Tim Lince

A number of small business owners have contacted World Trademark Review to criticise the UK Intellectual Property Office’s (UKIPO) handling of trademark applications filed by entities related to entrepreneur and serial trademark filer Michael Gleissner. One stinging critique, from the owner of IT support firm Purple Computing, questions why the UKIPO is not providing sufficient protection for existing rights holders and claims that the duty to oppose or seek cancellation of marks is too financially burdensome for most small businesses.

As a World Trademark Review investigation revealed in September last year, Gleissner has personally registered over a thousand UK company names, nearly all of which he is the sole employee for. Those company names have been used to file hundreds of trademarks in jurisdictions including the UK, France and Benelux. Many of those applications have been subsequently used as prior rights evidence for trademark filings in the United States. The filings are mostly for single commonly-used words, including terms related to established brands (eg, BAIDU, TESLA, THE HOME DEPOT) and domain names (eg, FASHION.COM, MEDIA.COM, NINJA.COM). The reason for the hundreds, possibly thousands, of global trademark filings has been steeped in mystery but one anonymous insider spoke to us a fortnight ago and claimed that the business plan is focused on the creation of “brand incubators”, with each mark placed “in a glasshouse” to build in value over time. Gleissner, for his part, has not responded to numerous requests for comment.

Following our recent coverage, a number of business owners (some of which couldn't speak on-the-record due to ongoing legal proceedings) have told World Trademark Review about how they have been impacted by this rampant trademark activity. While some are facing challenges from Gleissner-related entities (either through oppositions to their marks or UDRP actions), others are challenging trademarks that Gleissner has filed for or obtained registered rights for. The issues they raise highlight wider concerns that a number of small business owners have with the application and opposition procedures at the UKIPO.

A pair of purple marks

Examples include two ongoing proceedings at the UKIPO, which both centre on marks in class 38 that refer to the colour purple. The first is for the term PURPLE.COM, which was filed in March 2016 by one of Gleissner’s companies, Purple Technologies Limited. While it was registered in August 2016, technology giant Western Digital has lodged a cancellation action, presumably due to the numerous registered marks the company has for the term WD PURPLE. It is also worth noting that the website ‘purple.com’ has been owned since 1994 by data scientist Jeff Abrahamson. Speaking to World Trademark Review, Abrahamson confirmed that he was not aware of the PURPLE.COM trademark and was surprised it was approved. “My first thought when I heard about it was to be amused, it seems like such an indefensible move," he said. “It makes me wonder whether UKIPO examiners do any due diligence at all."

The second contested trademark is for the term PURPLE, which was applied for by the same company, Purple Technologies Limited, in October 2016. That mark has been opposed by a small British IT consultancy business, Purple Computing, which has held the trademark for PURPLE COMPUTING in class 38 since 2011. The company’s founder James Hart reached out to World Trademark Review about the opposition, and has also published an open letter about the case on Purple Computing’s website. “We’re essentially in a position where we can either defend our trademark or throw thousands of pounds we cannot afford into a black hole of legal fees, or suffer the potential long-term consequences of a severely diluted trademark if we do not defend it,” he explained. “If we fail to defend our trademark in this case, then Purple Anything in class 38 becomes irreparably weakened as a trademark and almost impossible to defend from anybody passing off or otherwise infringing upon it in future. In my view, this could set a precedent which completely undermines the whole system.”

Hart acknowledges that Gleissner is doing nothing wrong, and is just using the system that is in place. His frustration is therefore directed at the UKIPO’s procedures and processes, which he argues places an undue burden on existing rights holders, including the need to evidence his own use: “I am in a position where my total outlay might cost upwards of £3,500 in fees plus several days’ work in compiling invoices, website clippings and other documents which prove that I am actively using my 5-year-old trademark. This is the evidence requested by the applicant as part of the dispute process, [and] they may then request further submissions at the next round of evidence, costing even more in legal fees and time. Why the hell should a company incorporated and submitting regular annual returns for 7 years have to submit evidence of this nature to […] somebody with no tangible trading history?”

