Intellectual Property Operations & Implementation in the 21st Century Corporation: Summary of Chapter 4: Trademark Costs - Trimming the Sails in Rough Economic Waters

by Ladas & Parry LLP

Robert Doerfler, SVP Worldwide
Matthew D. Asbell, Ladas & Parry LLP

Companies that do not have a formal process in place for developing and managing trademarks may not be fully capturing and capitalizing on the value of their intellectual assets. Without a procedure to oversee the adoption, registration, use, and maintenance of the trademarks, the companies are potentially missing out on significant business opportunities and exposing themselves to unexpected litigation or other costly liabilities.

In order to manage a trademark portfolio cost-effectively, companies may take several steps, including taking inventory, evaluating the importance of existing brands, prioritizing the maintenance of registrations, and organizing trademark records. Identifying and cataloging properties is an essential first step because a company cannot effectively exploit or protect what it does not know it has. Moreover, law enforcement officers and courts cannot efficiently assist in the defense of vague, undocumented trademark rights.

During weak economic times, companies should review existing trademark applications and registrations that were acquired for a project but are no longer used to determine whether they are abandoned or canceled to avoid maintenance costs, and to consider recycling old brands, instead of developing new ones. Maintaining an organized electronic database of trademarks, including those available for reuse, can facilitate the selection and adoption of brands for new products and result in savings related to clearance and registration. For large corporations that have hundreds or thousands of trademarks worldwide, categorizing trademarks and markets by importance helps to identify priorities and can assist in identifying registration and enforcement strategies based on each category. In addition, investing money in a database management system and appropriate human support to keep accurate account of basic information for a trademark portfolio can save a company a significant amount of money for adoption, registration, use, and maintenance of trademarks, and the cost of litigation.

Just as proper management of an existing portfolio can save substantial costs, efficiency in the selection and clearance of new trademarks can also conserve funds in both the short and long term. A marketing department or branding agency may initially decide to perform preliminary searches. However, personnel should be cautioned that such searches are inherently imperfect and further that the company cannot rely on mere registration of an available domain name or social media username as the basis for the company’s claim of trademark rights. Therefore, even where a marketing department or branding agency has conducted a search, a trademark attorney should perform at least a preliminary search on the candidate trademark list and provide a brief analysis of the relative strengths and registrability of the potential marks. However, concluding that a mark is clear and available based on a preliminary search only can still be a costly mistake. This mistake is preventable by performing a comprehensive search.

When pursuing trademark registrations, you need to consider respective benefits and limitations of various filing systems and strategies. In the United States, a trademark owner can enjoy protection through a federal registration, state registration(s), or at common law. When pursuing trademark registrations in other territories, companies can use international treaty-based systems of registration such as the Community Trade Mark (CTM) registry and Madrid system which allow a single trademark registration to be extended to multiple countries simultaneously, decreasing at least the initial costs related to registering and maintaining rights. A CTM registrant establishes trademark rights in all member states of the European Union. An international registration under the Madrid System extends applications for protection to each of the member states designated by the applicant and accepted in the international registration. Many companies also take advantage of provisions of the Paris Convention, which enable them to follow an initial trademark application filing in their home country with applications for the same mark in foreign jurisdictions. As a result of membership of the home and foreign jurisdictions in the treaty, the companies can claim priority back to the original application filing date in the foreign applications filed up to six months later.

Finally, in order to support registrations, for marks filed in the United States, it is essential to ensure that the mark is in fact used on each and every good and service listed. The use of brand guidelines encourages the proper use of trademarks and any trade dress associated therewith. With regard to trademark owners actively engaging in due diligence in connection with ongoing trademark usage, it is equally important to review registrations prior to becoming a party to a Trademark Trial and Appeal Board proceeding to identify any potential problems before they may come under attack.

Whether a company is managing its existing rights or selecting, clearing, registering, and using new ones, trademarks can be costly enough to tempt decision makers to ignore such matters or take shortcuts to cut expenses in a difficult economy. But, companies should recognize that trademarks are assets that can have substantial value when they are properly maintained. Accordingly, companies should not haphazardly cut their trademark budgets or their portfolios in hard times.

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