Trademarks 2018: Roundtable

What have been the key developments shaping trademark law in your jurisdiction over the past 12-18 months?

Allan Poulter: Without doubt, the most important development that will shape trademark law in the UK was the decision to leave the European Union. For brand owners this has led to the need to reassess their current protection and make decisions as to whether to file new UK applications or to rely upon a process being implemented that will allow them to secure UK protection based upon existing EU registrations. It has also become necessary to review existing licensing and coexistence agreements to identify any potential jurisdictional issues and to re-evaluate enforcement strategies. For attorneys in private practice, we are faced with the prospect of over 1 million new UK registrations appearing on the UK register and a significant increase in the number of new UK applications being filed and resulting oppositions. There will be more hearings which will take many of us back to pre-EUTM days!

Elliot Papageorgiou: The past 12-18 months have seen unprecedented changes shaping China’s trademark law and practice.

First, the trademark prosecution process continues to accelerate. Not only did 2017 see a record 5.75 million trademark applications filed, but China’s Trade Mark Office (CTMO) has reduced the period from filing to examination, from the nine months envisaged under the Law to eight months. It is anticipated that this period will further be reduced to six months by the end of 2018, and a mere four months by 2020.

Second, Regional Trademark Examination Cooperation Centres have been established in the cities of Guangzhou, Shanghai, Chongqing and Zhengzhou, to handle and accelerate the greater volumes of trademark prosecutions.

Third, the CTMO is well on the way to applying technologies such as artificial intelligence (AI) to facilitate prosecution of the volumes of trademark applications. For instance, the somewhat awkwardly titled “Graphical Intelligent Search System for Trademark Registration Review” comprises a project in joint development between the Chongqing Trademark Examination Cooperation Centre and the CTMO, which seeks to take advantage of AI to analyse and compare device marks more quickly – China being a jurisdiction where the CTMO rejects applications on the basis of not just absolute grounds, but also relative grounds. This system is expected to go live in September 2018.

Finally, on 13 March 2018, China announced its plan to merge the CTMO, the Patent Office and parts of the Administration for Quality Supervision, Inspection and Quarantine into the State Market Supervision and Administration Bureau – thereby merging the various functions of those offices under one roof.

Geert Glas: As trademark practitioners know, Belgium, the Netherlands and Luxembourg form a single “Benelux” territory when it comes to trademarks (and designs). Such Benelux trademarks are granted by the Benelux Organisation for Intellectual Property (BOIP).

From 1 June 2018 onwards, the Benelux territory has become even more unified: all appeals against decisions by the BOIP (eg, a refusal to grant a Benelux trademark or a decision in opposition proceedings before the BOIP) now need to be brought before the Benelux Court of Justice.

Before this, the courts of appeal of Brussels, The Hague and Luxembourg all had jurisdiction to hear such appeals against BOIP decisions. This split competence sometimes lead to diverging jurisprudence, which should be a thing of the past with the Benelux Court of Justice as the new sole appeal instance.

Janice Bereskin: The past 12-18 months have seen many key developments.

The Supreme Court of Canada enjoined “global” activity, recognising the borderless implications of online activity. In a case involving a website, Google v Equustek Solutions, raising claims of misappropriation of confidential information and passing off between Equustek and another party, Google had originally agreed to delist the offending websites in Canada, but resisted the order to apply it worldwide. The Supreme Court held that:

The Internet has no borders – its natural habitat is global. The only way to ensure that the interlocutory injunction attained has its objective was to have it apply where Google operates – globally.

In another development, the Supreme Court of Canada refused a request for leave to appeal a decision enjoining the use of a registered trademark in keyword advertising. In the appeal decision, Vancouver Community College v Vancouver Career College (Burnaby), only one of many decisions involving these parties, the Court held that confusion should be assessed “as a matter of first impression”, when the search results, based on the plaintiff’s marks, first appeared. Both parties’ ads appeared on the same page, despite the fact that any confusion would be dispelled if the user clicked through the search results. The courts did not specifically consider if this was “use” – a factor that has deterred success in most other keyword cases.

