe the decisions would have any “material impact” on its business.

The dispute, which is being played out at the European Union Intellectual Property Office (EUIPO), has never been made public, but it can be revealed that Trump’s company has been engaged in a fight with a little-known firm based in the Grand Duchy of Luxembourg since March 2018.

Chartered trademark attorneys enlisted by an obscure Trump Organisation subsidiary have submitted nearly 1,300 pages of evidence in support of its arguments.

Offering an unprecedented insight into Trump’s loss making and heavily indebted Scottish businesses, they include a series of statistical sets detailing a decline in golf custom at Turnberry, the US president’s flagship international resort, since he bought it in 2014.

Turnberry has yet to turn a profit under Donald Trump's ownership. Picture: John Devlin

The documents, compiled last March and obtained by Scotland on Sunday, state that the number of visitors booking use of golf facilities at the property - a four-time host of the prestigious Open championship - has fallen from 11,835 in 2014 to 7,483 in 2018.

The paperwork, prepared by the London-based firm, Wildbore & Gibbons, also states that the number of golf club members at Turnberry has dropped from 434 to 373 over the same period.

Membership resignations

The downward trend comes despite a sizable investment by Trump’s firm at the property, which it has put at anywhere between £150m and £250m.

The number of visitors booking Turnberry's golf facilities has dropped sharly, the documents show. Picture: SWNS.

There is no way of independently corroborating the figures reported by Wildbore & Gibbons, which paint a candid picture of Turnberry’s operations.

The Trump Organisation routinely shields commercially sensitive information about its US and international resorts from public scrutiny.

In Scotland, it and its subsidiary companies present only a rudimentary overview of turnover at its businesses in annual accounts presented to Companies House.

They show turnover rose from £9.2m to £18.4m between 2014 and 2018, although losses increased from £3.6m to £10.7m.

Turnberry has yet to turn a profit under Trump’s ownership, and is reliant on loans of £114.9m to its parent undertaking, the Donald J Trump Revocable Trust, a New York-based state grantor trust.

A source at Turnberry said the issue of memberships have been addressed in person with Eric Trump, an executive vice-president of the Trump Organisation.

In 2018, Peter Rae, the club captain, wrote to members pointing out that the club has “lost a considerable number of members due to resignations and conversion to non-playing membership.” He added that the numbers of people who turned up to a membership initiative were “disappointing.”

Another initiative saw any existing members offered a night’s dinner, bed, and breakfast in the resort’s hotel if they proposed a new member who went on to join. It is unclear how successful the venture was. Full membership fees at Turnberry range from £5,000 to £17,500.

While the Trump Organisation has been investing in its Scottish resorts in recent years, it has also been trying to safeguard its trademarks.

Trump has made millions of pounds by licensing his name over the years, and with hundreds of trademarks registered around the world, his firm has zealously protected its intellectual property rights across the US, Europe, and further afield.

Delaware-based subsidiary

The Luxemburg firm, Anthee SARL, has challenged the exclusive use of numerous trademarks held by DTTM Operations LLC, a Delaware-based subsidiary of the Trump Organisation, across Europe. The DTTM entity is among the assets listed by Trump in his most recent disclosure to the US Office of Government Ethics.

So far, three of the trademarks - all of which bear Trump’s name - have been partially revoked by the EUIPO’s cancellation division.

They include a trademark protecting the use of the Trump name for the construction of residential and commercial properties throughout the EU, along with their management and sale.

However, the raft of partial revocations approved by the Alicante-based EUIPO goes even further, and could potentially impact on other established areas of the Trump Organisation’s business, as well as any future expansion plans.

Another decision has revoked its exclusive rights to the Trump name for an array of golf-related merchandise, including the likes of clubs, gloves, bags, tees, balls, divot repair tools, and head covers, many of which are sold by the Trump Organisation at its golf resorts, as well as via its Trump Store online retail portal.

Beauty pageants and holograms

The part revocation also prevents Trump’s firm from claiming exclusive rights to his own name for a broad - and diverse - range of goods and services, including credit cards, ringtones, Christmas tree decorations, video games, and sunglasses, as well as holograms, television shows, and beauty pageants.

