Focus on counterfeits How to protect brands in a new country McDermott Will & Emery’s Désirée Fields sets out a step-by-step guide for achieving effective brand protection on a global scale R egardless of size, brand protection is key to the success of any business. Failure to give adequate thought to brand protection can have significant financial, reputational and legal consequences. In order to be effective, brand protection has to be carefully tailored to suit the particular industry, outputs, culture and needs of the business concerned. Businesses should consider brand protection in all countries in which they exploit or intend to exploit their brand. It is a highly complex area and businesses must take professional advice within the country targeted. Regardless of whether long established or brand new, there are some steps every business should consider when expanding into a new country. P: plan, research and take local advice When entering a new market, it is essential for a business to educate itself on how to use, guard and enforce its brands. The level of protection available may vary significantly depending on the country in question. Trademarks are territorial in nature. Accordingly, businesses need to apply for separate trademark registrations to cover all countries of interest. It is crucial to understand how far protection of any particular registration will reach. For example, Community trademarks cover European Union countries; but other European countries, such as Norway and Switzerland, are not included within the scope of protection. The jurisdictions in which businesses should seek brand protection will depend on a variety of factors including the location of the market, locations of operations of the business itself, its manufacturers, distributors and suppliers www.intellectualpropertymagazine.com (as pirated goods may be supplied to these local markets), the likelihood of third party infringement and cost. Even where a business with a global presence does not operate in a particular jurisdiction, it should still consider a brand protection strategy to minimise piracy and infringements. Some countries have unique forms of protection. By way of example, Russian law protects commercial designations in addition to trademarks and trade names. In addition to trademarks, businesses need to consider whether to obtain country-specific domain name registrations, purchase Adwords or register company names. A business which primarily deals with goods may also need to consider issues such as design protection. Local lawyers, trademark agents and Chambers of Commerce will be able to advise businesses on the full range of protection available. It can also be helpful to find out how competitor businesses protect their brands in a particular country. R: rigorously consider what to protect The extensiveness of a trademark filing programme is ultimately a commercial decision. Smaller businesses may opt to only seek protection for their main brands, company name and logo. Large multi-national companies often have comprehensive filing programmes to protect sub-brands within their line of products or services. Businesses often forget that in some jurisdictions, English may not be the primary language. Accordingly, it may be advisable to register English-language marks in foreign characters. Hermès, the French luxury group, found this out the hard way after using but failing to register the Chinese-language mark October 2012 for Hermès (“Ai Ma Shi”), which was later registered by another company in China. A protracted trademark dispute ensued with the Chinese Courts ruling against Hermès, despite it having used “Ai Ma Shi” for decades. Local lawyers will be able to convert an English mark into local language by using either a transliteration or phonetic approach, or by using a conceptual method which focuses on the inherent meaning of the mark. O: obtain comprehensive clearance searches Determining the availability of a mark in a new country is crucial. A screening or knock-out search is the best starting point; it will eliminate marks that are clearly unavailable without incurring substantial costs. However, such a preliminary search is not a sufficient basis for determining whether a mark is available for adoption in a particular jurisdiction. It is crucial to instruct local counsel to carry out a full availability search to reveal prior similar marks that may form the basis of third party oppositions. Searches performed early reveal doomed marketing strategies, providing an opportunity for alternative branding to be considered or, where the registered mark of concern does not seem to be used, may prompt negotiations for its sale. While a full availability search is essential, it is important to remember that there are no registers for unregistered rights. Accordingly, there is no way of finding out for certain whether there is already somebody in the market who may have a prior claim in a particular jurisdiction. Additional comfort may be gained from carrying out a broader investigation of the market concerned by consulting relevant Intellectual Property magazine 27 trade journals, company registers and by performing internet and domain name searches. T: tender applications and start use without delay In most countries, trademark rights are established through registration (first to file). But even in countries that operate on a first to use basis, it is preferable to register businesses, brand names and logos as early as possible. Once clearance searches have confirmed that the chosen mark is available for use, it is advisable to immediately file for any applicable registered rights. Delaying the filing of an application after the initial clearance is risky, because third parties may file applications for the same or confusingly similar marks in the interim. In cases where the delay exceeds two months, it is advisable to conduct a new clearance search prior to filing. Upon