A new model for trademark operations

Trademark departments are needing to transform themselves driven by complexity, global risk, cost pressures and human capital requirements. A new model allows for significant cost savings, while being flexible enough to meet each client’s needs

In 2010 the vice president of trademarks for a global consumer packaged goods company was presented with a difficult challenge by her general counsel: reduce total operating costs for global trademark and brand protection by 30%. This was against the backdrop of the company’s strategic growth plan, particularly in emerging markets, and the expectation that the volume of trademark work would likely rise significantly. As the team began to assess and develop its plan, it became evident that in order to meet this budget imperative, the trademark department would have to reimagine its entire operating approach.

Fast-forward four years and the company has transformed its trademark department – with excellent results. The team met its budget goal, reducing total trademark spend by 38%. However, the greater impact has been its success in realigning itself to meet the needs of its business clients. By restructuring its operations, the trademark department now returns greater value for its spend. Further, while reducing its budget, the department has been able to expand its capabilities and support for the business.

How did the company achieve these results? The key was an innovative, progressive approach, which resulted in a new service delivery structure. The trademark department was able to strike the right balance between internal skills and capabilities and the effective use of outside support services. Also critical to the new model was the implementation of a technology platform, which provided process automation, content management and analytics to create an interconnected work environment accessible to all stakeholders.

While this might sound like trademark management nirvana, the path to instituting this approach is well within reach for any company. In our work helping companies to navigate these improvements, we have come to define a new model that builds on the latest advances in trademark practice management, shared and external sourcing, and leading technology. We call this new approach the ‘integrated trademark management model’.

Figure 1: Transformation – where departments are focused


Source: Hyperion Research, 2014

Figure 2: Four forces driving transformation


Trademark departments in a state of change

Legal industry analysts recognise that versions of this vignette are playing out across many trademark departments as they face a rapidly changing environment. A recent study by legal market research firm Hyperion Research found that the number of law departments engaged in significant transformation projects in 2014 was an amazing 87% (see Figure 1). For law departments, the focus is on financial and spend controls, as well as legal systems, organisational restructuring, process standardisation and outsourcing. The common thread across these initiatives is the need for law departments to improve their operational performance. Consistent with this, we see corporate trademark practices rigorously evaluating their operations and actively seeking new and improved ways to deliver value to their clients.

What is driving this widespread need for change? Four primary forces are affecting trademark departments and their operations (see Figure 2). First, trademark departments face increased complexity in how they fulfil their professional and business responsibilities to protect brand assets. This is the result of a myriad of internal and external factors. From the internal perspective, companies are in a perpetual state of flux. They endlessly reassess their business structures, products and services, and the trademark team must continuously react to provide effective counsel and ensure optimal coverage and protection. At the same time, external changes to the legal and regulatory environment require that trademark professionals continually redefine and adjust their strategies and tactics. Changing and expanding forms of brand protection – such as domains and designs, as well as other online channels – are expanding the knowledge and expertise required for effective brand management.

The second force is global risk and the new demands being placed on trademark departments to build global-oriented capabilities. Of particular influence is the pressure felt from emerging markets where the trademark legal environment is in the formative stages. Unlike Western countries, where the IP regimes are generally understood and predictable, when it comes to the largest growth markets in Eastern Europe, Asia, Africa and South America, in-house trademark counsel can often feel that they are in a reactionary position, always one step behind what is happening. Unfortunately, this trend is likely to increase. The complexity of IP protection is being driven by continued rapid growth in both portfolio size and the breadth of global IP rights coverage, particularly in emerging markets. Indeed, World Intellectual Property Organisation statistics show that growth in the top emerging markets is outpacing that in most developed markets, and that this trend looks set to continue.

Cost controls are the third force of change. As global economic pressures continue to vacillate, legal spend is being closely scrutinised in terms of return on investment. The need to control, if not reduce, budgets will remain a common drumbeat. However, the longer-term imperative will emphasise value. While simple cost cutting can be painful, value-based management requires insight and active management to assess the quality and cost of legal services. This is an evolving discipline for even the most sophisticated trademark departments.

