Archive | 2016, March | (5) posts

The struggle to avoid trademark degeneration

I have met trademark owners that are thrilled when their trademark has become part of the language as generic term. They regard it as undisputable evidence that they are a market leader and that their product is a great success. The thrill, however, quickly fades when the consequences of degeneration are realized.

The loss of a trademark to degeneration is a massive failure from a marketing aspect and often a major financial problem. The trademark is the bearer of the collected renown achieved under the mark, perhaps the sum of decades of work. Here we can include the value of the quality of the product, the cost spent on marketing and the recognition obtained in the marketplace. When a company is subject to an evaluation the trademark usually represents the majority of the company’s total value, sometimes up to 80% or more. To lose such a trademark to degeneration is to lose this value.

A degenerated trademark becomes part of the general language and is then available for everyone. This includes all competitors that are free to use the word and, accordingly, take advantage of the renown and value held by the previous trademark. For the trademark owner it’s like your private garden suddenly becomes a public park. Anyone can enter and you might as well take down the fences once degeneration is a fait accompli.

Not only do you lose the sole right and value connected to your previous trademark, you are probably still in need of a trademark to communicate in the marketplace. So you need to start over with trademark clearance, registration procedures and all the headaches and costs that this can entail.

So, what can you do to avoid this type of trademark failure? Well, it’s not easy to halt the process once the trademark has started to become a part of the general language. In very few cases degenerated trademarks have been restored to trademark status by massive marketing activities. Jeep comes to mind. However, most trademark owners lack the muscles for such an endeavor.

Instead, it is important to think ahead and to make smart choices already when you select your trademark.

  • Choose a trademark that is not in risk to be regarded as a generic word. For instance, very short trademarks for products with very long generic names are at high risk, simply because people are likely to choose the word that is easier to use.
  • If your product is new and lacks a generic description, make sure that there is a proper generic word that the language can adopt instead of your trademark. If necessary, invent one and communicate it.
  • Always use your trademark as a name. Start with a capital letter and never put the mark in plural form.
  • Use the symbols ® and ™
  • Establish clear trademark guidelines and make sure that they are followed.

Kristina Fredlund, European Trademark Attorney

Use of non-distinctive signs

The new Regulation (EU) 2015/2424 amending Council Regulation 207/2009/EC on the Community Trade Mark will enter into force from 23 March 2016

To the list of activities which a trademark owner will not in future be able to prevent a further exclusion has been added. The descriptive use defense (on the kind, quality, quantity, intended purpose, value, and geographical origin, time of production or other characteristics of the goods) has been extended to apply also to use of signs which are not distinctive. Thus, third parties will now have as a defence available against alleged infringement to claim that they use the sign in a descriptive way, provided that the use is made in good faith. Such use should always remain free for third parties.

The provision seems a bit odd. If a sign is not distinctive, it will not be used ‘as a trade mark’ when used and then there is no infringement pursuant to Article 10. Therefore, you will not come to the question of a limitation of the proprietor’s rights pursuant to the new Article 12 1 (b).

It must be presumed that a trademark is distinctive as long as it is registered. However, if a third party invokes the new Article 12 (1) (b) and successfully claims that the identical mark is used in a descriptive way, this would logically mean that the registered trademark is not distinctive and should be declared invalid. Or, if it is a combined word and device trademark, the proprietor will not have any protection for the descriptive word element as such.

Niclas Dahlberg, Attorney at Law

End to own name defence for corporate names

The new Regulation (EU) 2015/2424 amending Council Regulation 207/2009/EC on the Community Trade Mark (CTM) will enter into force from 23 March 2016

The use of another’s registered trade mark without consent as a trade name or company name will now specifically be deemed infringing use. Using a sign as a trade name or a company name can infringe a CTM.

Defendants in infringement proceedings are currently able to rely on the “own name” defence to infringement, whether or not the defendant is a natural or legal person, i.e. whether or not the name used is a personal or company name.

The new Regulation expressly limits the defence to use of personal names only. Legal entities will no longer be able to rely on the fact that they are using their company name. With the new Regulation in place, ASOS (see Maier v ASOS plc) would not have benefitted from the ‘own name’ defence.

