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Behind a company's brand is usually a trademark and company secretaries are increasingly becoming more involved in the day-to-day management of these assets. Vanessa Jones and Dr George Walker examine the key focus areas.
Typically, in large companies, there are separate teams of people who look after company secretarial matters, the trademarks and other intellectual property issues. However, few companies have the luxury of having so many specialists under one roof. In many companies, it falls to the company secretary to keep a ‘watching brief' on the trademark portfolio (and indeed any other intellectual property). In some, the company secretary has to be the prime point of management for the trademark portfolio and can play a pivotal role in ensuring the integrity of corporate trademark assets and in briefing the board on trademark related issues. However, this is not simply a matter of keeping an occasional eye on upcoming renewal dates.
Registered trademarks are potentially powerful corporate assets. Apart from being deployed for marketing, they need to be managed in their own right and have their correct business use monitored. The role for company secretaries is creative and intellectually challenging. It covers business risks and strikes at the heart of any business identity and brand. Whilst words and figurative elements that are capable of protection by trademarks might represent only a part of the overall branding strategy of any company, trademarks are an obvious starting point for protecting a company's brand.
A word on brands
Modern marketing language tends to refer to the ‘brand'. Yet, this term is vague: it might refer to a trademark, a shortened company name, a business name, a domain name or any combination of these. But where does the goodwill value - the equity of 'the brand' - actually lie? The term ‘brand' does not appear in trademark law. Brand management can readily be confused with trademark management. Surprisingly many books on brands do not include the term ‘trademark' in the index, and far less allude to the management per se and correct use of registered trademarks with a view to building asset value through the goodwill that is generated in trade. ‘Brand equity' could be said to describe the economic value that trademarks have acquired through advertising, which has been designed to give brands an image and an identity distinct from the manufacturer of products.
Routes to registration: key facts
A trademark is any sign which is capable of distinguishing the goods or services of one business from those of another and which can be represented graphically. Trademark law in the European Union is based on Directive 89/104/EEC. Only trademarks which are not already registered, not an excluded category and have an inherently distinctive character, or which have acquired a distinctive character through well established use, will be valid for registration.
Registrations for trademarks are granted by or on behalf of government bodies following applications made in the relevant countries. Trademarks are registered in respect of specific goods in any of the thirty-four official classes of goods or any of eleven classes of services within the official categories. Note that certification (quality standard) marks and collective marks of trade associations have separate treatment under trademark law.
Once granted, the trademark is placed on the official register maintained in the country of registration. These registers are open to the public for searching and inspection, including online. Registration gives the trademark owner the exclusive right to use the representation of the mark in the territory in which it is registered. Having this prima facie evidence of ownership, the registered owner can take infringement action to stop any other party using the same or a similar trademark for the same or similar goods or services. There are also criminal sanctions against those who counterfeit registered trademarks. Infringing imports can be stopped by customs at the port of entry.
Registered trademarks are territorial by nature and have to be obtained under the specific laws of each country in which protection is required. Beyond purely national registrations, there are various international arrangements which facilitate applications in more than one country. They are the:
1 Paris Convention, to establish home-country priority dates for foreign counterpart applications;
2 European Community Registered Trademark;
3 Madrid Protocol for International Trademark Applications; and
4 Madrid Agreement for International Trademark Applications.
Trademark registration for the UK
Registered trademarks are highly territorial. A registered trademark covering the UK can be obtained in four ways.
The official process of registering a UK trademark takes many months, with many procedures and deadlines, and can take a year or more. The filing of an application is not a guarantee that the desired mark can be registered: in the worst-case scenario, it or something very similar, might already be owned by another party.
Trademarks and risk
Risks can arise at all stages of the trademark cycle and it is essential to monitor and assess these risks (as part of the company's overall risk management framework). Here are some useful pointers to minimise various risks.
Presenting the trademark
A trademark is a mark of differentiation. The world is full of visual clutter. A trademark should always be presented distinctively and with care to maintain its distinctive identity. For word marks, this means never using the word as a noun, always as an adjective, and presenting it in a body of text in a visually differentiated manner - perhaps a contrasting font or in parentheses. For figurative elements, the graphics should be placed on a plain contrasting background leaving some plain space around. The mark should not be presented on a graphical or wallpaper background.
Once a trademark is registered, it is normal to use the R-roundel (i.e. ®), adjacent to the trademark to indicate its registered status. During the application stage, and for marks that are not registered or are unregistrable in law, it is normal to use the TM symbol to assert a claim to it.
The ® symbol should not be graphically incorporated in the design of a figurative mark as this would alter the fixed representation of the mark. It must sit to the side, within the surrounding free space.
Every time a trademark is used, the goods, packaging or accompanying literature should carry a formal statement to assert its proprietary nature. Conventionally, the wording would make reference to the trademark, the owner, the registry, the registration number and whether it was being used under any licence. This makes clear what the registration is and its limits, so avoiding the risk of confusion.
Evidence of continual use
Trademarks can only be validly registered by organisations that already use them in trade or have a bona fide intention to use (this is to stop trademark trafficking).
Even though the term of a trademark is potentially indefinite (the renewal period is usually ten years), the owner is required to use the mark ‘continually' in its trade of each registered good or service.