We also saw a rare interlocutory injunction granted. Traditionally, interlocutory injunctions before trial in trademark cases have been very difficult to obtain. Brand owners generally fail to meet one of the necessary requirements: proof of irreparable harm. Gathering quantifiable evidence of irreparable harm is incredibly difficult, particularly given the necessity for speedy action by a plaintiff, often before significant evidence of “damage” can be collected. In Sleep Country Canada v Sears Canada, a case involving a well-known jingle used to promote mattress sales, the Federal Court granted an injunction against a competitor using a close version of the famous jingle, dismissing the need for “expert” evidence and noting that damages in many cases would be “impossible” to quantify. It remains to be seen if this will open the door to more interlocutory relief, or whether the nature of the mark, a slogan/jingle, impacts the analysis, but along with a couple of earlier cases, there does seem to be a change providing more options to brand owners facing serious infringement.

Another significant matter this year saw the court recognise trade dress infringement. The Federal Court issued a rare decision in Diageo Canada v Heaven Hill, a trade dress case involving the famous “Captain Morgan” label, which it found to have been copied by Heaven Hill’s “Admiral Nelson” rum, which displayed the famous British naval hero. Despite coexistence in the United States for decades, and some Canadian coexistence, the Court, relying upon survey evidence showing 23 per cent confusion, found trademark infringement with Diageo’s label trademarks, passing off and depreciation of goodwill – noting the direct competition.

In a decision now being appealed, United Airlines v Cooperstock, a passenger-right’s advocate was successfully sued for trademark and copyright infringement, passing off and depreciation of goodwill relating to “untied.com”, a complaint site also displaying marks found to infringe United Airlines marks (United Airlines v Cooperstock). Despite a notice saying “this is not the website of United Airlines”, and the absence of any commercial activity on the website, the court, who noted evidence of actual confusion, enjoined the use.

Major amendments to Canada’s Trademark Act, passed in 2014, but not yet implemented, are now planned for spring of 2019. These will result in changes to filing procedures and new examination criteria; implement mandatory Nice classification and related fees-per-class; and introduce Madrid Protocol filings. Final steps are under way to complete many new practice notices, including the introduction of a “letter of protest” procedure. Stay tuned.

We must also note the arrival of the trolls. As anticipated by leading trademark professionals, a combination of the current law in Canada, with a single filing fee regardless of the number of goods/services, and the upcoming amendments that will permit registration without use has created a perfect environment for “trademark trolls” to flood the Canadian Register with hundreds of applications for marks covering all 45 classes of goods and services. This has been a significant negative development impacting clearance, prosecution and Trademarks Office resources. The ongoing delay in implementing the amendments, which will last for many months, continues to plays into the hands of trolls, and will have long-lasting implications for instability of the Register.

What are the main challenges posed by the rise of the internet and social media for brand owners?

Allan Poulter: Brand owners, for several years, have had to deal with the challenges posed by the rise of the internet and social media. The internet has no respect for national boundaries and has opened up access to many new markets, for both legitimate brand owners and infringers alike. The challenge has now become: how to get the balance right when making the decision of whether to take action or not. On the plus side, it has become easier to detect infringing activity and monitoring tools are becoming more sophisticated, allowing better-targeted enforcement strategies. This can help to ensure that limited funds are allocated more effectively. It has also become far easier to gather evidence of infringements and to monitor trademark usage.

Elliot Papageorgiou: In China, as in many other jurisdictions, the growth of online sales has (in percentage terms) greatly outpaced the growth of offline sales. As a result the problem of online infringement has grown exponentially. This growth, along with the proliferation of major online B2C portals and social media forums (such as WeChat) has resulted in unprecedented levels of online infringement of brands and the online sale of counterfeits. As far as cross-border trade is concerned, as a result of moving online, infringement shipments have moved from large-volume cargo shipments to vast numbers of small-parcel deliveries. This has made implementing effective border controls much more challenging for brand owners.

