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Covid-19 | Bulletin

Lean Trademark Strategies - For The Covid-19 Pandemic And Its Aftermath

Fasken
Reading Time 10 minute read
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Trademark Bulletin

As the business community continues to feel the impact of COVID-19, companies of all sizes are now faced with increasingly difficult decisions. The repercussions of the pandemic are being felt at all levels of a company's operations, including even its intellectual property strategy. As companies make decisions about resource-prioritization, this bulletin is intended to provide actionable advice regarding lean trademark portfolio management.

The first part of this bulletin reviews the benefits which trademarks offer, since a full understanding of these benefits is crucial to understanding which marks and applications should be prioritized or deprioritized. The second part outlines where to find value and cut expenditures at each stage of the trademark lifecycle, from filing applications to renewing already-registered marks.

Trademark Strategy is Both Offensive and Defensive

Many executives and in-house counsel think of intellectual property entirely in terms of its offensive use — that is, suing competitors. While trademarks are indeed powerful litigation tools, they also offer defensive as well as enforcement benefits that do not require costly litigation. Indeed, some of the most powerful benefits offered by a registered trademark are the online enforcement tools it provides, tools that can be used without the need to enter a courtroom. These enforcement tools will become more important as purchasing and consumption shifts online and e-commerce explodes in response to current conditions.

Offensive Benefits of a Lean Trademark Portfolio

Trademark registration ensures coast to coast legal protection for a business's brand. This geographic aspect is important to remember, because without registration, a brand receives protection under common law or unregistered trademark rights only in the geographic areas where there is provable brand recognition among consumers. Enforcement efforts are limited to that area, and competitors are free to use identical or confusingly similar branding elsewhere. A further fragility of unregistered trademarks is that interruptions to business continuity which result in a loss of brand recognition will equally result in a loss of unregistered trademark rights. So while unregistered trademarks can be important, they are limited in scope and fragile in their duration.

Registered trademarks share neither of these limitations for as long as the registration is in force.[1] These pan-Canadian trademark rights, enforced through litigation in either federal or provincial courts, are the main offensive advantage of a trademark registration.

A lean trademark strategy recognizes these traditional legal rights, but also takes account of other offensive benefits that registered trademarks provide online.

First, many e-commerce storefronts and social media platforms have "trademark policies" pursuant to which they will remove infringing content or transfer control of accounts upon proof of a valid trademark registration. The Amazon Brand Registry is one of the best known examples, but there are many others. These online takedown tools are often a fast and inexpensive way of enforcing trademark rights online. Additionally, registered trademarks grant access to the domain name arbitration system, allowing the seizure of domain names which were registered in bad faith and which contain identical or confusingly similar branding elements.

Defensive Benefits of a Lean Trademark Portfolio

Registered trademarks also offer a number of defensive benefits, both inside and outside the justice system. Once again, these benefits must be taken into account as part of any lean trademark strategy, so that both cuts or investments are made with full awareness of the benefits or costs foregone.

The most important defensive benefit is that a trademark owner which uses its trademark exactly as registered, and on the goods/services that are registered, is provided with a shield against most trademark lawsuits targeting the use of the mark as registered. This applies to lawsuits that allege the violation of both registered and unregistered trademarks. This is a key defensive benefit that should not be overlooked, since it applies for as long as the registration remains on the register.

Another important defensive benefit provided by a trademark registration is that once a trademark is registered, a lot of the effort that would otherwise be borne by a company to protect its brand, is instead carried out by the Canadian Intellectual Property Office (CIPO). When trademark applications are filed, CIPO's trademark examiners raise objections to new applications if the applied-for trademark is confusing with a registered trademark. Applications found to be confusing with an existing registration will be refused and may never leave the application stage. In essence, CIPO examiners begin providing defensive benefits on behalf of all registered trademark owners. This can save significant costs associated to opposition proceedings.

How to Be Cost Effective at Each Step of the Trademark Lifecycle

There are four stages in a trademark's lifecycle: (1) filing a trademark application; (2) pending applications; (3) existing registrations; and (4) renewals. Each stage raises unique cost-effectiveness considerations, which we detail below.

Filing a new trademark application

To execute a lean trademark strategy, trademark filings should be prioritized to target the company's most important markets in terms of future growth, past sales, and attractiveness of the brand for future use. It is indeed expensive to develop a brand, so given the potential for financial downturn, a company should marshal its efforts in the most strategic places.

To be most cost effective, word marks should be prioritized, as opposed to design marks (i.e. logos). This is because logo designs are much more likely to be updated or changed, whereas word marks (which are typically product branding or company names) tend be more stable. In any case, logos benefit from copyright protection, which is free and automatic, since copyright registration is optional.

A lean trademark strategy should also take account of the delays in the application process (currently 18-24 months). Slogans that change annually or marks that will be used only for one-off advertising campaigns are generally inefficient candidates for trademark application, since the registration will not issue until the campaign has been completed. As a result, offensive or defensive benefits do not crystallize within a useful time period.[2]

Finally, companies with international business interests should carefully consider the possibility of using the Madrid system to file applications internationally. This system allows for significant cost savings when companies file in multiple countries, and avoids the cost of hiring local trademark agents to file the application (although typically local counsel will be needed later in the trademark process). This offers very real savings which should not be neglected.

