The trademark and finance teams’ relationship (or, for many, lack of one)

The preceding updates explored corporate trademark team structures and workloads, and the brand strategies adopted. All of these activities require spend, yet budgets have been under pressure for a number of years. Last year’s survey suggested that some of that pressure was easing for many – with almost one-quarter of respondents expecting their budget to increase over the past 12 months (according to this year’s results, that was pretty much on the money, excuse the pun – 25.3% stated that they had subsequently experienced budget increases in 2018).

This year’s survey returned a similar result in terms of expectations, with 26.4% of respondents predicting an increase in budget over the coming year. Of course, the picture is not rosy for all and 16% pointed to an anticipated cut in funding. Across the board, though, it is about doing as much as possible with the available funds. This year, we drilled down into the nature of the available budgets and the interplay between the legal and finance functions.

In terms of overall finances, almost half of respondents (47.2%) operated with multimillion-dollar budgets. At the other end of the spectrum, almost 10% managed trademark budgets of less than $100,000. Of course, the size of the budget will depend on a number of factors – including the size and scope of the portfolio, the nature of the business engaged in and the nature of infringement faced. However, whatever funds are at hand, the juggling of online enforcement, anti-counterfeiting, litigation and portfolio management efforts is a significant challenge.

What is clear from the survey results is that the work undertaken is largely done so on a siloed financial basis (ie, the budget is assigned, billed and managed within the team). For many respondents (70.1%), trademark costs are billed to the IP department and/or not to other departments and internal business units. Only 5% billed enforcement costs to market teams or distributors. An even smaller 1.2% billed online enforcement costs to the e-commerce team (although 10% did so in part). This suggests, on the flip side, that those teams are not proactively or formally plugged into IP-related work.

The survey also sheds some light on the interplay between the finance and trademark functions, with just half getting involved in tax-related matters and less than 40% charging intra-group licence fees. In addition, more than half of respondents (51.7%) did not know whether any company trademarks or brands were included as an asset on the corporate balance sheet. For many, this would be the case only when a transaction has occurred, triggering reporting requirements.

What was your approximate budget for your trademark department in 2018? (excluding employee costs)

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From your total trademark budget (excluding employee costs), approximately what percentage is used for the following areas?

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However, that most trademark team respondents did not actually know whether any marks were included on the balance sheet suggests that at present, there is a lack of interplay between the trademark and finance functions.

This may, to some degree, reflect the fact that they have not been empowered by senior management to have that type of relationship (an issue we explored on previous updates). Equally, if the profile of the trademark team was collaboratively raised with financial colleagues, that may be a useful first step to getting the ear of the C-suite.

Did your trademark department budget change in 2018?

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Is your trademark department budget expected to change in 2019?

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Are your trademark costs billed to your department or other internal business units?

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Are your brand enforcement costs billed to markets/distributors?

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Are your online enforcement costs billed to the e-commerce team?

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Is the trademark team involved in your company’s tax issues?

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Does your company’s IP department give tax treatment to any IP work (eg, trademark applications giving tax reduction)?

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Does your company charge intra-group licence fees?

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Are your company’s trademarks included as an asset of the corporate balance sheet?

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