Geert Glas: The speed with which information is put on the internet and shared through social media means that brand owners can be confronted overnight with events that can seriously impact the goodwill built up in a brand.

A recall action, an accusation linked to the manufacture of your products in lower-cost countries, or a famous “face” for your brand who experiences painful details about his or her personal life being exposed: these sudden events can all create instant havoc for your brand.

Brand owners need to learn to communicate fast when hit by “breaking news”, and to be seen as openly addressing such issues.

Janice Bereskin: As noted above, the Canadian courts have recognised the global impacts of internet activity, and raised the potential of trademark infringement even for “hidden” marks such as keywords used in advertising. In addition, there are now several decisions suggesting that trademark “use” in Canada for services – such as restaurants, hotels and car rental services – continues to require a brick-and-mortar presence; mere advertising is not enough. For brand owners, this means that if local rights are impacted there can be global consequences, and that strategies need to be developed to maintain rights where there is no physical presence in Canada. Online sales continue to pose issues of both infringement and counterfeit, and even Canada’s new customs “request for assistance” has had little impact on stopping counterfeit imports. Brand owners need to appreciate that the immediacy of internet activity and social media requires a clear brand protection strategy to avoid poaching of both trademark rights at home and abroad, and domain names and social media handles.

In your view, what are the most significant challenges facing brand owners looking to enforce global trademark portfolios at the moment?

Allan Poulter: The perennial problem of managing budgets and maintaining appropriate protection for a brand continues to pose a significant challenge! With easier access to new markets and increased infringement activity, budgets necessarily are put under significant pressure and scrutiny. As far as protection is concerned, compromises usually have to be made as a “belt and braces” approach is very rarely an option. On the enforcement side, many potential disputes now involve multi-jurisdictional factors and forum-shopping strategies are becoming increasingly more important. Choosing your battles and where to fight them has become a key decision in many potential trademark disputes.

Elliot Papageorgiou: Apart from the already mentioned online to offline infringement dynamic, which itself brings challenges for enforcing global trademark portfolios, the One Belt One Road (OBOR) strategy (or Belt Road Initiative) is expected to result in even greater trade connectivity between China and the 65 countries covered by the OBOR, and therefore greater challenges to brand owners. International trade between China and the various OBOR countries will be “supercharged” over the next few decades, meaning that brand owners will have to rethink how they structure their international trademark portfolios – thus re-enforcing both their China portfolios as well as those along the OBOR.

Geert Glas: Nowadays it sometimes only takes months before a newly launched brand becomes a household name in tens of jurisdictions.

This speed with which some brands are rolled out globally, however, makes them more vulnerable to conflicts with prior local trademarks.

Indeed, the name of the brand has often not been cleared outside its home jurisdiction, and by the time the conflict in a different jurisdiction arises, changing the brand is already no longer an option, nor is bypassing that particular jurisdiction.

Janice Bereskin: Cost and complexity of global enforcement. Rationalising local law requirements for registration; absence of common law rights; and differing approaches to rights in non-traditional marks, combined with differing business practices and ongoing issues of counterfeits, adds costs, uncertainty and the potential for loss of rights. Finding counsel who can offer practical advice and creative approaches in a timely and cost-effective way has become of primary importance.

Sources have noted that in-house counsel are taking greater responsibility for their company’s brand protection. How is this affecting the way that external counsel are instructed?

Allan Poulter: In the last couple of years, we have seen many more companies take the management of their trademark portfolios in-house. This tends to lead to a reduction in basic filing instructions but will often result in a more collaborative approach to brand protection. Clearly, having a trademark expert within the client’s legal team can lead to a greater understanding of trademark issues by the business and facilitate a useful dialogue with external counsel on more complex issues.