Evidence of use might be needed if an alleged infringer chooses to challenge enforcement by alleging invalidity on the grounds of non-use. Evidence might take the form of specimens of labels or of trade literature bearing the trademark, suitably authenticated and dated. This collection, perhaps annual when everything is current, can later form part of the historical archive of the organisation.
If the organisation has licensed out its trademark rights, this information has to be gathered from licensees.
Wrongly using ® or TM in a statement of a company name
A company or business name cannot be a registered or unregistered trademark. Confusion can arise in marketing or PR departments when a text string is common to both a registered trademark and the company (or a business) name.
Casually altering the representation of the trademark
If the fixed representation of the trademark, as placed on the register of trademarks, is casually altered in-house, then the altered version will fall outside the scope of the registration. This variant cannot be thought of as being registered (without the risk of false claiming) or contributing to evidence of use.
Computer graphic packages make it very easy to manipulate images. Artwork designers might itch to tweak trademarks. This invites considerable risk. If the trademark is not managed, the unauthorised version can take on a life of its own with no one noticing.
A fraught area of legal confusion can easily arise if a marketing department ‘fishes out' a word from the representation of a stylised trademark (e.g. the trademark in italics) or a figurative element incorporating the word, and presents the word in plain font as if it were the registered trademark. False claiming is potentially one of the easiest offences for an organisation to commit if the use of its trademarks is not managed.
If a registered trademark representation needs to be revamped, then the update must be subject to a fresh application to register. Given the close similarity, the registry might object to the updated version, unless the applicant and registered owner of the original trademark are one and the same.
Creating a mismatch with the goods or services previously registered
The interests of organisations change and this can be reflected in what they trade. If new goods or services are introduced that are outside the scope of the original trademark registration, the trademark cannot be lawfully used on those goods or with the services.
This is an area where clear and effective communication is necessary between the marketing department, the trademark management function and the board.
Groups of companies
When a corporate house-mark is registered, there is usually one company which is the registered owner and therefore is responsible for the trademark. Companies within the group might then be licensed to use the trademark. The licensees should have access to a procedure manual to state exactly how the trademark is to be presented and used. Care needs to be taken by licensees to acknowledge the owner.
For those company secretaries who are responsible for trademark issues, this presents opportunities for company secretarial/legal teams to expand their current remit, as well as to forge closer working relationships between the two teams. It is clear that company secretaries are in a unique position to oversee the integrity of registered trademarks. Company secretarial/legal teams can, via the management of the trademark portfolio, have an opportunity to engage with broader business in relation to trademark issues. They can forge stronger connections within the business base, improve overall risk management and also provide opportunities for enhanced board communication.
SOME PRACTICAL STEPS FOR COMPANY SECRETARIES
Risks can arise at all stages of the trademark cycle and it is essential to monitor and report regularly to the Board on trademark issues. Consider the following practical suggestions.
1 Do not use new trademarks (or slightly altered existing trademarks) until registered trademark searches, company registration searches and common law searches have been done and clearance has been obtained, otherwise there is a risk of infringing someone else's trademark.
2 Register new trademarks without delay as most countries operate a ‘first to file' trademark registration system.
3 Try to obtain registrations for trademarks where practicable in all jurisdictions that the organisation or its licensees will carry on business.
4 Consider setting up an external trademark watching service to identify attempts by other parties to register closely matching trademarks: these searches can also be a source of market intelligence on competitors.
5 Use all trademarks as non-use can render them liable to revocation. ‘Use them or lose them' is the mantra de jour.
6 Keep an accurate and definitive database of trademarks (and any licences) and of their renewal dates and when renewal fees need to be paid. Have a trademark management strategy and ensure that evidence of use is collected and recorded. Keep both the trademark and the renewal payment certificates safe. For large portfolios, proprietary software packages can help.
7 Implement a monitoring program to ensure that any licensees use the trademark properly.
8 Ensure that a regular board report on trademark issues is circulated to the board and that key issues are on the agenda for discussion.
9 Keep the details on the official register up to date.
10 Include trademark notices ® with the relevant trademarks if they are registered as this can act as a warning to potential infringers.
11 Take prompt action to deal with any improper use of the trademarks, otherwise an infringer may subsequently be able to argue that the trademark has lost its validity or that the trademark owner has accepted the infringement.
12 Alert accounts departments to false ‘invoices' for supposed trademark registration which are either frauds or expensive and worthless invitations to ‘register' in, usually obscure, trademark directories.
Sources of support for the company secretary for larger trademark portfolios can come in the form of proprietary software packages which can assist with administration. Additionally, trademark watching services can alert companies about the trademark filing activity of competitors, often before any new products or services reach the market, or changes of ownership. This can be a valuable source of business intelligence and support for the company secretary.
About the authors
Vanessa Jones ACIS is a Director of Corporate Legal Solutions Limited, a consultancy company working in corporate governance, risk management and internal control, company secretarial practice and compliance.
Dr George Walker is a chartered scientist and consultant who specialises in intellectual property and domain name strategy and management, formerly at 3M and De La Rue.
ICSA Information & Training Ltd