Are your brands at risk?

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 ques​tion​.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.