Who’s Who Legal brings together Mark Engelmann of Fross Zelnick Lehrman & Zissu, Mark Feldman of DLA Piper and Cynthia Rowden of Bereskin & Parr to discuss the increasing significance of the Madrid Protocol, the influence of the internet and social media, the effects of client cost-consiousness and the impact of globalisation on this sector and its legal market.
Fross Zelnick Lehrman & Zissu
Chicago Cynthia Rowden
Bereskin & Parr
WWL: 2013 saw several countries accede to the Madrid Protocol, including India, New Zealand, Colombia and Mexico. These accessions mean the protocol now covers two-thirds of the world’s population. Is your country a member of the protocol and if so, what impact has it had on your personal practice? What benefits does the protocol bring to trademark owners? Are there any negative aspects clients should be aware of when considering filing under the protocol? Do you expect to see more countries join in the future?
Mark Engelmann: Yes, the US is a member of the Madrid Protocol, which has significantly increased the number of international filings and decreased the number of national filings. As for benefits to trademark owners, the Protocol allows for much lower filing costs. So, apart from countervailing considerations, which do arise fairly regularly (eg, US-based filings with more specific IDs can limit potentially broader coverage in extension countries), filing under the Protocol is typically the way to go. And yes, I do expect to see more countries join in the future.
Mark Feldman: Since the US is a member of the Madrid Protocol and a number of commercially significant countries have joined in the past few years, it is being used for more and more international filings. I tell clients the most important reason for using the Madrid Protocol is cost: the economics of using it wherever possible are compelling. Among other things, you also avoid the need for powers of attorney and legalisation at the time of filing, which may also get you an earlier filing date and lower upfront costs. The negative aspects are the possibility of central attack, the inability to assign the mark to an assignee outside of the Madrid system and the fact that an application based on a US base registration will track the same relatively narrow identification of goods and services in the US registration, rather than the broad descriptions allowed elsewhere. I will rarely rely on a US application that has not yet received a Notice of Allowance and will almost certainly be used in time to file a Statement of Use, because of the Madrid Protocol requirement to have your base mark registered at the appropriate time. The Madrid Protocol has a steadily increasing number of member countries and I expect more countries will continue to join, especially in under-represented regions such as Central and South America.
Cynthia Rowden: Canada is not a member of the Madrid Protocol, but the government has made accession a priority, and has now passed legislation designed to implement the Protocol and related trademark treaties. In doing so, the Trademarks Act will also be amended to delete the requirement to first use a mark before registration. This change was not the subject of prior consultation, and has been met with surprise and concern by trademark owners and advisers alike. The expected benefits from membership in the Madrid Protocol for Canadian companies would be the same as that in other countries, but Canada is a net “importer” of trademark applications so the benefits are far more likely to felt by foreign companies, at least initially.
WWL: Protecting trademarks in the digital age was a common theme in our interviews with lawyers. Clients are becoming increasingly concerned about losing control of their trademarks on the internet and particularly in relation to social media. Is social media a growing part of your practice? How have you responded to your clients’ fears of online counterfeiting?
Mark Engelmann: Yes, social media is a growing part of our practice. We have implemented many anti-counterfeiting programmes on behalf of clients. To be cost-effective, these programmes must be highly organised and selective to avoid spending huge amounts on one-off “whack-a-mole” efforts given the seemingly endless supply of counterfeiters who tend to pop up, disappear and pop up again.
Mark Feldman: Companies have indeed lost a good measure of control over their trademarks on the internet. A fast-growing part of the trademark practice is counselling clients on issues related to third parties using the client’s mark on the internet without the client’s permission, and we are frequently advising clients how to address these uses. Not every use is actionable and in some cases the uses are innocuous fansites. Deciding when to take action and when to tolerate use requires a nuanced approach, so as not to alienate good customers who can create a positive buzz around a brand. Of course, some uses are infringing or dilutive. In such cases we send cease-and-desist letters or prepare takedown notices to terminate these uses. The rise of social media has also had subtle downstream implications. For example, most cease-and-desist letters are more toned-down than before, for fear that the recipient will post the letter online or start an internet campaign against the trademark owner, even in cases that are clear infringements.
Cynthia Rowden: Both Canadian companies and foreign businesses doing business in Canada experience the same concerns as brand owners in other jurisdictions. Lawyers need to be much more aware that the cure can often be worse than the problem – going after entities using a mark in social media can result in a backlash that causes much more damage than the impact of the use. Social media has galvanised critical reactions from consumers in Canadian cases of alleged trademark or copyright misuse, with the adverse PR effects being much more public than the infringement. Just as companies had to develop guidelines on how to react to similar domain names, learning where to draw the line is important. In terms of protecting your client, having the weapons you need, eg, registrations for both trademark and copyright, will always help.
WWL: Clients remain cost-conscious. How have you responded to the changing lawyer-client dynamic? Are clients prioritising certain marks? What other strategic decisions are they making to reduce their legal spend?
