Dave Green – Geograph.org.uk

Trade mark erosion:Dangers, pitfalls and adaptation

Brett Lewis | Partner

Davies Collison Cave

It’s not easy raisinga trade mark

Dave Green – Geograph.org.uk

It’s not easy raising a trade mark

• Step 1: Creation and Registration

Getting to plant the seeds can be difficult and costly

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It’s not easy raising a trade mark

• Step 2: Trade Mark Promotion

Nurturing it requires skill, attention and money. Lots of it.

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It’s not easy raising a trade mark

• Step 3: Use it, or lose it

Without constant care and use, the TM withers

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It’s not easy raising a trade mark

• Step 4: Hope that others don’t use it too much!

It’s not easy raising a trade mark

• Step 4: Hope that others don’t use it too much!

It’s not easy raising a trade mark

• Step 5: Defend yourself against hijackers

• So – it’s NOT just about doing the ground work and sitting back and enjoying the fruits of your labour

• Other factors beyond your control:

Regulatory decisions Regulatory changes

• For multinational trade marks, an issue in one jurisdiction can have global consequences.

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The fruits of your labour?

The “erosion” of trade marks

• Regulatory changes may drastically affect your mark

Regulations may not specifically refer to trade marks (e.g. labelling laws)

May limit the manner of exploitation, or increase the cost of maintaining and exercising trade mark rights.

• Potential to devalue.

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Some recent examples

• Plain packaging of tobacco products

• Health warnings on alcohol and soft drinks

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Plain packaging of tobacco products

• Reduces the brand to a name

All forms of branding – trade marks, logos, colours, embossing and graphics – are removed from the packaging of tobacco products

Just the brand name is left, in the same typeface for all other brands

In many jurisdictions where tobacco advertising is otherwise restricted, packaging is one of the few remaining outlets for brand differentiation

Plain-packaging, in effect, reduces tobacco trade marks and brands to their name

Photo: plain-packaging.com

Plain packaging of tobacco products

• The aim To make health warnings more

prominent, and reduce the ability of a cigarette packet to promote tobacco use.

• Where it has been considered

United Kingdom and Canada: considered in the 1990s, but eventually abandoned

Australia: Recently re-elected government has suggested that it will push ahead with its planned reforms.

Photo: cigarettesflavours.com

Plain packaging of tobacco products

• Industry response Not unexpectedly, vocal

Arguments have revolved around:

- Trade issues (WTO and WIPO)

- Potential TRIPS and Paris Convention breaches

- Lack of evidence to suggest it will work

- Constitutional arguments (in Australia): is it acquisition of property? Will it need to be compensated on “just terms”?

Photo: Association of Australian Retailers

Collateral damage to tobacco mark regulation: fragrances?

• In 2004 Lithuania’s State Tobacco Authority banned the sale of any product featuring brands that were similar to tobacco trade marks or brands in an attempt to stop brand extension.(See: Vilija Vesunaite and Aurelija Rukaskaite, ‘Cigarettes, Clothes and Tobacco’, Trademark World, March 2009, p 19)

• Overnight Cool Water aftershave became contraband.

Erosion of alcohol trade marks

• Any impact on the context in which a trade mark can be used can decrease its value

• Example: health warnings on alcohol products:

Other food warnings

• John Hopkins study: some energy drinks have

up to 14 times the caffeine content of a can of Coca Cola

should “carry health warnings”

• In the UK

Food Standards Agency

colour-coded warnings

battlePhoto: Keacher.com

The implications of these examples

• The value of a trade mark can change rapidly if the regulatory landscape alters

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• Which means your beautifully tended tree may end up as a bonsai.

TM erosion in thepharmaceutical sector

Dave Green – Geograph.org.uk

But what about the pharmaceutical sector?

1. Tension between the US FDA and USPTO

2. EU repackaging of parallel imports

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TM erosion in context

Challenges facing the

pharmaceutical industry

• declining R&D output • conservative government

spending on pharmaceuticals in the wake of the GFC

• fewer blockbuster drugs in the pipeline

• cuts in R&D, marketing and IP budgets

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Caught between two masters: FDA and USPTO

• TM approval for registration can be hard, but approval for use can be even harder

• US Food and Drug Administration asserts increasing authority to refuse “misbranded” names, i.e. those that: incorrectly imply product benefits misrepresent drug characteristics have the potential for confusion with other

pharma product names and therefore contribute to medication error

• Goal: public safety, not brand protection

vs

Caught between two masters: FDA and USPTO

• FDA name approval process: expert panel examines existing names to find

possible sources of confusion compare handwriting samples and

examination for sound alike words look at other facts, such as whether the drugs

are taken for different diseases, and whether a dosage mix up may have negative consequences for the patient

• Problems: Lack of transparency: FDA guidelines used to

make determinations are not public Subjective measures based on opinion Unpredictable outcomes Name review is last step of approval process

vs

Impact on mark value

• FDA may reject a registered pharma trade mark just before marketing launch phase

If world-wide marketing campaign is scheduled, time constraints mean little time for appeal

Pre-launch investment in mark lost

Mark loses potential to be global

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Repackaging of parallel imports

Context:

• Prices of pharma products determined by each EU member state

• Price differences = business opportunities via parallel importers

• Packaging and labelling highly regulated

• Repackaging > tension with trade mark rights

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Repackaging of parallel imports

What’s the problem?

• Trade mark owners face increasing uncertainty: re-boxing under a generic name (“de-branding”) re-boxing under manufacturer’s and importer’s brand (“co-

branding”) sticker on original box to identify the parallel importer of the

product (“overstickering”)

• Clear detrimental effect on value of the original brand and trade mark. TM owners lose control of:

branding and packaging of final product ability to set prices brand unity for the product.

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EU legislative and judicial stance

• Bristol-Myers Squibb v Paranova; Boehringer and Others v Swingward Ltd; Communication 839 of 2003:

Trade mark owners may not oppose sale of repackaged goods if:• the repackaging is ‘necessary’ to permit importation • the repackaging does not adversely affect the original

condition of the product;• the presentation of the repackaged product is not likely to

damage the reputation of the trade mark or its owner;• the new packaging identifies the manufacturer and the

repackager• the trade mark owner receives prior notice and a specimen of

the repackaged product before it is put on sale.

Strategies and defences

Dave Green – Geograph.org.uk

But now for the good news

• Brand owners and therefore in-house TM lawyers face ongoing challenges arising from external change.

• But there is hope: industry has huge potential to inform any debate and influence outcomes

Attempts to introduce plain packaging legislation for tobacco products in Canada and the UK were thwarted largely because of the efforts of tobacco companies.

Potentially fatal blow to the value of trade marks was averted through coordinated campaigning.

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Preparing for, and adapting to, erosion

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1. Recognise that the regulatory shifts can erode the value of your trade marks and respond accordingly: by proactively allocating resources. This doesn’t mean only budget, but time and focus as well.

2. You can’t adapt to or change what you don’t know about, so:• Make sure you’re aware of any proposed regulatory changes

at an early stage• Subscribe to relevant trade law journals and alert services• Allocate time each week to review these and flag any

potential issues• The sooner proposed regulations can be identified, the earlier

the work can begin on informing the debate and ensuring your voice is heard.

Preparing for, and adapting to, erosion

3. Make friends and influence people

Form networks with colleagues and competitors to fight for common causes

Become involved in professional associations and their policy committees

Be loud! Make sure your voice is heard by active participation in the media, engagement of PR firms and use of lobby groups

Dave Green – Geograph.org.uk

But most of all … enjoy the journey