Technology

'Tis The Season To Be Wary II: 3 Considerations For Trademark Policing Before The New Year

The holiday season brings with it a fair amount concern over counterfeit products.

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It’s that holiday time of year again!  For those celebrating the holiday season (which I hope is most of you), it’s not just a time for gathering family and friends to celebrate the season – it’s also a time to exchange gifts as well.  Unfortunately, the season brings with it a fair amount concern over counterfeit products.  By 2022, the International Trademark Association projects that the total estimated value of counterfeit goods (including pirated goods and digital piracy) be around $1.90–$2.81 trillion.  Now that’s a lot of coal in stockings.  Fortunately, there are a number of considerations worth noting to bolster a company’s trademark policing during the holidays – things to do that will operate as a springboard to policing products in the New Year.

It’s no surprise that this time of year poses policing challenges due to the retail focus for the holidays (at least in the United States).  As I have written before here, counterfeiting cost US companies over $600 billion in 2016 and exceeded $1 trillion (yes…that’s trillion) in 2017.  Since 2018 likely marked the first holiday season with $1 trillion+ in sales, these numbers are only increasing.  The thing is, the loss imposed by the sales of counterfeit goods is not just in the fraudulent sales – from bogus warranty (and product liability) claims to reputational damage (especially in this age of online reviews), the impact on a brand can be substantial.  As a result, companies should incorporate a strategy for handling counterfeits that works together with its trademark policing policies.

It is important to note that counterfeiting of products and trademark infringement are related but somewhat different concepts – both hurt a company, but do so in different ways.  I wrote about these differences in a previous article, but they are worth reiterating here.  First, trademark counterfeiting most commonly occurs where a third-party knowingly and intentionally places the identical mark on its own goods and fraudulently sells such goods as the genuine article (referred to as “passing off’ or “palming off” the counterfeit goods as the real thing).  Such cases involve a distinct intent to deceive.    Infringement, on the other hand, deals with confusing similarity between trademarks, for which there may be no intent to deceive and/or defraud.  Remember: trademark counterfeiting is a type of trademark infringement, but not all trademark infringement equates to counterfeiting.

The concepts are different, they remain interrelated.  When properly designed and applied in practice, a decent trademark policing strategy helps address potential counterfeit sales.  How? Although such policies must be tailored to specific brands by their very nature, there are some common considerations that are part of a foundation to such strategies that should be present in any trademark policing strategy.  Here are 3 of them:

  1.    Ensure Your Trademarks Reflect Your Use. This consideration may seem so obvious that it is not worth mentioning here.  That perception would be wrong – you would be stunned how many times I have been presented trademark portfolios to protect, only to find that trademark usage over time has deviated from what the client believes is actually protected.  Sometimes the issue is a change in usage that does not properly reflect the mark(s) as registered, sometimes it is an interruption of use for a period of time, or even a minor change to the mark that actually constitutes a material alteration that changes the commercial impression.  Each of these problems affect the company’s ability to maintain (let alone assert) its trademark rights. The point here is that a company can never — ever— take its trademark portfolio for granted.  The last thing your company (or client) needs is to seek to take action against a third party infringer or distributor of counterfeit products and realize that its rights are not what they seem.

2     Ensure the Policy Reflects an Overall a Litigation Strategy.   Think sending a cease & desist letter to a potential infringer without being ready to follow-up should the recipient ignore the warning is OK?  It’s not.  This is a simple example, but the point here is that policing trademarks is one part finding offending uses, and another part understanding what to do about them.  This should always be addressed by asking a seminal question:  What goal is your company (or client) seeking should it engage in litigation involving such infringement or counterfeits?  The answer to this question is essential to tailoring the trademark policing strategy to that answer.  More importantly, the answer is likely not one to be set in stone (and shouldn’t be) – just as a company grows and changes over time, so may the answer to that question.  Be mindful of these dynamics and ensure that the trademark policing strategy can adapt over time.  The holidays are as good a time as any to revisit what has been working over the prior year, and what should be revisited for the new one.

3     Ensure the Policy Addresses Both Traditional and Online Sales.  Nowadays, brand usage extends well into the digital world.  Enhanced by social media and interactive online components of online sales (such as online ratings and reviews), trademark policing strategies must go beyond addressing specific instances of infringement or counterfeit sales and account for different online platforms.  Infringing trademark usage on a platform such as eBay may not (and does not) have the same mechanisms for brand owners to address infringement and sales of counterfeit goods.  Moreover, the platform’s terms and policies may be revised, requiring revisions to the trademark policing strategy. Each platform reasonably likely to present potential infringing uses or sales of counterfeit goods should be considered and familiarity with reporting mechanisms established and included as part of the policing strategy.  This consideration may seem daunting, but in practice is not as difficult as it seems and is a necessary element to any effective trademark policing strategy.

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These are just some of the considerations, but I am sure you get the point.  When it comes to a trademark policing strategy, ensure your company (or client) is operating from a solid foundation that can adapt over time. Although you can’t prevent all instances of trademark infringement or counterfeiting, adhering to the foregoing will help your company (or client) sing “auld lang syne” to the ghosts of infringement and counterfeit past. Now that is something worth toasting to for the New Year. Merry Christmas and Happy New Year to All!

Tom Kulik is an Intellectual Property & Information Technology Partner at the Dallas-based law firm of Scheef & Stone, LLP. In private practice for over 20 years, Tom is a sought-after technology lawyer who uses his industry experience as a former computer systems engineer to creatively counsel and help his clients navigate the complexities of law and technology in their business. News outlets reach out to Tom for his insight, and he has been quoted by national media organizations. Get in touch with Tom on Twitter (@LegalIntangibls) or Facebook (www.facebook.com/technologylawyer), or contact him directly at tom.kulik@solidcounsel.com.

 

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