For the half-year to 31 December 2014, the IPKat's regular team is supplemented by contributions from guest bloggers Rebecca Gulbul, Lucas Michels and Marie-Andrée Weiss.

Regular round-ups of the previous week's blogposts are kindly compiled by Alberto Bellan.

Friday, 21 September 2012

Uncertainty in trade mark practice: why do we bring it upon ourselves?

This Kat recently met with representatives of a small start-up company, which wished to discuss trade mark protection. The company had already selected a name/mark; however, in doing a search, we found several existing marks that could pose a problem either for registration or use of the selected mark. We pointed out to the client that since it effectively did not have any goodwill in the mark, it would be well-advised to consider alternatives. The client's response was typical: "This is our mark and we have decided to already use it. We will not let anyone take it away from us. Proceed with the filing." And so we did. 

Reflecting on this experience, this Kat once again was reminded about the high degree of uncertainty that seems to be part and parcel of the trade mark registration system. When I refer to "uncertainty", I don't mean that the metes and bounds of IP protection in general, and trade marks in particular, cannot be set with the same precision as drawing up the boundaries of a piece of real property. This sense of "uncertainty" is well-recognized.

Assuming that the trade mark right has been established, the owner still does not know ab initio the scope of his trade mark right. It is ultimately for the court to determine whether there is a likelihood of confusion between two marks, i.e., what are the metes and bounds of our trade mark. This meaning of "uncertainty" is part and parcel of the trade mark right and it is unavoidable. Rather, this Kat refers to the uncertainty that goes beyond the inherent indeterminacy of an IP right and which is due to suboptimal behaviour on the part of the two main actors in the trade mark registration system, namely the prospective trade mark owner and the Registry. In particular, this uncertainty gives rise to a situation in which the prospective trade mark owner is more likely to encounter a bar to either adoption or use of a trade mark at stage where the damage to the prospective trade mark owner is potentially larger. The prospective trade mark owner is acting in a "suboptimal" fashion because it has chosen to take the potentially oversized risk that it may not ultimately secure rights in a mark and may be forced to change it somewhere down the line, at a both a financial and reputational cost.

There is a conceptually a simple way to avoid this problem. The prospective trade mark owner could have selected a number possible trade mark alternative when the company was established two years ago. If it had taken this step, it could then have filed in parallel an application for each of these alternative marks and would then have likely known already whether all or some of the marks are available for registration and use (this Kat is familiar with a small number of companies that act in this fashion, at least some of the time). True, there is no guarantee that at least once of these marks will be successfully registered, but the likelihood that this will not occur can be materially minimized (or even eliminated). As a result, the trade mark owner will have achieved near-certainty with respect to its trade mark rights prior to the time that it actually begins to use the mark and to develop goodwill in it.

 The reasons that these measures are seldom taken by a company can presumably be attributed to cost considerations and internal management of the company's trade marks. As for the former, it would seem that the cost of near-certainty by means of filing much earlier, multiple applications is too high for the company, which prefers the reduced outlays at a later time for a single application (multiplied by the risk factor and associated costs for failure to register the mark). As for internal management, the situation is that the company, whether by design or not, fails to appreciate the relevant time line with respect to trade mark protection.

Goodwill is accumulated day by day, such that delaying filing works at a cross-purpose to achieving goodwill. With relaxed time lines for obtaining patent protection under, e.g., the PTC system, the prospective trade mark owner apparently is inclined to misdraw a parallel to trade mark protection. While the conduct of the trade mark owner may be understandable, this Kat still views it as suboptimal. As for the Registry, the issue seems to be primarily an issue of resources.

This Kat would like to believe that the long time period for examination and prosecution, which is the norm in many jurisdictions, is primarily due to the fact that the various trade mark registration systems simply do not have enough examiners and supporting staff to process applications and the like to enable the Registry to provide the applicant at a much earlier stage with reliable information about the likelihood of success of obtaining trade mark rights. Be that as it may, there is a material mismatch between the turn-around time by the Registry with respect to the certainty of the application and the applicant's interest in speedy treatment. Here, as well, while this Kat recognizes the economic realities of Registries, this Kat still views the institutional response of the Registry to be suboptimal. The result is that the prospective trade mark owner may work in a manner which is ultimately against its self-interest and the Registry may not provide the services in a manner best suited for its customers. In other words, both contribute to uncertainty in the process of adoption and use of a trade mark that goes beyond the uncertainty that is inherent in the nature of the trademark right after it is granted.

 The ultimate question is whether there are any measures that either the prospective trade mark owner or the Registry can reasonably take to reduce these sources of uncertainty in the trade mark registration system. One comes to mind: a fully-integrated fast track for prosecution upon payment of an additional fee. The amount of that additional fee would be calibrated whereby it will less than the amounts that would have to be expended at an earlier time to maintain multiple applications, but sufficient to fund the additional manpower that would be required to handle these additional applications. Indeed, one could imagine grades of expedited examination, each with its own fee, depending upon the extent to which the application is being expedited.

Does this Kat believe that this kind of change will be put into place? The answer is "no", which leads him to wonder once again. What can we say about our trade mark system, which is characterized by greater uncertainty in the process than need be, in part due to suboptimal behaviour on the part both of applicants and of the registry?

3 comments:

Anonymous said...

The UK IPO did introduce a fast track system and then withdrew it due to low uptake and that fact that examination reports tend to be issued within 1-2 weeks of filing.

Steph

Anonymous said...

In Australia applicants can request for expedited examination if there are reasonable grounds for doing so, usually out of commercial necessity. There is no fee charged by ip Australia, the govt authority that administers trade marks, but the request needs to be in the form of a stat dec which often should be drafted by lawyers.

Peter Smith said...

Both the UK and Community trade mark systems provide registrations quickly but, because they carry out no examination on relative grounds, they provide no significant degree of certainty for the applicant. While opposition is available to owners of earlier rights, most potential opponents probably do not have watching services in place. Or, if they do become aware of the new application, they may choose not to devote funds to opposing a speculative application filed by a company that is not yet trading.

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