In this article, we highlight COVID-induced trends and risks that impact you as a brand owner. Secondly, we highlight steps that you can take to protect your IP rights in the new Covid context.
Businesses have positively adapted to Covid via new ways of operating, hereunder via their brand use and increased online selling. However, there has been a large increase in fraudulent uses of brands. One of the big challenges faced by brand owners is thus maintaining the reputation and value of their brands. Secondly, closure of government offices and courts is delaying companies’ abilities to register and enforce their trademarks. Lastly, there is seen a spike in attempts to create COVID-related trademarks and domain names.
In order to protect yourself, you as a brand owner should be vigilant during this period to e.g. i) monitor and take appropriate action against infringement and dilutive use of your trademarks, ii) clear and register trademarks in a timely fashion; and iii) monitor developments regarding COVID-related trademark and domain names.
COUNTERFEIT PRODUCTS AND SCAMS DUE TO INCREASED ONLINE RETAIL
E-commerce has spiked due to the global lock downs of physical stores. According to a EUROSTAT study, the proportion of internet users between age 16-74 in the EU shopped online in 2020 equalled 64%, Denmark having the highest share (89%). In some EU countries, e-commerce grew by as much as 30%.
On the one hand, this transformation is positive. On the other hand, it has led to a boom in counterfeit products and fake sites. Often, buyers cannot check the quality of the goods firsthand. It is often very difficult to verify whether the seller is legitimate. Consumers and business are therefore easily misled. Customs and border protection authorities have seen an uptick in counterfeit products. Obvious products include medical supplies, face masks, test kits. However, many different consumer goods are counterfeited or sold in a lesser standard. In addition, there is a boom in phishing scams, fake charitable websites, and legitimate products’ prices being unreasonably increased. These illegal activities impact brands negatively. They create consumer confusion and damage brand reputation and loyalty.
We recommend that brand owners
- resist the temptation to cut back on their IP protection strategies,
- review IP portfolios to ensure that they have the necessary trademark and design registrations as well as up-to-date notices filed with border authorities to streamline the process of dealing with counterfeit goods,
- consider protecting their brands on the internet via professional monitoring of domain names, social media, mobile apps, and marketplaces.
Deadlines – Clearance and Filing of Trademarks
Businesses are understandably focused on day-to-day operational challenges. However, they should still bear in mind that failing to follow normal trademark clearance and protection protocols can increase risks of trademark claims or loss of trademark rights at a later stage. Brand owners with trademark portfolios should consider how the crisis will impact their ability to prosecute and maintain their portfolios.
On the positive side – Extensions
Trademark offices around the world have many places extended deadlines automatically or upon request. Some trade mark offices have extended deadlines regarding priority claims from a first filing or have relaxed the documentary requirements for filing of trade mark applications. Opposition deadlines have in some instances been extended. Extended timelines will in some cases be welcomed by brand owners. In on-going registry proceedings or litigation, brand owners can likely benefit from additional time to gather evidence from their business or licensees who have competing priorities.
On the negative side – More difficult to protect
Extensions will cause significant delays in publication or registration of applications. Certain steps in some application processes cannot be completed electronically, the result being a burden of applications to be published and registered. This could in turn delay the abilities of brand owners to fully enforce their rights. It is becoming more difficult for owners to protect their trademarks through the normal litigation processes. Firstly, courts are curtailing certain operations, including in-person hearings. Secondly, not all types of deadlines and not all authorities have extended deadlines. Trademark owners seeking injunctive or emergency relief need to strategise wisely. Some courts will not be receptive and available to hear requests. Societal emergencies will perhaps be weighed heavier than the relevant case.
Far from all countries are extending deadlines or providing relief from existing deadlines. We therefore recommend that you be proactive and meet deadlines as usual, if possible. This will avoid deadline build-up and heavy workload for you at a later stage. It will also avoid possible challenges by third parties at a later stage to the legality of the extended deadlines. Extensions of deadlines do not necessarily apply to determinations of infringement or priority claims regarding trademark ownership. In addition to the prosecuting of existing brands, if you plan on introducing new brands, product names, or slogans, you should continue to clear those and timely file for trademark protection.