Mark Engelmann: Clients are definitely cost-conscious, probably more than ever. They prioritise their house marks and other important product and service marks, and they are demanding alternative billing arrangements and discounts to keep costs down and share the financial risk.
Mark Feldman: Clients have always been concerned about costs and the budget pressures on companies seem to keep increasing. It’s not so much that clients are being “cautious”, but rather they are being smart and strategic about the choices they make about their legal spend. So, with respect to their trademark portfolios, clients have expressed appreciation for our suggestions about prioritising which marks to file, the countries in which they should be filed and the classes, and to take advantage of efficient filing options such as the Madrid Protocol and the European Union wherever applicable. Fees and budgets are also increasingly addressed with alternative billing arrangements such as fixed fees. The days of filing for everything, everywhere, in all classes are over.
Cynthia Rowden: Costs are a constant issue for clients. Some routine legal services are now viewed as more of a commodity, and clients occasionally hire outside agencies to conduct “bids” for these services. We realise the pressure our clients are under – the legal departments of many companies are being asked to do more with fewer resources, and often performance is measured in terms of cost-containment. At the same time, quality of service, responsiveness, and practical business advice remain important. Flexible fee arrangements and discounts on specific projects are common, but the biggest savings come from strategic decision-making in partnership with clients on what needs to be done, and having the depth of experience to fit people to the right jobs.
WWL: Litigation levels remain steady according to those lawyers we spoke to throughout the world. Has this been the case in your jurisdiction or practice? Are clients more cautious before entering litigation than in the past?
Mark Engelmann: We have not seen a reduction in litigation. As in the past, brand owners understand the need to protect their trademark assets, which in some industries, perhaps most, are among their most important corporate assets.
Mark Feldman: Litigation levels have remained steady, or have seen a modest increase. Clients are being smart and prudent in making their litigation decisions, but that smartness includes the realisation that they will not allow infringing marks to coexist and thereby jeopardise the strength or scope of protection of their valuable trademarks. Clients today are often more reticent to incur the expense of pulling the trigger on litigation, except when they need to file as a last resort. Once they do bring a case, clients are eager to explore ADR as a way of ending the case early.
Cynthia Rowden: Trademark litigation in Canada has remained steady, but historically has been less significant than patent litigation, especially since the Canadian courts are very reluctant to order interim or interlocutory injunctions in trademark cases. While infringement and passing off actions are usually settled long before trial, there are more appeals of opposition and cancellation actions, and these appeals go to the Federal Court. Clients expect litigation to be conducted with clear expectations about cost, requiring careful budgeting and full participation by clients in strategy and decisions at every stage of litigation.
WWL: With many clients requiring management of global portfolios, has this benefited global law firms over smaller boutiques? How has your firm responded to this trend?
Mark Engelmann: I can’t speak about the revenues of global firms, but if anything I think we, as a highly specialised boutique, have benefited from clients’ needs to manage their global portfolios. We have the advantage of being in a position to use the best firm or firms in each jurisdiction, many of which we have worked with for decades and therefore have reason to trust implicitly. Also, we meet regularly to assess the quality of the work the local firms are doing for our clients and if that quality drops off, we either act quickly to rectify the situation or move on. Big firms are typically obliged to use their local office in each jurisdiction. To the client’s possible detriment, a global firm may not have the best lawyers in a particular country and thus can’t “cherry pick” the best firms the way we can. I also believe that boutiques like ours tend to be more flexible than big firms and have a somewhat leaner cost structure, both of which benefit the client.
Mark Feldman: Global law firms have benefited from the trend towards centralised handling of global trademark portfolios. A global firm can offer a one-stop service and provide the best of both worlds to clients: strong teams of trademark professionals in the most important trademark markets throughout the world, plus the ability to pick the best local firms in other countries. In addition, global firms are often doing other related work for clients, such as corporate, M&A, antitrust or franchising, and we are able to collaborate and coordinate in ways that boutiques cannot match with inter-disciplinary teams that have deep overall understanding of the client’s business. Another advantage of global firms is that the international offices have the capability to handle litigation and provide sophisticated advice regarding complex issues on licensing, advertising, regulatory matters, franchising, corporate transactions, etc; whereas many local boutiques outside the US are staffed only with agents. Clients seem to recognise these benefits, as we have experienced a steady increase in the number of global portfolios that we have the privilege of handling.
Cynthia Rowden: As a boutique firm (albeit with over 250 people in four offices), we believe that dealing with specialists in each country has a significant advantage. Clients benefit from the depth of experience associated with a boutique firm, plus the easy access to experts around the world. Since we work on many files in many countries, we can share feedback and recommendations when specific local problems arise. Ultimately, regardless of whether the firm is big or small, global or purely local, we are looking to get our clients the best legal advice. With large portfolios, it is particularly important to have systems specifically developed for IP. In a boutique, everyone understands the nature of IP files and projects, and we are lucky to rely on systems that can adapt to clients with a single file and a deadline 15 years away, as well as clients with thousands of files, hundreds of deadlines in any year, and associates in dozens of countries.