In view of that using a registered trademark as a trade or company name (or part of such) now is a specific infringement, it is more important than ever that businesses looking to expand into the EU cannot rely on their trade or company name. They should conduct the necessary clearance searches to ensure that their trade or company name will not infringe any third party rights. If the clearance search indicates that the dominant part of the company name does not infringe any third party rights, the company should file an EU trademark application. The other side of the coin, trademark owners that do not already subscribe to a company name watching service may consider doing so.

Niclas Dahlberg, Attorney at Law

New ways to obtain trademark and design rights on the Faroe Islands

Today there is only one way to obtain a trademark right on the Faroe Islands and that is by filing for a national Danish trademark. A designation of Denmark through the Madrid Protocol will only cover Denmark and Greenland, but not the Faroe Islands.

As of April 13, 2016 this will change. The government of the Faroe Islands has requested to abandon the reservation meaning that designations of Denmark through the Madrid Protocol will not cover the Faroe Islands.

The opportunity of only having to designate Denmark will be very cost effective for trademark holders as there is no need for a local agent or a translation of the list of goods into Danish when the application is filed.

From April 13, 2016 there will therefore be two ways to obtain a trademark right on the Faroe Islands. Either through a national Danish trademark registration or a designation of Denmark through the Madrid Protocol.

The Faroe Islands and Greenland will still not be covered by the EU-trademark even though this covers Denmark.

The above also applies to designs, as the Faroe Islands will be covered by a designation of Denmark through the Geneve Agreement from April 13, 2016.

Thus, if you are considering designating Denmark and the Faroe Islands is a market you should wait until April 13, where the new rules will apply.

Johanne Mørk-Hansen, Associate

Making well founded decisions about opting out…

 …of the Unified Patent Court and requesting Unitary Effect for your European Patent

The benefit of requesting Unitary Effect for your European Patent is obvious to anyone, by payment of only one renewal fee, equivalent to that of four national renewal fees, a territory potentially covering 25 EU states, if all current Contracting Member States ratify the Agreement, which is a territory equal to that of the USA is available for enforcing your patent rights. This benefit must of course be weighed against the fact that the Unitary Effect comes in a package with the new Unified Patent Court (UPC). A Court which has the ambition not only to deliver expeditious and high quality decisions, the aim is to be as fast as 12 months from filing a claim to reaching a decision, but also to enhance the legal certainty, and to make it easier to enforce patents and to defend oneself against unfounded claims and claims relating to patents which should be revoked. The legal certainty is to be enhanced by providing a more uniform case law.

However, today the legal systems in the Member States of European Union differ greatly, and even though it is foreseen that only the most qualified judges, with great experience in patent cases, will be recruited, it is difficult to predict exactly how the Court, with its multinational panel of judges will in fact rule.

Since the UPC will also have exclusive competence for already granted European Patents and for European Patents granted in that transitional period, the opt out possibility has been created to alleviate patent holders from this uncertainty.

The decision to stay within the competence of the UPC, or for that matter request Unitary Effect will involve great consideration of many factors. If you are in a field where there is a high likelihood of litigation, for instance if you expect competitors to copy your design, if the patent is licensed to different licensees in different countries, or if the patent is of extremely high value to your business the patent should probably be opted out.

If the possibility to enforce the patent for several European countries quickly and at once in one Court only, or if the patent has withstood opposition or even appeal at the European Patent Office the patent, i.e. the patent is strong, it should probably be kept within the UPC.

For some companies the default setting will most likely be to opt out most of their European Patents, and of course not request Unitary Effect, until the case law of the Court emerges. For other companies, in particular SMEs the decision will most likely be dependent on, and maybe also made in collaboration with potential or current licensees.

Hopefully, even if there is still some uncertainty, we will have enough case law within the first 2-3 years to be able to make even better decisions, and to give even better advice. There are of course many more factors than those mentioned above to consider, and the advisors at Awapatent will stand by to help you and your company to make well founded decisions.

Sofia Willquist, European Patent Attorney