IT’S SOMETHING intellectual property lawyers have always been aware of — if businesses don’t use their trade marks for more than three years, they are at risk of losing them to competitors in ‘non-use’ lawsuits.
But mergers and acquisitions lawyers should also be aware that non-use applications are an increasingly popular resort for globalised businesses, according to Clayton Utz partner Kate Marshall, of the firm’s IP practice.
“Where brands are part of an acquisition of a business, you shouldn’t assume the brands assigned to the clients are actually valuable,” she said. “Registered trade marks are a good starting point, but the company needs to have been using them, or they are at risk of losing them again.”
Many businesses assume that a trademark registration entitles them to ten years of use, and they need only to renew the registration to guarantee ongoing protection. The reality is, if the mark is unused for more than three years, companies can face an action to have it removed from the register.
“Not only that, but your competitor can apply to register it, meaning that any goodwill that you might have built up in the brand over the years can quickly disappear — and it’s painful to have somebody take your brand,” says Marshall.
With globalisation of business and borderless internet marketing, brands are under attack from more quarters than ever.
In the case of Nestlé, one of that company’s brands had already taken off in other parts of the world. Only Australia posed a problem, with an existing but disused trade mark for that particular brand held by another company. Marshall led Nestlé into a non-use application over the brand, and won.
“With businesses globalising, there is more interest in obtaining a particular brand,” she said. “If your brand is successful in Europe, Japan, China and the US, and a tiny company’s twenty-year old registration is in your way in Australia, it becomes worthwhile to challenge it, and problems will arise.”
Another example was the meat pie Four N Twenty, already registered (as 4n20) as a trade mark in New Zealand. Marshall represented Patties, the owner of the Four N Twenty brand, which succeeded in having the registration removed.
Lawyers who have clients with trade mark portfolios should ensure that annual IP audits form an integral part of the client’s overall risk management and compliance strategy, said Marshall.
“People in core parts of the business need to sit down with their marketing and legal teams once a year and ask: Which brands are we using? Are there brands we are using and haven’t protected? And most importantly, will we be concerned if our competitor starts using these brands?”