The effective protection and monetisation of intellectual property rights is key to a successful business strategy. As one leading lawyer in the industry told us, “Brands are an international business and even the smallest companies have big ambitions in this regard.” The global business community is becoming increasingly aware of the importance of establishing and protecting their brands, leading to practitioners in the trademarks sphere experiencing a surge in demand for their services. We spoke to some of the leading lights in the field of trademark law around the world to explore the key trends affecting practitioners in the space.
Since the United Kingdom electorate voted to leave the European Union on 23 June 2016, Brexit has been a hot topic across the globe. In the trademarks space, the subject continues to be a pressing concern for practitioners and clients alike. Over the course of our research, practitioners spoke of the significant uncertainty surrounding the potential implications of leaving the EU, with one prominent UK-based trademark lawyer noting, “Not being able to give clients definitive advice is one of the biggest challenges in the legal world right now.”
The ability to register a European Union Trademark (EUTM), which conveys protection across the current 28 member states of the EU, is the cornerstone of many global filing strategies. The result of Brexit on such strategies is a problematic issue. For existing holders of EUTMs, a direct transfer of rights to the UK is anticipated, which will allow brand owners to benefit from a separate UK trademark in addition to coverage across the soon-to-be 27 member states. This cost-neutral strategy is certainly in the interests of clients, allowing them to avoid the additional costs of duplicate filings, leading to many practitioners advocating a “wait-and-see” approach. However many international clients are erring on the side of caution, embarking on the process of mirrored filings in the EU and UK at extra cost to guarantee current levels of protection. As negotiations continue, the international trademark community is waiting with bated breath for the result. As one practitioner noted: “Until the dust settles, the only thing that can be said with any certainty is that international filing strategies are going to change.”
Despite the uncertainty in the market, there has been a notable uptick in UK filing work, offering firms opportunities to expand their practices in this area. Additionally, once the UK exits the EU and brand owners are required to embark on separate filings, lawyers predict an explosion of filings in the UK. This poses a significant opportunity for growth in the UK market, allowing both firms to expand their domestic filing and prosecution practices to keep up with demand. The prosecution of EUTMs will continue to be a major part of firm’s practices, however, driving many domestic outfits to look into establishing offices in neighbouring jurisdictions or for practitioners to obtain a dual-qualification in Ireland. As well as benefiting other practice groups, this allows the firms to avoid potentially diluting clients and to provide a one-stop-shop service across the full spectrum of domestic and cross-border trademarks work.
In 2017, more than 5.7 million trademark applications were filed with the Chinese Trademark Office, an increase of over 55% from the previous year. This immense market growth is an enticing prospect for practitioners across the globe, who note the huge potential of the Chinese market. Historically China has been viewed as a problematic jurisdiction for international brand owners, with many falling victim to trademark squatters taking advantage of China’s first-to-file trademark system to register marks in anticipation of their entry into the Chinese market. Since the adoption of the Chinese policy for trademark reform and opening up in 2014, however, the market is gradually working to alleviate these issues and to enhance protection for the rightful owners of trademarks. As a result, practitioners report a steady stream of brand owners looking to establish themselves in China, which will keep them busy well into the future.
Spurred on by the continued growth of the country’s economy, the Chinese market is thriving and appears well on its way to establishing a global presence across innovative industries through effective brand management strategies. As China strives to become a leader in the high-tech manufacturing sphere through the “Made in China 2025” policy, the growth of international brands has become more important than ever before. As a result, Chinese companies are readily registering trademarks in the EU and US in a bid to establish aspirational Chinese brands. This is good news for practitioners across these jurisdictions, who are benefiting from the increased workload brought about by the movement of Chinese companies outside China. Overall, the market views the development of the Chinese market as a positive change, with one source noting: “The Chinese market has really matured and it’s a promising development to see them taking the protection of their IP so seriously.”
Technological advancement has been one of the hallmarks of the 21st century so far; however, it has not been without its problems for brand owners. With the explosion of the internet and the development of consumer habits, online counterfeiting remains a significant issue for market players. The online space is becoming more and more important for transactions, and the perceived anonymity of infringers mean that ever-increasing numbers of counterfeit goods are being sold online. Practitioners in Eastern Europe note this as a particularly hot topic at the moment, highlighting the proliferation of small-scale factories producing counterfeit goods to sell online in the region. With shipments decreasing in size and the difficulties of locating infringers selling through online platforms, litigation is not always a viable option. As a result, lawyers face increasing demand to implement creative and cost-effective solutions to limit damage and prevent future infringement.
Practitioners across the board have noted a rise in disputes with multi-jurisdictional elements, as a direct result of the online infringement of trademarks. In the words of one London-based source, “The internet does not respect geographical boundaries.” The internet is by no means a new invention; however, practitioners report that online trademarks work is more active than ever before. Mobile technology is a fixture of modern life, and ease of access to online content means that the opportunity for online infringement of trademarks is a bigger problem than ever before. This is a particular issue across social media platforms, with claims for passing off, trademark infringement and breach of data becoming a daily occurrence. As a result, disputes in the trademarks space are on the rise, and is not expected to slow down any time soon.
The past year has seen a “continuation of the consolidation and convergence in the legal market”, as one source put it. For the past decade, law firms within the UK and Dutch legal markets have increasingly opened up to trademark attorneys in a bid to take on valuable filing and prosecution work. Sources we spoke to report the beneficial effect of this development, with one UK-based lawyer noting, “Many clients prefer to go to one law firm for all of their needs, and taking on trademark attorneys allows us to provide this service.” The demand for a one-stop-shop for trademarks work is becoming increasingly common among sophisticated clients. During 2017 this trend has also emerged within the French market, signalling the combination of services such a practice is able to provide as the way forward. In parallel to this, 2017 saw further consolidation of the legal market as a whole, as the wave of law firm mergers and reorganisations hits the intellectual property space. Among the significant changes over the past year was the acquisition of leading UK IP boutique law firm Redd by media and technology specialist firm Wiggin. Likewise, within the US market, practitioners noted that firms are increasingly expanding their reach as “clients are increasingly demanding international expertise”, further contributing to the growing trend of law firm mergers.
Competition on fees was highlighted as another recurring trend in our research, with practitioners highlighting “the incredible pressure from clients to keep costs down”. In the disputes area, litigators we spoke to reported that they are feeling the squeeze, noting “an increasing focus on non-adversarial means of dispute resolution” in a bid to save money. “The cost of litigation has proven to have a chilling effect on cases brought”, said one leading trademark litigator, who went on to note that “although you still see big-ticket litigation, law firms are increasingly under pressure to come up with creative ways to cut costs”. Practitioners also described the increasing commoditisation of trademarks services such as filing, noting that “fixed rates are a must to even get through the door”. Further exacerbated by the growing competition between law firms and trademark attorney outfits, the ferocity of this competition does not appear set to die down anytime soon. Despite the fact that so many players share this market, the increased demand for IP services is providing high levels of work across the board. As one practitioner puts it, “The market may be crowded, but there is enough room for firms to fight within it.”
A combination of the globalisation of intellectual property enforcement, the growing Chinese market and the rise of technology are all resulting in one thing: an ever-busier market for trademarks work. Even developments such as Brexit, which have provided significant challenge in other practice areas are, despite the uncertainty, resulting in more work for UK and European-based practitioners. While competition is fierce, there seems to be plenty of work to go around, contributing to a rapid expansion overall in the practice area. This growth doesn’t seem set to slow any time soon, with consolidation in the market and "full-service" practices helping firms to file and prosecute even more efficiently. Further developments in the sector aimed at managing this explosion in trademarks work worldwide seem likely in the coming year.