being granted a registered right, the ownership of the mark is publicly declared. This may assist with registering the mark in other countries, bringing court actions and allowing the seizure of infringing materials by customs officials. Businesses should commence use of their registered marks immediately and take advice on local laws concerning use and registration. In some countries, such as the US, failure to use a mark for a certain period of time is prima facie evidence that the mark has been abandoned. Similarly, many European registrations become vulnerable to revocation for non-use if they have not been used for a period of five years or more. Where a business has not used its marks during the relevant period, depending on the jurisdiction in question, there may be the option of filing fresh applications for the relevant marks to safeguard rights. E: educate staff and implement intellectual property policy Effective brand enforcement relies on the detection of third party infringements. Accordingly, it is important to educate all staff within a business on intellectual property rights and protection, regardless of their position, with additional training for staff involved with the product or brand development process, sales and marketing. Training will enable staff to identify issues of concern and flag them up. It is advisable to nominate a particular employee as the relevant person for any concerns to be reported to. An inconsistent approach to trademark protection can endanger enforcement strategies internationally. This risk can be reduced by a written intellectual property policy setting out guidelines on what types of intellectual property the business owns, what 28 Intellectual Property magazine may constitute a third party infringement and whom to notify potential infringements to. The policy may also deal with physical protection and destruction methods of sensitive branding documents or procedures for dealing with surplus production. Large international businesses should also include trademark filing procedures and nominate a particular company as the owner of all intellectual property. C: caution – beware of third parties When entering a new market, it is important to make third parties aware of rights ownership. This can be achieved by putting trademark symbols on all relevant goods, using trademarks consistently in relation to services and increasing awareness through advertising. Businesses should vet commercial partners in new countries carefully by carrying out risk assessments and due diligence on organisations and individuals. Once vetted, when licensing use of a brand to third parties, it is advisable to introduce controls on usage and quality control provisions in the licence agreement. It is important to be alert to all instances of brand infringement. Larger organisations often dedicate significant funds to in-house teams or external companies to monitor trademark and domain name registrations and search for unauthorised brand usage. However, monitoring third parties does not have to be expensive. Smaller businesses may opt for lower scale monitoring, by putting a basic worldwide trademark watching service in place and checking for cybersquatters regularly. pursuing litigation. Depending on the nature of the infringement, a cease-and-desist letter can often be an effective first step to resolution of the matter. Such letters are particularly effective on small companies or individuals, often infringing unintentionally. Where a cease-and-desist letter does not have the desired effect, parties may consider negotiation or mediation before resorting to more aggressive action. Enforcement actions usually occur through local trademarks registries or courts. Normally, the administrative route, as dealing with a registry, tends to be quicker and less expensive than dealing with the judiciary. Where a cybersquatter is concerned, the most costeffective and expedient route is usually to bring proceedings under the relevant dispute resolution procedure associated with the domain name. PROTECT Businesses entering new countries face many challenges having to balance the aim of obtaining maximum levels of brand protection against the commercial realities of their target market and costs. The key elements to successful brand protection are manifold. Above all, businesses should remember the following when considering a brand protection strategy: Plan, research and take local advice. Rigorously consider what to protect. Obtain comprehensive clearance searches. Tender application and start use without delay. Educate staff and implement intellectual property policy. Caution – beware of third parties. Take enforcement action against infringers. T: take enforcement action Failure to take action against infringers can harm a brand by diluting the mark’s distinctiveness and diminishing the value of registered rights. Generic use by third parties may even destroy the ability of a mark to function as an indicator of origin, a fate experienced by Linoleum and Thermos. Defending and enforcing intellectual property rights is expensive, and businesses should have a fund in place for these purposes, but it does act as a deterrent to other potential infringers. Before embarking on extensive enforcement actions, businesses should remember that some large websites have clear policies on intellectual property infringements. By way of example, auction sites, like eBay, and social networking sites, such as Facebook, may remove infringing content upon notification by the brand owner. It is advisable to take local expert legal advice before contacting an offender or October 2012 Author Désirée Fields is an associate in the law firm of McDermott Will & Emery UK LLP, based in its London office. She focuses her practice on all aspects of contentious and non-contentious intellectual property law, with emphasis on trademark and brand protection. www.intellectualpropertymagazine.com