Six other cases are outstanding, including challenges to a heraldic crest-style logo used by the Trump Organisation, the trademarked name of Trump International Hotel, and Trump Home, trademarked for various household goods.

Anthee SARL is appealing elements of the three EUIPO decisions which would see DTTM Operations LLC retain the registered rights in relation to Trump trademarks covering hotels, restaurants, and golf courses.

Jason Chester, an associate and chartered trademark attorney at the Edinburgh-office of Marks & Clerk, told Scotland on Sunday that the part-revocations issued by the EUIPO would curb the reach of Trump’s intellectual property rights.

“Subject to appeal, the three registrations will effectively be limited to hotel services, services relating to food and drink, and the provision of golf services,” he explained.

‘More difficult’ for Trump Organisation

“It is difficult to say whether these decisions will have a material commercial impact on the Trump Organisation, as some goods and services will clearly be more important than others to its overall business strategy in the EU.

“What is clear is that it will be more difficult for the Trump Organisation to enforce its registered rights against third parties seeking to use or register ‘Trump’ or similar variants in the EU in relation to the goods and services that have been removed from the contested registrations.”

Asked if other third parties and individuals around the world would seek to exploit the part-revocations and monetise the Trump name for themselves, Chester, who has helped multinational corporations protect and enforce EU and international trademarks, said: “The Trump brand is likely to have a valuable reputation throughout the EU and third parties may seek to take advantage of it.

“It is possible that third parties may seek to capitalise on the outcome of the revocation actions by using or seeking to register ‘Trump’ for themselves in an attempt to give the impression that their business activities are commercially linked to the Trump Organisation.”

But he added: “On the other hand, President Trump is a controversial character and third parties may take the view that aligning themselves with the Trump brand could have a detrimental effect on their business.”

Brussels-based think tank

Chester stressed that the Trump Organisation could potentially invoke or rely on other mechanisms and grounds to enforce its intellectual property rights, pointing out that it could, in theory, challenge anyone registering a Trump-related trademark on the basis of bad faith.

The Trump Organisation also has numerous trademarks held with the UK’s Intellectual Property Office, the validity of which are unaffected by the ongoing legal actions at the EUIPO.

It is unclear why Anthee SARL has submitted the various challenges to Trump’s trademarks.

The company’s managing director, Axel Goethals, a Belgian-national, is also the CEO of the European Institute for Asian Studies (EIAS), a Brussels-based think tank which aims to “strengthen ties” between Asia and Europe.

A biography on the EIAS website states that he has “a vast experience in different corporate sectors such as the pharmaceutical industry [and] real estate development.”

Anthee SARL holds no EU trademarks. However, according to the Benelux Office for Intellectual Property, which oversees intellectual property in Belgium, Luxembourg, and the Netherlands, it applied on 9 November 2016 - the day after Trump’s election victory - to register a trademark with the Trump name covering various services, including financial and real estate developments.

‘Genuine use’

Under EU rules, anyone is allowed to file an application for what is known as a “declaration of revocation.”

Anthee and its trademark attorneys, Office Freylinger, also based in Luxembourg, argued that under article 58 of the EU trademark regulation, the Trump-branded marks had not been put to a “genuine use” for a continuous five year period.

As part of its submissions via Wildbore & Gibbons, Trump’s company argued unsuccessfully that regardless of where its businesses are based, they attracted customers from across Europe.

“The attraction lies in the TRUMP name and reputation which pulls in European Union consumers, whether the actual services are provided out of Scotland, Ireland, the United States of America or Canada,” one document states, adding that the Trump name had acquired “an enhanced distinctiveness in relation to hotels and golf resorts, and was familiar to ordinary consumers thanks to its “global reach and fame.”

However, a three-strong team of trademark examiners at EUIPO’s cancellation division concluded that the information provided showed the services were provided in several places in the US and Turkey, “none of which are part of the relevant territory.”