The International Who’s Who of Trademark Lawyers has brought together Iris Quadrio of Marval O'Farrell & Mairal, Marc Wallheimer of Hogan Lovells International, Timothy Golder of Allens and Louis Van Wyk of Spoor & Fisher to discuss levels of work, the growing recognition of the Madrid system, gTLDs and the impact of the global financial crisis on this sector.
Marval O'Farrell & Mairal
Who’s Who Legal: Figures published by the World Intellectual Property Organization show that international trademark filings under the Madrid system reached a new record in 2011 with 42,270 applications. Have you experienced an uptick in trademark filings in your jurisdiction?
Louis Van Wyk: Our firm practises throughout the African continent and we have experienced a substantial uptick in trademark filings in general. International Madrid trademark registrations (ITMR) are not necessarily valid and enforceable in all African countries which have joined the Madrid arrangements. Complex issues are arising in several of them, especially common law jurisdictions such as Ghana, Sierra Leone, Swaziland and Zambia. For this reason, filings under the ITMR are still relatively flat.
It appears that the mature economies have discovered Africa and realised that many of their trademarks are not properly protected. Another significant new development is the appreciation of intellectual property rights by African companies and organisations. In some countries more than 50 per cent of the trademark filings are by local companies. In South Africa, filings by South African companies have increased despite the economic downturn.
Timothy Golder: After dipping at the start of the global financial crisis, the number of applications filed annually in Australia has increased by 10.8 per cent. There were 62,633 applications filed in 2012 – a 1.75 per cent increase on 2011 – and 34 per cent of these applications originated from outside Australia.
Iris Quadrio: Although Argentina is not a member of the Madrid Protocol and there are no immediate plans to join, trademark filings have grown at an acceptable level of 5.2 per cent in 2012, according to figures recently released by the Argentine Patent and Trademark Office. Traditionally, Argentina’s trademark filing figures have been one of the highest in the region. This is partially due to the possibility of registering defensive marks under our system, which allows for flexible use requirements to renew a mark or defend it against a non-use cancellation action. This is often an incentive for companies who are trying to protect their marks for products or services beyond those of main interest. In addition, as companies tend to adopt a regional approach to gain a consistent filing strategy in the Latin American market, even in cases where Argentina is not the main market for a given product or service, it is nevertheless included in trademark filing projects.
Marc Wallheimer: The recovery of Benelux trademark filings has been slow but steady in the past few years. The impact of the economic downturn, however, resurfaced in 2012, with the number of filings dipping again.
Who’s Who Legal: With the new generic top-level domains expected to roll out by mid-2013, many are predicting it to be a busy time for trademark lawyers and their clients. Are clients concerned about protecting their trademarks? What are their key concerns?
Louis Van Wyk: We expect it to be a busy time for trademark lawyers and their clients, although not as busy as in mature economies. There are not, as yet, as many well-known global trademarks emanating from the African continent. However, in view of the upsurge in exports from Africa, clients may have encountered their trademarks registered by others at the Trademark Clearinghouse. They are also concerned about the costs of registering the trademark as a domain name, especially during the so-called sunrise period. The major concern that we have encountered so far is the fear by clients of online infringement and cybersquatting, either of their own trademarks or innocently by themselves, once they start exporting to other countries.
Timothy Golder: Few of our clients were interested in applying for their own top-level domain due to the prohibitive application costs and significant ongoing investment required. However, many of our clients are very concerned about the potential damage that may be suffered as a result of their trademarks being registered at the second level by third parties.
One of the main issues for our clients is trying to predict the likely impact of the new generic top-level domains (gTLDs) on their business and determining what marks in their trademark portfolio to protect at the second level. More generally, the key concern for our clients is the significant additional layer of costs that the gTLDs will place on their brand protection programmes and the difficulty in budgeting both in terms of lodging their trade marks with the Trademark Clearinghouse, and the undisclosed cost of registering their own marks at the second level of relevant domains.
Iris Quadrio: Clients are closely following developments in this area. However, due to the high costs involved, it appears that only the larger companies are likely to apply for this kind of protection. In fact, most companies are mainly concerned that their existing trademarks may face a conflict with new top-level domains.
Marc Wallheimer: There is also much talk about the new gTLDs in the Benelux. The obvious main concern of brand owners is that the new gTLDs will cause a massive increase in cybersquatting and that the costs of brand protection will skyrocket as a result. I think that the clearing house mechanism helps reduce the risk of brand abuse. To keep costs down, brand owners should carefully evaluate their portfolios to determine priorities and their overall strategy.
Who’s Who Legal: IP protection plays a key role in encouraging foreign investment into a country. As the developing world introduces trademark laws and regulations or heightens existing protection, have you noticed an increased willingness among brand owners to enter new jurisdictions? Which jurisdictions are brand owners looking to expand into?
Louis Van Wyk: We have definitely experienced a new willingness among brand owners to enter new jurisdictions on the African continent. The major countries in Africa where we are experiencing growth are South Africa, Nigeria, Kenya, Ethiopia, Zambia and Angola.