The fees for filing a trademark application are now payable by international class. It may be worth choosing the scope of the application wisely to avoid unnecessary cost and ensure that the most is made of a class that is selected by making an effort to include all relevant goods or services in respect of which there is an eventual intent to use.

Companies should also actively seek to use government subsidies or grants in order to reduce the cost of acquiring trademark protection, particularly abroad. For example, the CanExport program administered by Global Affairs Canada allows qualifying small and medium sized enterprises to cover up to 75% of trademark registration costs for export markets.

Pending applications

At this stage too, companies should make decisions efficiently. Marks that, upon sober second thought, are not worth the cost of registration should be abandoned. Priority marks should however proceed through the normal trademark registration process. For marks that are not clearly part of either category, it will often make sense to seek an extension to respond to any office action or examiners' reports, where available. Extensions of time will delay the decision point for that application until the current situation has stabilized more, allowing for more informed decision-making. In the midst of the COVID-19 crisis, we would expect CIPO to be receptive to extensions of time.

In some cases, the lean strategy can extend to how companies respond to office actions, in addition to when a response is filed. CIPO examiners are famously picky about how a company describes its goods and services. A lean trademark strategy may require conceding some of these objections, and accepting a slightly narrower scope of protection for some goods and services in order to obtain a cheaper registration.

Where your trademark strategy concerns a competitor's application, keep in mind that formal opposition proceedings are only one of several tools available to companies. Letters of protest can be sent to examiners in order to draw their attention to your company's trademark, and thereby ensure that they raise proper confusion objections.

Existing registrations

An existing trademark registration is one of the leanest IP tools available to a company, since there are no annual maintenance fees for a trademark registration. Renewal fees are modest, and are paid after 10 or 15 years (depending on whether the trademark was registered before or after the recent reforms which came into force on June 17, 2019). Renewals are discussed in the next section. Here, it is important to keep in mind that even if there are few legally required steps to maintain a registration, brand owners should consider some proactive measures to maximize online enforcement.

For example, many platforms and domain name providers have brand registration systems that allow registered trademarks to be listed for enforcement purposes. Brand owners should proactively register key trademarks even before counterfeiters become a problem on a given platform, since listing on platform-specific brand registries is usually free and well worth the minor time investment.

Renewals

If one of your company's trademarks comes up for renewal during the COVID-19 pandemic or its aftermath, you may face a difficult decision about whether to renew or not. While trademark renewal fees are modest, cash could be at a premium when you receive the renewal notice. The first thing to keep in mind is that Canadian trademark registrations benefit from a six-month grace period to begin the renewal process following the trademark's expiration. Should one or more trademarks in a company's portfolio be up for renewal during the COVID-19 crisis or its aftermath, it may be advisable to simply wait out the storm and renew in several months' time.

Another strategy for maintaining a lean trademark portfolio when it comes to trademark renewals is to renew partially by excluding Nice classes that do not contain core products and services. This may be particularly relevant since the long renewal period for trademarks means that a company's business may have evolved substantially since the original registration. Accordingly, it may or may not make sense to renew the entire trademark (along with the higher fees that this entails).

Conclusion

Now is not necessarily the time to ease on branding efforts. With social distancing in full effect, people's spending habits are shifting online, and the pandemic-driving surge in e-commerce may well last far into the future.[3] Consumer-oriented companies have to be responsive to this, and even many B2B industries may see a permanent shift via digital platforms for sales and advertising. In such an environment, trademark needs could be greater, lesser, or simply different from before. As a result, a lean trademark strategy is not simply one of reducing brand protection expenditures to zero. Rather, it consists of a hard look at current and future markets, and an assessment of which trademarks will provide the most efficient offensive and defensive capabilities in those markets.

In order to extract the maximum benefit, this assessment must be applied rigorously and systematically to all stages of the trademark lifecycle. It should take account of the strategic and legal considerations above, as well as time-dependent issues related to Canada's trademark reform. An application or registration abandoned now and refiled later may face higher filing fees as a result of Canada's adoption of the Nice classification system and stricter scrutiny by examiners due to substantive changes to the Trademarks Act.[4]

Should you have further questions about how to execute a lean trademark strategy, feel free to get in touch with the authors.



[1] While non-use of a registered trademark can eventually lead to loss of those rights, this will occur only if a competitor or someone else brings an administrative cancellation application and if there have been three uninterrupted years of non-use. A single transaction in the normal course of trade during the three-year period is sufficient to maintain the registration even if the mark is virtually unknown in Canada.

[2] However, these delays can also be leveraged as part of a lean trademark strategy. Filing a trademark application now means that many of the costs of registration are incurred only a year and half from now. This allows companies to manage and minimize cashflow in the short term when filing.

[3] https://www.bnnbloomberg.ca/e-commerce-may-double-amid-covid-19-pandemic-former-ebay-ceo-1.1412962; https://www.emarketer.com/content/coronavirus-covid19-boost-ecommerce-stores-amazon-retail.

[4] This include the recent proliferation of distinctiveness objections and the loss of the lower registration threshold that foreign trademark owners could claim under the now-repealed provision of section 14 of the Act.

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