The fourth and most important force is human capital. As trademark groups look for the best way to provide legal counsel to their business clients and build strong, valuable portfolios, the challenge is to accurately define the skills, capabilities and capacity required to properly staff and operate the trademark function. This includes understanding the optimal mix of attorneys, para-professionals, trademark specialists and other support staff. For the trademark group, considerations of internal versus external sourcing are an added dimension. While the use of outside legal counsel is a critical aspect of the overall function, understanding whether work is most effectively handled in-house or externally is a constant pendulum swing. In addition, the use of trademark support services which can provide specialised skills in the administrative aspects of trademark management is an important consideration. This includes the emerging use of outsourcing and the potential for trademark functions to be disaggregated and reconfigured through the use of a closely aligned service partner.

For trademark teams facing these four forces of change, pressure will become apparent in ways that derive from the unique characteristics and requirements of the business and their brand protection needs. It is critical to understand the implications that these four forces have on both business clients and the trademark practice. Engaging the services of your organisation’s change management expertise is strongly recommended.

Figure 3: Value opportunities for new operating approaches


A shock to trademark operations

Unilever’s 2006 announcement that it was partnering with global law firm Baker & McKenzie to outsource its trademark operations and administration was a watershed in corporate trademark management. While other companies had outsourced certain support activities, these tended to be specific, more narrowly defined areas. The new Unilever programme – the Baker Model – represented the first time that a company had shifted a significant proportion, indeed the vast majority, of its trademark function to a single global law firm. The move was even more revolutionary because of the large portfolio size – over 160,000 marks – and the critical value that trademarks have for Unilever’s brand-driven businesses.

In the intervening years, the trend towards trademark operations outsourcing – and indeed all legal process outsourcing – has taken a circuitous path. Like Baker & McKenzie, a number of other global firms have introduced trademark portfolio services for clients. However, eight years on and the trademark profession’s view of Unilever’s programmatic shift of operations and administration to a single law firm is mixed. Proponents point to the efficiencies, cost savings and quality that can be gained by having a single firm provide centralised administration and a captive global agent network. However, opponents doubt that operations and administration can be divorced from the core mission of the trademark practice. Under this view, a company cannot effectively manage the full lifecycle of its portfolio without having these capabilities in-house. In addition, there is scepticism as to the true cost savings that can be realised from a monopoly service provider.

The fact of the matter is that both viewpoints are correct. New operating approaches offer significant value opportunities to trademark departments (see Figure 3). The Baker Model and its numerous variants have certainly delivered value to their clients. However, many companies have faced important limitations in such models and failed to realise the expected benefits, particularly with regard to cost savings. These experiences provide important lessons, which can help us to work out what does and does not work in these global outsourcing models.

A core element of the global law firm model is the use of a centralised administrative function, which provides docketing, filing and other formalities work. The shared service centre is located in a low-cost market, allowing the global firm to operate at lower hourly rates. While the administrative element is packaged as part of the programme, the underlying cost model has important implications for the client. In some instances, it has been reported that process or quality issues offset the relative labour cost savings. While these can be managed by standard operating procedures and training, in many cases companies find that the productivity issues are more fundamental. The challenges of location, language and cultural norms can have an underlying but critical impact on the programme’s overall efficiency.

Another critical consideration of the global law firm model is the requirement to use the firm’s affiliated offices. While ostensibly providing greater efficiency, higher quality and favourable rates, for some companies the lack of flexibility prevents the use of local expertise, which might well be better suited to their business needs. Companies may even have to sever long-standing relationships with agents who have built up experience and knowledge of their needs, thereby losing valuable counsel. In addition, companies forgo the ability to negotiate the best agent rates in each jurisdiction. While the global firm provides a favourable packaged fee approach, in the aggregate this can still lead to higher total costs. Where this is the case, it is important for clients to seek value and return on investment justification from other benefit sources, rather than primarily cost savings. For some, this may be a major factor in evaluating the outsourcing.

Client service is an important element of the global law firm model. Companies are assigned partners and client relationship managers, which provide professional oversight and coordinate service delivery. In some instances the firm will provide a team of professionals who are available in-country or onsite to provide a closer working relationship with the client. This is a highly valuable aspect of the model, in that it can ensure that the client receives the agreed service level.

Finally, technology is the foundation for connecting all components of the programme. It is critical that systems enable the efficient flow of work and information at each step of the trademark lifecycle. Global law firm portfolio services use industry-standard IP docketing applications and other tools, as well as document management. However, a key consideration is the client’s inability to synchronise its own internal system or to access the firm’s system. This creates a disconnect between client and firm, which can raise critical business issues. The IT aspects can be particularly challenging where either the firm or the client does not have the required capabilities.