Timothy Golder: With the emerging markets in Asia, Australian brands are becoming more recognisable beyond our shores (although some iconic Aussie brands have already secured traction in markets such as the USA and UK). As a result, we have seen a shift away from the old model of Australian brand owners attempting to take action against infringing parties overseas, to beating them to the punch by actively securing trademark registrations in those jurisdictions.
For Australian brand owners, we are seeing an increased interest particularly in China, India, Vietnam and Indonesia.
Iris Quadrio: Despite the current economic difficulties, trademark owners are conscious of the need to protect their IP assets both in Argentina and in Latin America. This is further prompted by the fact that consumers in the region have a high degree of attachment to brands, which plays an important role in addressing social challenges and meeting peoples’ needs.
There is an increasing interest in protecting trademarks throughout the region, with particular emphasis on Peru, Colombia, Chile, Argentina, Mexico and, of course, Brazil.
Marc Wallheimer: Despite the economic downturn, clients continue to seek foreign investment opportunities. China remains one of the key jurisdictions which brand owners are keeping a close watch on for business expansion opportunities. Another appealing jurisdiction is Indonesia, due to its huge domestic market and increasing local demand.
Who’s Who Legal: Is trademarks a recession-proof practice? Are clients continuing to go to court to protect their brands? Has the financial downturn affected your practice? Have clients’ demands changed?
Louis Van Wyk: Africa is not a homogeneous “country”. Africa has 54 countries (recognised by either the African Union, United Nations or both) and each one has different requirements, demographics and so forth. One thing common to most of these countries is the growth of the middle class. People in the middle class aspire to have better education, a safer environment and a better quality of life in general. Therefore brands denoting quality goods, especially pharmaceutical and veterinary products, insecticides and pesticides, as well as cosmetics (in particular skincare), are in demand. A brand is regarded as a badge of quality in many jurisdictions. In my experience, brand loyalty is fierce. Trademarks is not a recession-proof practice. Clients are continuing to litigate to protect their brands. Especially in economically strained times – they are very jealous of protecting the house marks as well-known brands. However, they do not have limitless pockets. Clients are increasingly becoming disillusioned with the hourly rate and want alternative fee arrangements in order for them to be able to budget properly. Lawyers must work harder, make more use of technology and provide a better service at either the same price as last year or cheaper. Clients are becoming resistant to the annual increases in legal fees. Clients also are more concerned about outcomes than success in courts. We are therefore expecting an increase in the use of alternative means of solving disputes such as arbitration and mediation. In some instances, for example, action against counterfeiters, it is seldom possible to resolve the matter in any other way than going to Court. Incidentally, litigation against counterfeiters is growing at a rapid rate in Africa. There is a demand, as I said before, for brands that denote quality and are aspirational. As a result, counterfeiters are offloading large volumes of counterfeit goods in African countries. Some countries – such as, for example, South Africa – have sophisticated anti-counterfeiting measures in place. Lawyers, custom officials, the Department of Inland Revenue and the police work closely together to stamp out counterfeiting.
Timothy Golder: The 2009 dip in Australian trademark filing figures proves that trademarks is not a recession-proof practice. In the recent difficult financial landscape, trademark owners are recognising the importance of enforcing their key brands. However, despite the acknowledgment of the importance of enforcement, trademark owners remain reluctant to pursue matters through the Court due to the time and expense involved. Therefore, we have seen an increased willingness by trademark owners to attempt to secure a commercially sensible resolution of infringement matters. We have also seen that where the infringed trademark is not core to our client’s business, there is a particular reluctance to commit resources to pursuing infringement matters.
The global economic downturn has affected our practice inasmuch as we are continually having to work with our clients to meet increasingly tight budgetary constraints. We have also detected that fewer foreign companies are including Australia as part of their international (Madrid) applications, and local clients are filing in fewer jurisdictions, with most focusing on Asian jurisdictions.
Iris Quadrio: Although the recession may have marginally affected the investment plans of bigger companies, it also prompts medium-size and small companies to make further efforts at innovation and to launch new products which may hedge any drop-in filings.
In addition, even though the financial downturn may impact clients’ strategic plans and budgets, trademark filing will not necessarily be affected. Clients are aware of the importance of protecting their IP assets and in many cases filing programmes are part of a broader regional strategy.
When it comes to litigation, however, clients tend to follow a more conservative approach and they carefully select the cases over which they want to go to court. Although requests for high-quality work and responsiveness have remained the same, clients have become more demanding insofar as they now ask for faster responses. Of course, cost is always an issue considering that clients and companies in general have become more budget-conscious.
Marc Wallheimer: The fall in the number of trademark filings during the downturn already shows that the trademark practice is not recession-proof. That said, in my experience, brand owners still keep investing in what they have carefully built up over the years. Clients still maintain – and some even expand – their portfolios, and they are still willing to go to court to defend their brands if necessary.
I do not think that clients’ demands have changed, although some may be more cost-conscious, which in my opinion is only natural in times of economic uncertainty. I believe that fee structures should not be rigid, and clients appreciate being able to discuss fee arrangements that are tailored to their needs.