Boom in trademark applications and Domain Names including “COVID-19”
Businesses may want a COVID-19-related domain name for a valid number of reasons. A lot of businesses are trying to capitalise on the pandemic. Trademark applications for COVID-19-related phrases and slogans have boomed. Many of these applications are related to clothing and accessories. However, brand owners should be aware that a successful application and registration will depend on various factors. The applicants must have a good faith intent to use the marks in commerce. Moreover, many of the terms will likely not be registered since they will be deemed too descriptive.
COVID-19-related applications should be carefully analysed, watched, and reviewed, especially if you or a competitor wishes to use the same or similar terms in marketing or advertising.
Risk of ”Non-Use” and what it means to you
In most jurisdictions, trademarks must be used genuinely to create a market for the goods/services for which the mark is registered. If the owner does not use the mark, a third party may revoke it on the basis of ”non-use”. The owner can defend himself by showing that there are “proper reasons” for the non-use. Many consumer-facing businesses are not using their trademarks genuinely during lockdown, e.g. restaurant chains and hotels. At a first glance, the risks posed by a non-use attack appears to be low. In the European Union, for example, there must be no use in a period of five years. However, a real risk exists in case lockdowns continue, if a severe recession enters, or if the trademark has already not been genuinely used for some years. Some courts and offices, e.g. in the UK, have held that economic recession does not amount to a proper reason for non-use.
If you reduce production/services during a recession, you risk exposing your trademarks. If the marks are revoked and new rights acquired by third parties, you as the trademark owner will be unable to resume providing those goods/services in the future under the brands. It is therefore recommended that you mitigate the risks of non-use attacks.
How may COVID affect ”protected designations of origin” and ”geographical indications”
Protected Geographical Indications and Protected Designated of Origin protect names of specific products in order to promote their unique characteristics that are linked to their geographical origins and traditional production processes, e.g. Champagne. On a negative note, with Corona lockdowns, many producers are struggling to comply with elements of the relevant product requirements. On the positive side, the EU has allowed temporary amendments to help producers. For example, the milking times for Parmigiano Reggiano have been extended. In order to ”get on the EU’s list”, a complex process has to be followed, which e.g. involves notification to the European Commission together with an explanation of why the amendment is necessary. More changes may come. We recommend therefore to stay up to date with the relevant regulatory developments via your legal experts and if necessary, to file for extensions in order to be granted a relevant extension.
Conclusion – Which steps should you take?
- Identify and pursue misuse of trademarks such as counterfeit goods or use in connection with practices that could negatively impact your brands;
- Set up brand registry accounts on online platforms and market places where you list your registered trademarks in order to prevent listing and sale of counterfeit trademark goods and to facilitate the removal of the goods;
- Set up watch services to ensure that your brands are not being misused, hijacked or combined online, hereunder with COVID-19-type terms;
- Record trademark registrations with custom and border protection authorities to develop anti-counterfeiting strategies so that officers at entry points will be able to identify infringing goods;
- Keep on top of trademark office deadlines and developments;
- Clear and register trademarks and advertising slogans in due time, since it could impact trademark rights down the line;
- Mitigate risks of non-use attacks, so that you will not end up being unable to use your brand for certain goods/services in the future;
- Stay up to date with relevant regulatory developments via your legal experts and file for extensions should you sell products that are protected based on origin or geography and you are struggling to comply with requirements due to COVID.
Links and sources:
EUROSTAT: Statistics Explained (https://ec.europa.eu/eurostat/statisticsexplained/) – 27/01/2021
This news article is meant for general information and discussion only. It is not a full analysis of the matters presented, and shall not be regarded as or relied upon as legal advice.