Ultimately, he adds, even if Purple Computing was to prevail at the opposition stage, there would be little tangible reward at the end of it. “I really don’t fancy throwing good money after bad, I just get the feeling that as soon as £3,000 goes to the lawyers I am opening the floodgates to another tranche of money in a few months’ time if the applicant requests further evidence from us. Even if we win, there’s not much preventing somebody else from doing the same thing again,” he states. “Regardless of budget, costs awards should surely compensate for successful defensive actions, especially [if] the UKIPO are not doing anything proactive to defend existing trademark owners at source.”

He expands: “Our solicitors advised us that the typical process for the UKIPO nowadays is to accept all applications, then leave it up to the registrants and applicants to sort it out between themselves, through litigation if necessary. Surely the IPO should be the gatekeeper for UK-owned trademarks and offer at least a basic level of protection to businesses, by attempting to take some common sense decisions and err on the side of caution when a new application first arrives? The same process of accepting everything wouldn’t exactly work well for patents.”

The other side of the coin

Of course, for many the UKIPO’s fast and efficient trademark process is seen as a positive. EIP trademark attorney Sharon Daboul notes that “the UK’s IP system is regarded as one of the best in the world” but adds that she can appreciate both sides: “From the side of a trademark applicant, the UK registration process is simplified, quicker, and cheaper. It means that product launches no longer need to be unduly delayed by waiting for a trademark to be registered; it is a more market-based system, with fewer administrative hurdles. However, this places the onus on UK trademark owners to monitor new applications and actively oppose them. The opposition process can be stressful, time-consuming and costly, particularly when a trademark has been registered for more than five years.”

The ease-to-registration of the UKIPO’s trademark process is primarily due to UKIPO examiners no longer refusing applications on relative grounds, a change that was implemented in 2007. Daboul claims that, for the most part, the current system “works better”, adding: “It used to be up to the applicant to try to overcome an objection, whether it be through arguments, evidence, or by trying to obtain consent from the other party. The process now is much quicker and more predictable and, as a result, also keeps the costs of registration relatively low. These benefits would be lost if the UK added the in-use requirements that exist in, say, the US system.”

But despite the in-use requirement in the US, entities related to Gleissner have nonetheless filed hundreds of trademark applications at the USPTO. To get around the stricter examination process that exists across the Atlantic, these applications are often based on prior rights from foreign filings (many of which were obtained in the UK). Therefore, in theory, Daboul says that the UKIPO’s lack of an in-use requirement could be used as a workaround to attain registered trademark rights at the USPTO. “It is certainly viable that applicants could use a UK registration to circumvent the requirement to first show use of a trademark in the US,” Daboul states. “It is possible to obtain a US trademark registration without first showing use, provided it is based on a ‘foreign registration’. However, US practitioners usually advise overseas applicants to be cautious because the requirement to have an intention to use the trademark still remains.”

For its part, a UKIPO spokesperson told World Trademark Review that it understands concerns that small enterprises have with the current system: “We are aware that some small business owners find the expense of monitoring marks and filing oppositions burdensome. That is why in 2013 we introduced a new fast track opposition route as a faster, cheaper, and less complicated way for owners of earlier trademarks to oppose later filed applications. We have also reformed the standard opposition procedure to keep costs down for businesses.” The spokesperson added that that the opposition rate for new trademarks is currently at 4.3%, a rate that has “remained stable over recent years”.

Asked about the approach taken by examiners to new applications, the spokesperson confirmed: “The IPO considers whether an application can function as a trademark; if not the application is subject to absolute grounds for refusal. The IPO does not refuse applications on relative grounds – the basis that they are too similar to an existing trademark – otherwise new marks could be refused because of earlier marks which are not in use and are therefore legally unenforceable.” On use, they added: “UK trademark law requires that the applicant declare a genuine intention to use the trademark. An application can be rejected or a registration subsequently cancelled on the grounds that it has been made in bad faith. However, the law gives trademark owners a period of 5 years to put a new trademark into use. After that the trademark owner’s rights become unenforceable, unless he or she can show that the mark has been used.”

Of course, evidencing use can also be required of those lodging oppositions (at no small cost), which is one of the sticking points for Hart. He urges the UKIPO to consider addressing a number of issues, such as the lenient examination process and "pitifully low" cost awards, to help ease the burden for small business owners. In considering his next move, Hart admitted that – due to the spiralling legal costs – he may not move forward with the opposition proceedings. “Although we’re feeling victimised at the moment and may have to concede defeat in this case, there is a fundamental problem in the trademark system which is allowing this to happen,” he concludes.

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