Who’s Who Legal brings together Hidde Koenraad of Simmons & Simmons, Sheana Wheeldon of Wheeldon Legal, Lawrence Apolzon of Fross Zelnick Lehrman & Zissu and Julia Holden of Trevisan & Cuonzo to discuss a number of practical, commercial and legislative developments across their respective markets.
Hidde Koenraad (Simmons & Simmons), Sheana Wheeldon (Wheeldon Legal), Lawrence Apolzon (Fross Zelnick Lehrman & Zissu) and Julia Holden (Trevisan & Cuonzo)
Hidde Koenraad: As the economy has improved following the global financial crisis, we’ve seen an upswing in clients again launching new brands – hence an upswing in clearance, filing and prosecution work. Deals are also increasing. As regards the balance between contentious and non-contentious work, in our practice we have seen that trademark infringement cases tend to be settled in an amicable way more often than before. In many counterfeit and straightforward infringement cases, defendants opt to settle faster, taking into account that as a losing party in proceedings, they can be ordered to pay a substantial part of (or even full) legal costs and other expenses incurred by the winning party.
Sheana Wheeldon: Based on my experience, activity in the trademarks field has at least been steady over the past year and may indeed have increased.
The fact that large clients, and even some smaller ones, are tending more and more to self-file trademark applications has contributed to an ongoing drop in filing work going to law firms. This trend has been given further momentum in recent years, now that New Zealand can be designated in international applications.
On the other side of the coin, some less sophisticated clients who initially self-file cause themselves unnecessary headaches and need to enlist external providers to solve the resulting problems or, worse, defend them in a dispute that could have been avoided. I have seen a number of situations where this has occurred.
Lawrence Apolzon: A commercial database that tracks US trademark applications shows about 332,000 filings from 1 June 2013 to 31 May 2014 and about 341,000 filings from 1 June 2014 to 31 May 2015. The 2015 number should go up by a few thousand more after additional Madrid extensions made during this period are input. I also noticed an increase in new business ventures showing an interest in searching and filing.
As for court proceedings, another commercial database that tracks filings in the federal courts that are characterised as trademark cases shows about 3,200 filings during the year before 1 June 2014 and about 3,600 filings during the year before 1 June 2015. While these numbers are up, we note a trend towards early mediation in hopes of settlement. In the US Patent and Trademark Office (USPTO), opposition proceedings remain very popular. For purposes of objecting to ITU applications, this is the only recourse a brand owner has in the US. Given that opposition proceedings may now be given more weight in court actions (see question 2), we expect more aggressive activity in the USPTO to continue.
Julia Holden: In Italy, a simplified opposition procedure for trademarks has been in force since 11 May 2011, pursuant to article 174 of the Italian Industrial Property Code. This administrative procedure is significantly less costly than litigation before the Italian IP courts and allows the holder of a trademark to challenge the filing of identical or similar trademarks registered for identical or similar products.
Since the introduction of oppositions, prosecution work has increased considerably. The opposition procedure can be completed relatively quickly and reasonably inexpensively, with a less rigorous burden of proof. Over 200 decisions have been issued since the new procedure commenced using a structure very similar to that used for Community Trademark opposition decisions. Before the IP courts, the contentious work remains substantially unchanged.
Hidde Koenraad: In the Netherlands, The Hague District Court and Court of Appeal have specialised IP divisions with exclusive jurisdiction over amongst others Community trademarks and Community designs, patents and Community and national plant breeders’ rights patents. These specialised IP divisions have been in existence for many years. As is generally known, the Dutch courts have a progressive attitude in granting EU-wide injunctions against foreign companies, also in trademark cases. The Dutch courts can thus be an excellent forum for European-wide cross-border measures in trademark and other IP cases. Our somewhat looser approach to urgency can also help with clients seeking interlocutory relief.
Sheana Wheeldon: In New Zealand there is no specialist IP court and no proposal to open one. Currently the judges on our High Court bench do not even specialise, so it is common for the lawyers arguing a case to have to educate the judge in the relevant IP law. Most New Zealand IP specialists support the concept of specialist IP judges, but in such a relatively small jurisdiction we can only dream of a dedicated specialist IP court.
