17 May 2006
Melbourne, 17 May 2006: "Use it or lose it" - that's the message a leading IP lawyer has for businesses that believe trade mark registrations alone are enough to protect their valuable brands.
Kate Marshall, a partner in the intellectual property practice at national law firm Clayton Utz, says many businesses are not aware that they face the risk of legal action to take away their exclusive rights to use a particular trademark where they have not used the mark for a certain period. For businesses that rely heavily on brand recognition for their reputation, this can mean not only the loss of an iconic symbol but also the stripping of a valuable asset from their books.
"Many businesses are under the impression that a trademark registration entitles them to a 10-year use period and they simply have to renew the registration at the end of that period to guarantee ongoing protection," says Ms Marshall.
"The reality is that if you don't use your mark for three years, you can quite easily face an action to have it removed from the register, taking away your exclusive right to use it. Not only that, but your competitor can apply to register it, meaning that any goodwill that you might have built up in the brand over the years can quickly disappear - and it's painful to have somebody take your brand."
Ms Marshall says recent trends suggest that businesses are all too ready to seize the opportunity to extinguish or hijack a competitor's rights to use a particular trade mark where they do not think it is being used. "In a competitive global economy, companies are not afraid to take the step of what we call a non-use application," says Ms Marshall. "Companies should be aware that they need to use their brands to protect their rights to them. The use doesn't have to be significant, but there must be some use to keep the trademark registration active."
An example of this occurred with the 4n20 brand, which had been registered as a trade mark in New Zealand to another company. Ms Marshall represented Patties, the owner of the Four N 20 brand, which succeeded in having the registration removed. Patties now has its Four N 20 brand registered as a trade mark in New Zealand, as it was able to show that it had an established reputation in the brand that was known across the Tasman.
More recently, L'Oreal succeeded in having the trade mark 'DISCOVERY' removed to make way for its trade mark 'LASH DISCOVERY'. Similarly, global food manufacturer Nestlé has recently taken action to have a trade mark removed on the basis of non-use to make way for the registration in Australia of one of its global brands.
Ms Marshall recommends that as a first step towards safeguarding their IP rights, companies should ensure that annual IP audits form an integral part of their overall risk management and compliance strategy.
"Companies often have a large portfolio of brands, with some brands going in and out of fashion depending on the current needs of the business. It doesn't mean those brands are 'dead', they just might not have been used for a period of time or may have been put on 'ice' while the company develops a marketing strategy.
"People in core parts of the business need to sit down with their marketing and legal teams once a year and ask: Which brands are we using? Are there brands we are using and haven't protected? Are there brands we can let go? Will we be concerned if our competitor starts using these brands? Not only will this help the business keep track of their brands for protection and enforcement purposes, it will also save unnecessary registration costs."
Ms Marshall says that protecting the right brands is particularly important where a company wants to exploit them globally. "Trademark protection can be an expensive business. Companies should focus on their core business markets and take a practical approach to enforcing their rights."
