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21 September 2015 Are your brands at risk?

By Eric Ziehlke, Partner


In brief
 

The value of your brands

Sometimes, the truth hurts. Never is that more true than with a company's brand – despite being loyal to it for years, you might come home one day and find your brand in bed with another firm, and soon realise it was never yours to begin with. This can be particularly damaging to many companies, for whom their brands may be the most valuable assets they possess. Brands represent the vital assets of your company, whether they encapsulate the innovation of your goods and services, or provide premium margins that generate sustained profit growth. Either way, brands need to be protected against inherent statutory and commercial risks. As such, to keep your brand close, keep your knowledge of legislation closer, and ensure you address the following risks.


How brands can be lost

Failure to register trade marks
The only way to obtain statutory proprietary rights in a brand is to register it as a trade mark.Company and business name registrations do not provide proprietary rights in those names.Domain name registration merely provides a licence to use that name in a particular domain space.There are certain inherent rights which may be generated in unregistered trade marks but such rights are often poorly defined and lack the statutory protection provided by trade mark registration.

Failure to register in relevant classes
It is important that a brand is registered as a trade mark in all classes for which the company uses the mark.Over time, a company may begin using its mark for goods and services which are significantly different from those for which the trade mark was originally filed.The mark may therefore not be protected in those new classes and third parties may then register their own similar marks in those classes for which the company does not hold registration.

Failure to register in relevant countries
The trade mark registration of brands is strictly on a country-by-country basis.It is therefore possible for third parties to "steal" the brands of other companies by registering them in overseas jurisdictions.If a company has not yet used its brand in those countries, it may not then be possible for that company to register its brand as a trade mark in those countries.

Failure to renew registration
Trade marks are subject to renewal every 10 years. Over that time, companies may change their business addresses more than once.As a consequence, trade mark renewal notifications from the Registrar may go astray.In addition, the individuals within the company who are responsible for renewal may have changed their work responsibilities many times.Under these circumstances, the renewal of vital trade marks may be over-looked and these trade marks could lapse irrevocably.

Failure to use registered marks
In Australia, there is a statutory requirement that 5 years after filing, a trade mark must be used at least once in any 3 year period otherwise third parties can apply to have the mark removed.The typical situation in which third parties apply to remove such a mark is because it represents a barrier to the registration of their own marks.

Non-use removal applications can constitute a serious threat to brands which are registered as trade marks.Once a removal application is filed, the onus is then on the trade mark owner to demonstrate that it has been using a mark which is substantially identical to the mark as filed.If the trade mark owner is now using a mark which has some distinctive element added or removed from the mark as filed, then that use may not constitute use of the registered mark.

In a non-use removal application, it is necessary for the trade mark owner to show use of the registered mark for all the goods and services for which it is specified, otherwise those goods and services can be wholly or partially removed from the trade mark registration.The trade mark owner must show use of the mark for those identical goods or services or "the same kind of thing" which is a relatively narrow concept which can be stringently applied by the Registrar.The Registrar does have the discretion to allow a mark to remain on the Registrar even though the statutory use requirements are not fully met.However, this discretionary power will only be applied in favour of the trade mark owner if the surrounding circumstances justify it.

The introduction of the "Raising the Bar" provisions in the Trade Marks Act has involved the implementation of more stringent administrative and evidentiary requirements on trade mark owners, making it correspondingly more onerous for them to defend such non-use removal applications.

Failure to identify ownership
Brands can sometimes be registered as trade marks in the names of entities which subsequently become defunct. This can place the validity of the registered trade marks in serious question.It is possible for a trade mark to be validly used by an entity which is not the owner of the mark but in these circumstances there needs to be a demonstrable nexus between the trade mark owner and the trade mark user based on express financial or quality control requirements.

Defending your brands
It is important for companies to recognise that their brands are valuable assets and care for them accordingly.When brands are filed as trade marks, it is important to fully register them for all existing and contemplated uses.A house style program should be introduced to ensure the correct representation of those brands.All registered trade marks should be systematically monitored to ensure that they are fully registered in all relevant classes and in all relevant jurisdictions.Brands should be the subject of regular maintenance which should preferably be carried out by specialised lawyers or attorneys.

The benefit of these protective measures is that they serve to protect the company's brands. Unlike many other commercial assets, brands generally appreciate rather than depreciate in value over time.  Brand protection can increase the asset value of the company and allow the company to fully exploit its brands in the market place through advertising, premium pricing, licensing or assignment.

For further information, please contact:

Eric Ziehlke, Partner  |  Phone: +61 2 9233 5544  |  Email: ejz@swaab.com.au

If you would like to republish this article, it is generally approved, but prior to doing so please contact the Marketing team at marketing@swaab.com.au

This article is not legal advice and the views and comments are of a general nature only. This article is not to be relied upon in substitution for detailed legal advice.

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