Keep calm and carry your brand through the covid-19 crisis
- Companies should have honest discussions around costs with external providers
- Where making IP available to fight covid-19, infringement risk evaluations are critical
- It remains to be seen whether covid-19 will be considered a valid reason for non-use
There is much to be learned from how brands have responded to the covid-19 crisis. Claire Jones, senior trademark attorney at HGF, reflects on some of these lessons and provides insight into how trademark teams should focus their activities at a time when brand protection is more important than ever.
The novel coronavirus, covid-19, has had an unprecedented and dramatic impact on people and businesses internationally. The measures that have been put in place to contain the spread of the virus are the most significant restrictions since World War II, with the economic impact as yet uncertain. In response, many registries around the world have adopted exceptional measures in light of the crisis, suspending or extending a number of deadlines. Most IP offices have closed physical offices, but are still able to provide online services without interruption. Many companies and businesses are also working remotely and implementing business continuity plans to remain fully operational. The IT capabilities available in these modern times have greatly assisted to reduce the negative impact on both employees and employers, allowing business to continue as close to ‘normal’ as possible. There are a number of takeaways that can be gleaned from how trademark teams have responded.
Cost control and budgeting
Budgets and costs will be even more important during these uncertain times, given that revenue and costs involved in transitioning to working from home will be impacted and outside of the projections envisaged at the beginning of the year.
However, while there is more pressure to control costs, trademark protection and strategy are still important to consider in a broader, more long-term view. For contentious matters and litigation, the adoption of exceptional measures by many registries has given a degree of respite and the backlog caused by the suspensions should help to alleviate immediate costs outlay.
Companies should also look to have open and honest discussions around costs with external providers. Although legal and trademark firms will also be under pressure to continue bringing in revenue, there will be ways of reducing costs or offering payment holidays during these more difficult months. Grace periods are available on renewals, which would give additional time for actioning (albeit with some additional charges). Disputes and pending registry actions can be assessed and reviewed, and again, there are a number of extensions that can be considered, especially if both sides are agreeable.
The earlier conversations can occur, the easier it is to manage and control the position as all parties will have better opportunities to manage and control costs.
Intellectual property has played a central role in the corporate response to the coronavirus. For instance, a number of well-known companies, including McDonald’s, Audi and Volkswagen, temporarily changed their brand promotion to make it relevant to current trends (eg, social distancing).
Other companies have taken further steps, with Gap sourcing and producing masks and other personal protective equipment (PPE) for healthcare professionals, and LVMH (the parent company of Dior and Givenchy, among others) converting some of its perfume manufacturing facilities to make hand sanitiser for the French authorities and the healthcare system. In the United Kingdom, numerous manufacturers have provided PPE items; The Manufacturer has a great article showcasing all the companies involved here.
There are also a number of patent pledge, design and copyright incentives circulating where companies will make intellectual property publicly available if it is used to fight covid-19 (eg, for ventilator manufacture). If this is a consideration, it is worth discussing the specifics with your IP advisers to ensure that the necessary freedom to operate analyses and potential infringement risk evaluations have been carried out in order to avoid any issues with existing IP rights and to establish parameters around what parts of your intellectual property may be made available for collaboration.
Online business and counterfeiting
With lockdown provisions in place across many countries, physical ‘non-essential’ stores have been closed and consumers have increasingly needed to use online resources. This inevitably increases the risk of counterfeit items.
The UK Anti-counterfeiting Group (ACG) recently launched its Annual Report (see here) and warned that there has been an increased risk of substandard and dangerous fakes available online. It is clear that brand owners should not cut back on online protection strategies and should look to review their current position to ensure that they are fit for purpose. Many large online sales platforms such as Amazon and eBay will have brand registries and if not already enrolled, registration should be actioned so that counterfeit or infringing items offered for sale can be removed quickly and easily.
There will always be those that take the pandemic as an opportunity; there are a number of counterfeiters and scams operating, including fake websites, price gouging, phishing, fake invoices requesting payment and protection policies. Companies should be particularly vigilant of the promotion and reputation of their own brands online.
In the United Kingdom and the European Union, trademarks can become vulnerable to cancellation if they have not been put to use within five years of registration and there are no proper reasons for non-use. ‘Use’ in relation to trademarks must be real commercial use with an intention to create or maintain a market share for the goods or services provided under the mark. However, many businesses and brands will have been impacted as businesses are no longer able to trade at the same pre-covid-19 levels, if at all.
A key provision in respect of non-use is no proper reasons for non-use. Although there is no definitive list of what constitutes ‘proper’ reasons, the interpretation is quite narrow; the circumstances must arise independently of the will of the trademark owner; have a sufficiently direct link with the trade mark; and make its use impossible or unreasonable (Häupl v Lidl, CJEU, Case C-246/05).
It remains to be seen whether covid-19 will be considered a valid reason for non-use and much will depend on individual circumstances and the facts of each case.
If there is a possibility that your trademark is at risk of non-use cancellation, documentation should be collated demonstrating the steps taken before and during the pandemic. This can include information on government restrictions, including lockdown and timescales, issues with import/export and distribution, licensing, use information pre-pandemic and efforts taken in trading/preserving the business.
Without the ability to prove its impact longer term, covid-19 may not provide sufficient reasons for non-use. It must be shown that, in the absence of the obstacle, there could and would have been genuine use of the trademark in the relevant five-year period. If little was done to prepare for use in that period, this could constitute lack of genuine use, irrespective of the covid-19 impact.
IP assets are an integral part of a business, and although the pandemic may impact IP strategies, it is now more important than ever to ensure that your strategy takes into account the new circumstances and that companies are flexible and can adapt as new opportunities arise. Failing to protect brands or expand brand protection, or dealing with issues even in these unusual times, could cause enforcement and validity problems further down the line.
Vigilance should be maintained in relation to third-party filings and in a timely fashion, as well as continued monitoring and actioning of infringements and dilution. Many court systems and registries remain open, albeit with delays or limitations on what can and cannot be actioned online.
Watching services, including in relation to domain names and online counterfeits, should be stepped up to ensure that opportunistic applications are not being filed linking a brand with covid-19 terms or other opportunistic activities which undermine the rights in the brand.
Portfolios should be reviewed to ensure that coverage is fit for purpose. With companies producing new products, online sales potentially reaching new territories and companies moving online, a review will ensure that the goods and services being offered are still covered by existing protection. Where required, new applications can be filed to cover any new goods or services. For example, a restaurant may have a trademark for restaurant services, but the existing protection would not necessarily cover takeaway food services or delivery services.
Regular reviews of IP portfolios and discussions to address issues arising from these unusual times will go some way to reducing the impact of the pandemic and ensure that the portfolio remains robust and in good shape for a time when it is back to business as normal.