Trademark protection best practices

A few decades ago, the average company's value consisted of tangible assets. Today, an estimated 75% of a company's value is intangible. Part of this value consists of the company's brands and the consumer's trust in them. Active monitoring of a company's online brand reputation will protect the investment in its intellectual property.

Studies indicate that corporate brand image and reputation represent more than 40% of a company's market capitalization (1). Corporate brand protection has two fundamental purposes:

- to guarantee the origin of products;
- to protect the company's investment in its intellectual property.

Active monitoring of brand reputation identifies brand dilution, brand tarnishment, cybersquatting, traffic diversion, and online counterfeiting.

Statistics published in 2012 by the European Commission show an increase in the number of shipments violating intellectual property rights. Medicines are at the top of the list of detained articles (24%). Daily use products (i.e. body care articles, medicines, toys, electrical household goods) accounted for 28.6% of the total number of detained articles, raising concerns over the potential risks for public health and safety. In the UK, around 4 million suspected counterfeit articles are intercepted each year by UK Customs. Trademark owners can seek Customs action at the UK or European Union border.

1. Taking measures against brand damage

Brand image dilution or blurring (impairs a mark's distinctiveness)

According to the US Federal Trademark Dilution Act of 1995, trademark blurring is an association arising from the similarity between a mark or trade name and a famous mark that impairs the famous mark's distinctiveness. The likelihood of confusion with customers or competition between the companies are irrelevant to assess brand dilution.

The Trademark Dilution Act defines dilution as "the lessening of the capacity of a famous mark to identify and distinguish goods or services, regardless of the presence or absence of (1) competition between the owner of the famous mark and other parties, or (2) likelihood of confusion, mistake, or deception." 15 U.S.C. § 1127.

Brand tarnishment (damage to a company's reputation)

Brands are increasingly used to communicate ideas and convey the corporate image. Brand owners are seeking protection beyond the false and misleading use of the mark - against dilution and tarnishment. Tarnishment occurs when the brand dilution damages its reputation. Counterfeiting is the primary cause of brand tarnishment. In addition, luxury brands who have carefully selected distributors argue that their brand image is damaged when their brand is associated with an unauthorised distribution network such as a discount reseller.

Brand tarnishment caused to a luxury brand by a website selling fake products.

Traffic diversion

1) Cybersquatting

According to the United States Anticybersquatting Consumer Protection Act, cybersquatting is registering or using a domain name in bad faith with the intent to profit from the goodwill of a trademark belonging to someone else.

A variation of cybersquatting is typosquatting or URL hijacking. Typosquatting is similar to cybersquatting in that the squatter registers a domain name that may create confusion. It is also called brandjacking.

Cybersquatting results with our MarkLocator brand monitoring tool.

2) Pay per click (Adwords)

Traffic diversion can occur in several ways, including when a competitor buys pay-per-click keywords featuring your brand name. Following a change in Google policy, any company can buy a competitor's brand name in Adwords for its pay-per-click campaign. Although Google has been cleared of counterfeiting in several cases (jurisprudence is however still unsettled), it is possible to sue the advertiser for trademark infringement.

Pay-per-click abuse (Adwords) results with our MarkLocator brand monitoring tool.

Loss of consumer trust

The overall effect of brand dilution, cybersquatting, and traffic diversion will be a loss of trust in the public for the branded products.

According to a survey conducted by IBM, 19% of consumers will rely on online customer reviews for “honest feedback on product information”. Protecting your online reputation will have a direct effect on your sales.

2. Countermeasures and actions

Luxury brands no longer have the "monopoly" of counterfeiting (luxury goods represent less than 2% of the goods seized by the Customs in the European Community). Counterfeiting affects more and more consumer goods. SMEs are now in a similar situation as large groups were twenty years ago. A broad protection strategy must be put into place as standard procedure, even in smaller companies.

There have been a number of attempts to estimate the variety of impacts of trademark counterfeiting. Counterfeiting not only impacts the intellectual property rights holder but it also affects consumers and their health and safety. Active brand control against counterfeiting has a direct effect in the consumers' and market's trust in the brand owner.

Counterfeiting figures include an annual $77.5 bn in lost tax revenues in the G20 and 120,085 jobs lost in the motion picture industry.

Protecting your trademark

1. Register your trademarks. In the UK, registration offers better protection than Common Law.
2. Invest in an online brand monitoring tool that will identify potential dilution and infringement of your brand.
3. When a potential confusion/infringement is detected, send a cease and desist letter. This is a cost effective and often effective measure.
4. Register a domain name portfolio to prevent cybersquatting. If you export products, do not forget international extensions, such as .de (Germany), .eu or .cn (China).
5. Create Facebook and Twitter pages with your brand and company names.
6. Monitor new trademark applications in order to oppose applications before damages are caused to your brand.
7. Use UDRP procedures available at the ICANN or the WIPO for domain name squatting. They are cost effective and efficient if you are a legitimate trademark owner;
8. Lodge an application with the Customs for the detention of any goods that are detected at the border and that are suspected of infringing your trademark.

Brand owners face a considerable challenge with online brand protection. Brand reputation management is key to preserving the company's future.

MAS LEGAL proposes Marklocator®, a range of online tools for efficient brand monitoring and brand image management.

Start protecting your brands now with BrandToBe® trademark search and registration packages.

Note 1 - Source World Economic Forum