Elliot Papageorgiou: Given that the levels of brand infringements and counterfeiting have been at material levels in China for some period of time, it has long been a cost-effective strategy for brands to maintain, develop, and grow in-house brand protection capabilities in China. Greater in-house responsibility for brand protection is thus not a new phenomenon in China. Having said that, as the Chinese IP environment continues to become more developed, expect to see a greater overlap between the types of cases that in-house departments handle themselves and those that are instructed to outside counsel. As is the case in developed jurisdictions, in-house counsel in China will increasingly instruct out cases, because either the cases are too complex/involved/require expertise and resources that the in-house departments do not have, or they are not sufficiently rewarding or interesting for in-house departments to want to handle them. This will require external counsel in China to increase both their expertise and competence (in the case of difficult cases), as well as their efficiency (for more volume-based/commoditised services).

Janice Bereskin: External counsel work increasingly focuses on tough problems that require experience and creative solutions, since more in-house counsel and their teams are able to deal with routine trademark clearance and prosecution. This results in more interesting and challenging work for external counsel, but it is usually combined with strict budgets and tight timelines, needing care and attention to provide work that does not compromising quality.

How do you see the field of trademark law developing over the next five years?

Allan Poulter: The trend towards harmonisation in trademark law seems set to continue. The challenge lies in harmonising trademark practice which will require even greater cooperation and discussion between national and supra-national intellectual property offices. We are already seeing signs of such cooperation in areas such as classification terminology which is welcome, but there is still significant divergence in substantive areas such as whether an application is based on use, an intention to use or can be filed without restriction. Although the ability to secure registrations with a very broad specification may appear to be of value to a brand owner it also means that it is becoming increasingly difficult to clear a new brand on an international scale. The existence of registrations with very broad specifications has also given rise to numerous trademark oppositions even where, in fact, there is no commercial overlap or conflict between the respective businesses. Therefore, counter-intuitively, it may be in the brand owners’ interest if a more restrictive approach to acceptable specifications is adopted internationally.

Elliot Papageorgiou: Volumes of filings in China have exploded over the last few years, alone 2017 saw 5.75 million trademark applications. We expect these numbers to continue to increase as China increasingly looks “outwards” and the government continues to encourage international growth of Chinese brands (one of the nine strategic tasks set out in the “Made in China 2025” plan). Given this vast volume of filing and the increasing number of “bad faith” applications, we would also expect the Chinese trademark authorities to develop a more robust system for dealing with bad faith applications.

Geert Glas: I hope that we will start seeing the trademark offices and courts (including the Court of Justice of the European Union) to adopt a more liberal approach when it comes to colours and shapes.

There seems to be a divide between marketing professionals, for whom it is obvious that colours and shapes often do perform a trademark function, and lawyers, who seem reluctant to grant trademark protection to those same colours and shapes.

This reluctance is often based on a genuine concern that such trademark rights may obstruct competition by giving the trademark owner an unfair advantage over its competitors.

This concern is of course valid, but I’m of the opinion that trademark law as it has evolved contains sufficient and sophisticated checks and balances to guarantee that competitors should not be hindered in their freedom to compete.

Janice Bereskin: In Canada, we anticipate an increase in opposition proceedings, non-use cancellation proceedings and trademark litigation as a direct response to Canada’s new trademark law, which when implemented will eliminate use requirements, but at the same time does not address either the impact of enforcement of a registered mark that has never been used, or the risk of overcrowding of the Register with marks that are not in use anywhere. It is not certain how the courts will respond to infringement claims based on unused marks – so there will be some uncertainty until judicial precedents are created. Brand owners will need to invest more time and effort in risk analysis in an environment where registration rights do not reflect use, and more “watch” services should be considered to avoid encroachment. Accession to the Madrid Protocol should help encourage Canadian brand owners to acquire more global rights, while at the same time, offering the option of Canadian trademark protection to more international companies.