In assessing options, the global law firm model is best matched to those trademark departments seeking a significant restructuring. For these clients, a close working relationship with a single firm provides a valuable global solution. However, the global law firm model may not be suitable for companies with small to medium-sized portfolios or which do not have a significant number of international trademarks. Likewise, regardless of company size, a return on investment primarily focused on cost savings is unlikely to be satisfactory.

Integrated trademark management model – a new approach

Companies seeking to achieve significant improvements in their trademark operations can benefit from the lessons learned by early-adopter peers. As the solutions market evolves, trademark departments have a host of alternatives for designing their operations to best suit their needs and requirements.

To help frame these options, we have developed a new trademark operations approach called the integrated trademark management model. The design concept is informed by the transformational forces shaping today’s trademark function. The model differs fundamentally from the global law firm outsourcing model in a number of critical ways, allowing for adoption by a broader range of companies and avoiding the limitations of the global law firm outsourcing model. Most importantly, it provides a more rigorous cost-savings structure, which ensures that companies can manage their trademark spend directly.

The integrated trademark management model allows for significant cost savings, while providing flexibility

The core design element of the integrated trademark management model is to provide an operating approach which balances the use of in-house staff and external resources and the allocation of specific functions. The model does not require a complete shift of all trademark administration to an external provider. Instead, companies can determine which roles and responsibilities are best retained internally and which are more effectively provided by the external service. The client can ensure that required in-house support is available, with the added ability of being able to augment and scale its staffing through the external service. In this regard, the types of service provided (eg, searching, drafting, filing, renewals and formalities) can be custom configured and budgeted, rather than requiring an ‘all or nothing’ approach.

Another important element of the model is the agent network. A global preferred agent network is provided, covering all jurisdictions. However, the network is neither captive nor static. Clients retain the flexibility to define their network as best suits their business. Multiple local agents are available in each country, or clients can request special agents which will be added to the preferred network. Clients can benchmark, renegotiate and reconfigure their agent networks on an ongoing basis in order to optimise their business needs and budget considerations. Transparency into these costs, which include agent fees and currency rates, is an important feature.

From a client service perspective, the integrated trademark management model emphasises the critical importance of maintaining a close working relationship with the client team through client collaboration. Assigned resources, including dedicated programme managers, work directly with internal staff. These may be in-country or onsite. However, unlike in other models, the use of distant offshore or low-cost labour markets is not in and of itself part of the model’s business structure. The primary approach is to use local staff for all aspects of the programme, driving cost savings from process efficiencies rather than wage arbitrage.

Process management and the use of standard operating procedures are critical to ensuring efficiency, productivity and quality management. In designing a company’s specific operations model, a set of such procedures is specifically defined that matches the functional activities and resource allocations. Process workflows – including the use of templates and technology tools – are established for all areas. Critically important metrics and key performance indicators are defined to support continuous performance management.

As with all legal operations, technology is also a primary element of the model. The solution provides a single platform which includes all required modules, including docketing, document management, collaboration and reporting analytics. The platform also provides specialised tools to manage workflows for trademark searches, renewals, filings and domains. Technology is considered an integral aspect of the service delivery itself. The client and solution provider work from the same system. This eliminates the client’s need for separate systems, and eliminates data and information issues which can exist between client and service provider. This technology approach provides additional cost savings by avoiding expensive internal IT expenditures.

With a broader focus on the needs of all trademark departments, the integrated trademark management model offers a viable solution for companies of all sizes. Because of its flexibility, clients adopting the model can design each solution element to meet their needs. In addition, the model’s design allows scalability, so that clients can adjust their programme however and whenever necessary.

Figure 4: The integrated trademark management model



Trademark departments are actively assessing and evaluating their trademark operations. Driven by complexity, global risk, cost pressures and the demands of human capital requirements, trademark departments are faced with the need to transform themselves. The global law firm model is an established approach which a number of large international law firms are offering. However, while it presents certain advantages, for many companies the approach may not be a viable fit.

A new model has emerged that provides a unique approach to improving trademark management. The integrated trademark management model allows for significant cost savings, while also providing the flexibility that companies require to design a programme which meets their business needs and requirements.

Ralph Schroeder is CEO of Helios Intellectual Property 
[email protected]

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