Legal Briefing

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Retail | 03 May 2019

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Brand management

Brands are one of the most valuable assets of any business. They act as ‘badges of origin’, distinguishing products and services of one business from those of competing businesses. They also impart a message to customers, acting as a guarantee of quality and authenticity. In this article, we consider five important aspects of effective brand management that should always be considered (but that are often overlooked).

Apple had to pay upwards of $60m to obtain trade mark registrations for “iPad” registered in the name of a Chinese company.Dan Cahill, Ashfords
‘Apple had to pay upwards of $60m to obtain trade mark registrations for “iPad” registered in the name of a Chinese company.’
Dan Cahill, Ashfords
The importance of clearance searches

An important early step in the brand creation process, clearance searches help to determine whether the use of a proposed brand will result in you infringing someone else’s legal rights in an identical or similar brand (and assess the chances of you being able to register your chosen brand as a trade mark).

One of the most common pitfalls IP professionals see is businesses putting a great deal of time and money into the creation and marketing of a new brand, only to find out later that another business has already launched or registered an identical or similar brand, forcing a re-brand. Even worse, the business is put at risk of being sued for registered trade mark infringement/passing-off, being injuncted from using the brand and having to pay an award of costs/damages/account of profits to the other side.

There is nothing worse than having to expend time, money and effort re-branding. Not only that, a re-brand can result in a major loss of customer goodwill and provide your competitors with an advantage (forcing you back to square one and destroying any brand recognition you may have built). Conducting clearance searches during the early stages of brand creation can help to avoid these difficulties.

Registering trade marks – getting it right

Once you have settled on a new brand, you should look to register it as a trade mark. The registration process can take upwards of 6-12 months (potentially longer in some countries), so it is important to start the registration process as soon as possible after creation.

Obtaining a registered trade mark essentially grants you a monopoly in a brand. If you don’t obtain a registered trade mark, you are less likely to deter others from trading under the same or a similar brand, and from a legal perspective it is often far more difficult to stop them doing so. Registering a trade mark also helps when it comes to commercial exploitation of a brand, allowing you to licence your registration to others and control the way in which they are allowed to use the brand.

When deciding what goods and services should be covered by your application, foresight is key. It is important to make sure any trade mark applications you file cover a sufficiently broad specification of goods/services that not only protect your core product/service offerings, but also product and service ranges that you intend to offer further down the line. Territorial coverage is also key – you should look to register your brand in any countries where you trade (or plan on trading in the future).

Portfolio management
Renewals

Trade mark registrations must be renewed periodically to remain on the register (in the UK every ten years, but this differs from country to country). If you fail to renew a registration, it is removed from the register, potentially giving third parties a free run at not only using your brand in trade, but also obtaining a trade mark registration for your mark themselves. It is vital to maintain detailed records of your registered trade mark portfolio, and diarise all renewal deadlines.

Maintenance and use

In some countries (eg, the US), trade mark owners are required to periodically submit evidence that they are using their registered trade mark in that country. Additionally, once trade mark registrations have been registered for a certain length of time, to enforce your registration against third parties you have to prove you have made ‘genuine use’ of your mark in trade.

Thus, it is important to ensure that you are not only making use of registered trade marks in the form they are registered, and for the goods/services covered by your registration, but also to keep records of your trade mark use (including details of trading and advertising activities, sales figures, and examples of your registered mark being used on products and in marketing materials). Otherwise, you face the risk of not only being unable to enforce your registration against third parties, but also of losing your registration entirely.

Policing and enforcement
Watching services

As a brand owner, it is important to be kept aware of third-party trade mark applications filed for marks that are identical or similar to your marks, in any countries where you trade (or ones where you plan on trading in the future). Every day, thousands of trade mark applications are filed across the world, and it is likely that, at some point, an application will be made for a mark which is either identical or similar to your own.

You should consider setting up trade mark watching services, which monitor trade mark applications being filed, so that you are able to take action against any third-party trade mark applications for conflicting trade marks.

Marketplace infringement

When it comes to monitoring the marketplace, an ever-growing threat to brand owners is the presence of online trade mark infringement.

There are third party service providers who offer online platforms which not only monitor potentially infringing use of brands online, but also co-ordinate automated takedown procedures on third party marketplace platforms (eg, eBay and Amazon), which can help to ease the burden on brand owners.

China – the importance of registering trade marks

China operates a ‘first to file’ system. This means that the Chinese trade marks office will block an application if it takes the view that there are earlier trade mark applications/registrations for marks that it considers to be identical/confusingly similar.

What often happens is Chinese nationals apply to register Chinese trade marks for well-known/up-and-coming Western brands (ones that are not already registered in China), with the intention of extorting large sums of money as and when the true brand owner looks to sell its goods/services in China.

Countering such problems often proves to be very difficult, and if a third party does manage to register a mark in China, our experience is that it is very difficult (often impossible) to remove it from the Chinese TM register, unless you are able to prove that your brand name is ‘famous’. Many brand owners end up having to buy the registration off the third party – as it is often the only certain way to get ownership of the brand.

This is a problem some of the biggest brand owners have faced. In 2012, Apple reportedly had to pay upwards of $60m to obtain Chinese trade mark registrations for ‘iPad’ registered in the name of a Chinese company, while in 2017 Michael Jordan was forced to pursue proceedings as far as the Chinese Supreme Court, to prevent a third party from registering his name in China (incurring substantial time and cost).

If you have any intention of selling or having products manufactured in China, you should look to register your trade marks in China as soon as possible, not just in English, but also in Chinese characters, before some else does.

Ashfords is a leading national provider of legal, professional and regulatory services. We combine legal expertise, commercial experience and our wider network to help our clients achieve their goals, providing value for time and value for money. Our experts possess specific industry knowledge which can help in-house lawyers in the retail sector.

Ashfords LLP
Ashford House
Grenadier Road
Exeter
EX1 3LH

Email d.cahill@ashfords.co.uk
Phone +44 (0)1392 334034

Ashfords LLP
1 New Fetter Lane
London
EC4A 1AN

Email l.workman@ashfords.co.uk
Phone +44 (0)20 7544 2406