Lawrence Apolzon: The US does not currently have a specialist court for handling trademark disputes outside of the Trademark Trial and Appeal Board (TTAB) in the USPTO where registration issues are litigated. TTAB decisions in inter partes proceedings can either be appealed to the Court of Appeals for the Federal Circuit (CAFC) or reviewed through a new civil action initiated in an appropriate District Court (depending on where the parties are based). The recent Supreme Court decision in B&B Hardware, Inc v Hargis Industries, Inc, 135 S. Ct. 1293 (2015), finding that a decision on the issue of likelihood of confusion in the TTAB “may” preclude a federal court from reaching a contrary conclusion on the issue in a subsequent infringement action, has prompted speculation that there will be increased post-TTAB activity in the CAFC or district courts. While many think this is all much ado about nothing, any increase will likely be in the district courts where parties can develop a more robust factual record.
Julia Holden: IP specialist courts have always been welcomed by practitioners as they are able to offer higher-quality decisions in a shorter time, as the judges in these courts acquire specialist knowledge in the field. The more jurisdictions capable of creating IP specialist courts the better, as many IP litigation matters have multinational aspects so it is important to see quality decisions in neighbouring jurisdictions which may influence the other IP courts deciding on the same or highly similar issues.
Hidde Koenraad: As from 2015, judgments from one EU member state will be automatically recognised in any other EU member state, due to the recent amendments to Council Regulation (EC) No. 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments. After obtaining a cross-border injunction, rightholders should thus be able to enforce their IP rights in a more time- and cost-effective manner.
Furthermore, everybody is of course keeping close track of the various proposed legislative changes to the Community Trade Mark Regulation 207/2009 (CTMR) and the European Trade Mark Directive 2008/95/EC, resulting from the overall examination of the EU trademark system. Depending on the outcome, some changes may deeply impact the legal practice, including for example the proposed legislation that may offer more effective trademark protection against counterfeit goods in transit at the borders of the EU – a big deal in the Netherlands because of our busy ports.
Sheana Wheeldon: There have been no recent regulatory or legislative changes in New Zealand in the trademark area that would impact on the market or legal practice.
Lawrence Apolzon: The USPTO recently concluded a post-registration proof-of-use pilot study which randomly required registrants to submit more than one specimen per class in support of declarations of use. This showed that half the registrants failed to verify previously claimed use. Unlike many other jurisdictions, the United States trademark system requires use to maintain registrations. This use requirement is either routinely overlooked or grotesquely misunderstood by many trademark owners. This results in a federal register that does not accurately reflect commercial realities. Trademark practitioners should regularly remind their clients of the use requirements to ensure that only accurate filings are made.
In connection with the closely related area of design patents, as of 13 May 2015, owners of novel and non-obvious ornamental designs for articles of manufacture can benefit from The Hague Agreement Concerning the International Registration of Industrial Designs. Because of the extraordinarily picky drawing requirements of the USPTO, foreign filers should seriously consider vetting their drawings with US practitioners before initiating the process.
Julia Holden: One of the key legislative amendments to the Italian IP Code relates to the payment of damages. The amount of damages a company could be ordered to pay has increased since courts can order damages based on the profits earned by the infringer as a consequence of the infringement.
Another key legislative amendment to the Italian IP Code relates to urgent preliminary proceedings. These are often carried out with more in-depth analysis than in the past, with the result that the preliminary decisions are more thorough and well grounded.
Hidde Koenraad: A lot of activity is still to be expected in trademark issues involving the internet, social media and new technologies, such as 3D printing. Clearly, the expansion of the internet has also led to an expansion in trademark infringement claims and lawsuits involving the internet, including related trademark law issues such as unauthorised use of trademarks as keywords or within listings for non-genuine goods on auction sites, or the use of trademarks on virtual objects that are traded in virtual worlds. These and other fast-changing technological developments constitute clear challenges to the traditional application of trademark law.
Sheana Wheeldon: One continuing trend here is for trademark disputes at IPONZ level, such as oppositions and revocations, to be very hard fought and then often appealed – sometimes through more than one level of the courts. These disputes are often between owners of similar competing brands and are sometimes part of global disputes.
I see this trend continuing as IPONZ proceedings, especially if then appealed to the courts, can be a relatively cost-effective way of getting judicial guidance on whether marks are too close. If the final decision comes from the High Court or even the Court of Appeal, this carries considerable weight and at a cost much lower than that of infringement proceedings. (Under New Zealand law, in appeals from IPONZ proceedings the parties must still rely on the original evidence filed at IPONZ. This effectively limits the cost of appealing.)
