For the half-year to 30 June 2014, the IPKat's regular team is supplemented by contributions from guest bloggers Alberto Bellan, Darren Meale and Nadia Zegze.

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Saturday, 20 October 2012

Speaking About Trade Marks: Ready My Lips?

This Kat recently had the pleasure of speaking in Chicago at the INTA-sponsored conference on "Trademarks on Transactions". Having spent an oversized number of his higher education years in Chicago, it was great to return there for three days of glorious autumn weather along the shores of Lake Michigan.

Back home in the blogging saddle and reflecting once again on the conference, one topic particularly grabbed this Kat's attention. As part of the session on "Legal, Business and Tax Issues Involving Related-Party Transactions," discussion was had on the pros and cons of consolidating all trade mark registrations in a single company within a larger corporate group. One claim made in favour of such a move is that, in so doing, the trade mark owner is in a more sound position to support a claim that the mark is well-known.

If a given mark is held by a number of related entities, it might be more difficult, so it was asserted, to prove that the mark has become well-known, even if the mark is used widely and enjoys recognition on a world-wide basis. The thinking expressed was that, because ownership is split, no single entity can presumably claim the world-wide fame of the mark, thereby weakening any argument that such the mark is well-known. For that reason, from the point of view of establishing that a mark has acquired well-known status, unitary ownership of the mark across multiple jurisdictions is the way to go.

This Kat pondered this assertion but he felt a sense of unease about it. He took advantage of the Q&A to ask: "Was anyone on the panel aware of any case law that had addressed this question?" In particular, did anyone of them know of a judgment in which well-known mark status was rejected because the mark in question was not held by a single entity but rather by a number of related companies, despite the fact that the mark itself enjoyed a substantial reputation in a large number of countries across the world? None of the panelists could point to any such decision. Nevertheless, it was argued, a consideration of whether or not the mark was held by a single or multiple entities impacted on claiming well-known mark status. In other words, the situation seems to be that, while there is no specific legal authority for the position, as matter of practice the position has obtained a measure of acceptance. With that, the issue rested.

The exchange above was interesting not only for the legal question raised, but for raising a fundamental question in connection with the mores of a professional presentation. How much leeway does a speaker have when he advances an unsettled legal assertion without being aware of any supporting case authority? This Kat is not naive (he hopes)--when one speaks, one may seek to advance a proposition, even in the absence of any known legal authority. Such suggestions are often the most tantalizing part of a presentation.

But, in so doing, does the speaker have an obligation to clarify the context in which the suggestion is being made? Should the speaker state whether his proposition is supported by case law and or accepted practice or whether the speaker has even checked the legal position? Or perhaps not: a presentation is not a published professional article. Perhaps the purpose of an assertion in a presentation, such as the suggestion that the potential risk to a claim of well-known status of a mark in the event of split ownership of a mark across various jurisdictions, is to challenge the audience to pursue the matter further if interested? Even here, however, should there not be at least a minimum check about the legal plausibility of the claim? As this Kat already prepares for his next public presentation, he is considering these questions anew. .

3 comments:

Anonymous said...

In my opinion the case law position (or lack therof) should always be cited in such presentations. After all, no one would make a scientific or technical assertion in a presentation without providing some data to support the argument.

Barbara Cookson said...

The problem here is that there is a massive lack of authority on matters regarding assignments of trademarks and especially proprietorship underneath the corporate veil so people say what they think is best practice and then need to justify it with some scare story (well known status is new to me, usually its tax related and whether there is a valid place of business to justify using an appropriate address for a Madrid application). Possibly issues relating to brand value and licensing such as the STARBUCKS story may bring more clarity but one wonders if the tax authorities will check the trademark registers and what they will infer if they do. A new business like Starbucks Corp will likely pass muster anyway but in the past German marks were often held in licensee names because Germany did not recognise trademark licensing. I also recollect that FENDER had a go at putting its Australian brands into the local distributors ? name to try and stop grey goods.

Anonymous said...

Absolutely, in speaking or in legal advice it should be made clear whether an opinion is based on authority/legislation or where it is simply a "better view" in practice.

There were a couple of attempts in prior Australian cases Fender v Bevk and the Transport Tyres case to assign a tm registration to a local distributor to seek to evade the operation of the parallel importation defence (now s123 Trade Marks Act). However after the recent "clarification" on the parallel importation defence, central control and ownership with territorially restrictive licences will probably be the norm since following Sporte Leisure and Lonsdale cases, grey imports won't have a parallel importation defence where the initial application is in breach of the overseas licence (ie produced for sale outside the licensed territory). That doesn't appear to apply to subsequent sales outside the licensed territory though (Toast v Facton). Those cases do take away one of the main theoretical advantages of diverse ownership.

I agree, diverse ownership is usually for tax dodge reasons - as indeed is central ownership, if the owner is located in a jurisdiction where licensing royalties aren't taxable or minimally taxable so cashflow can be funneled upstream.

Still important to get the owner right though as we certainly do in Australia have cases where one company in a cororate group applies to register the mark but another is the intended user and no licensing controls are in place, with the resulting registration ultimately being found invalid for want of intention to use. Scary stuff!

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