Lawrence Apolzon: On the prosecution front, there is a substantial amount of interest in non-traditional trademarks. The formal registration of trade dress as well as product design, the latter of which always requires proof of acquired distinctiveness, gives IP owners the opportunity to protect their most important designs. Certainly, only a relatively small number of product and package designs are truly source indicating. But registering them forces the IP owner to focus on and specifically identify the truly distinctive elements of its designs. This makes the owner much better equipped to enforce their designs against third parties. Likewise, third parties can better understand what designs they should stay away from, courts can be more confident about the specific IP that is being evaluated as to likelihood of confusion, and US Customs can block imports of rip-offs. Parallel to this is a renewed interest in seeking design patent protection, when budgets and timing permit.
Hidde Koenraad: We find that alternative fee arrangements that suit the client’s business needs are in many cases a good way to alleviate cost concerns. Some companies dislike the billable hour because of the uncertainty such a fee arrangement creates, instead favouring fixed fees or capped fee arrangements. Similarly, various clients prefer alternative fee structures because they provide predictable expenses and facilitate budgeting.
I do not expect major changes in terms of the balance of work between boutiques and larger full-service firms in the Netherlands for the upcoming years. Up until 15 years ago IP used to be a specialist area practised by only a few departments of the largest firms. Nowadays, besides IP departments of larger full-service firms, you see various true specialist IP niche firms, but also medium-sized firms offering IP services. However, not all of these medium-sized firms have genuine IP specialists on board. With the goal to separate the true specialists from the cowboys, in the Netherlands various IP litigators are currently busy forming an IP litigators association, called VIEPA.
Sheana Wheeldon: The legal market has been adapting for some years to clients’ cost constraints. In a nutshell, legal providers cannot rely on bulk fees for basic filing work that requires little skill, but clients need to be able to identify when they need the specialised input of external providers – which can be more often than they think.
The challenge for providers is to demonstrate that they are adding real value, and to achieve the client’s trust, allowing the client to seek out that added value at an early stage in any situation. Legal providers need to find more creative ways of measuring value than strict hourly rate billing, and many are doing so.
In-house lawyers have been growing in numbers and sophistication for many years now. They are increasingly dictating their terms to external providers, and these terms might include refusing to pay for junior lawyers’ time, having more than one provider competing for jobs, and cherry-picking for the right senior specialist to advise in a given case.
Some aspects of the large full-service firm model probably need to be reviewed. There will always be a place for large full-service firms, especially in relation to big deals and big litigation, but I believe the boutiques offer some important advantages in today’s market. In this changing world, a large back office may not be relevant and adds significantly to the cost base (and of course is perceived as such by clients!).
In New Zealand there are numerous new small boutique IP firms which all seem to be doing well. This suggests that a more flexible, low overheads model is working for their clients.
Lawrence Apolzon: Technology has streamlined many legal tasks and facilitated innovative billing arrangements. Further, many corporate clients have been receptive to a reallocation of tasks and other systematizing measures. This has helped control costs to the delight of most clients. But some become preoccupied with this topic.
Full-service firms sometimes respond by offering deep discounts to handle such clients’ trademark and copyright portfolios in an effort to gain more lucrative work in other areas. The global firms have a one-stop shopping option that can seem appealing. However, unlike the global firms, IP firms have the freedom to work with the best firms in each jurisdiction worldwide and due to their size, focus and broad client base, IP firms are able to tailor services to their clients’ specific needs and goals within their budgets. Fortunately, we live in a very creative era, and trademark, copyright, and design work abounds, regardless of the size of the firm handling the work.
Julia Holden: Choosing a law firm means establishing a relationship of trust; the lawyer chosen by the client has to live up to expectations. Whatever the goals and size of the client it is necessary to be cost effective while delivering the highest-quality legal service. It is vital for the practitioners of the legal market to provide accurate estimates of the expected costs and a fair indication of the basic timeline for completion of specific stages of an operation.
Boutiques are often preferable to multi-practice law firms, since they are able to offer more flexibility and still attract top independent professionals who wish to escape the rigidity of multinational cumbersome and often bureaucratic large scale law practices. Boutique specialist practices are more suited to the specialised needs of clients and can more easily adapt to the new challenges of the marketplace.