How should enterprises manage trademarks?

By Frank Liu and Shan Lin, Tiantai Law Firm
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More enterprises have put such intellectual property rights in a core strategic position in the context of strengthening efforts for protection of these rights. The importance of trademarks as part of intellectual property rights to enterprises goes without saying. A well-known trademark can definitely bring a higher profit to an enterprise.

However, many enterprises lack a complete trademark strategy and management system. An enterprise should pay attention to the following aspects in performing internal trademark management to make trademarks better serve it.

Establishment and implementation of trademark strategy

trademarks
Frank Liu
Partner
Tiantai Law Firm

As a tailor-made framework and blueprint for trademark protection, the trademark strategy can provide a global vision for trademark protection, and outweighs any separate action plan in terms of importance based on our practical experience. When developing an overall trademark strategy, the enterprise and the external lawyer must fuse respective advantages and collaborate to assure the strategy is complete and feasible.

First of all, they must identify the position and business direction of the enterprise to devise a high-feasibility strategy. However, the strategy should also be adjusted with the situation to avoid copying the inherent pattern without change after implementation and conflicting with the enterprises’ development and business adjustment.

Significance of trademark registration strategy

trademarks
Shan Lin
Paralegal
Tiantai Law Firm

As domestic trademark registration is entering a low-cost competition market, many enterprises pay more attention to the registration cost while neglecting the significance of the trademark registration strategy. In fact, trademark registration plays an important role in the overall trademark strategy, and only after establishing a solid trademark foundation, can the enterprise obtain effective legal protection more easily.

In practice, many foreign-funded enterprises make decisions for the trademark registration in various countries and regions through their headquarters. Yet, many foreign decision makers are not familiar with judicial practices in China. Therefore, it is possible to cause irreparable mistakes in trademark registration without professional advice from experienced local agencies as a result of objective differences in the trademark examination practice among various countries and regions.

Daily use and management of trademarks

Enterprises are also prone to neglect daily use and management of trademarks. In daily business operations, an enterprise should strengthen the management and conservation with respect to specifications of trademark use, validity maintenance of trademarks, provision and acceptance of trademark licensing, evidence of trademark usage and trademark awareness, thereby gradually establishing a complete internal trademark management system.

In practice, many enterprises authorize their subsidiaries/affiliated companies to perform trademark registration and maintenance, which will to some extent prevent the enterprise’s management team from tracking the overall status of trademarks, managing the trademark registration strategy, and assessing and controlling the infringement risks. The authors have encountered several cases where prior trademark registration of parent companies has impeded that of their subsidiaries.

An enterprise should also attach importance to trademark validity maintenance and evidence conservation of trademark usage. When maintaining trademarks, the enterprise should first distinguish them in terms of importance, and then manage and maintain the trademarks according to the “80-20 rule”.

In addition, the enterprise should also pay attention to conserving evidence pertaining to trademark usage (such as pamphlets, advertisement placement, contracts and sales data) and awareness (such as certificates of honour, media coverage and industry ranking) in order to provide evidence of awareness when necessary. The internal legal affairs department and the marketing department of the enterprise should co-ordinate with each other, or it will be hard to realize timely conservation and effective screening of evidence regarding trademark usage.

Take right protection actions as per trademark strategy

Last but not least, trademark protection is also the biggest concern of enterprises. Infringement will not only deliver a severe impact on normal sales and market share of the enterprise’s products, but also damage the good reputation that enterprises have laboriously accumulated. Trademark squatting in China has triggered a growing number of intellectual property disputes. Many enterprises have still made no progress even after having taken the right protection actions for years, due to the lack of a comprehensive strategy. In fact, it is difficult to deal with changeable infringement modes and complex infringements by a single means of anti-counterfeiting or a legal action.

By taking trademark right protection actions, the enterprise will not only maintain trademark rights, but also maintain and increase market share, as well as brand awareness. Even in the cases of trademark prosecution, the trademark actions of the enterprise including quantity, frequency, region, success rate and other elements will also be of great importance to prove its trademark and influence in the market, and it will also influence the amount of the compensation in civil infringement litigation cases.

Therefore, in order to increase the brand reputation, market share and brand popularity, enterprises should also attach importance to the trademark right protection and improve the success rate of trademark right protection through establishing the targeted strategies.

In conclusion, it is not an easy job for an enterprise to carry out systematic and overall trademark management. While advised by professional consultants, an enterprise should develop a trademark management system commensurate with itself after fully identifying its product/service features and future direction, and only a system so built can meet the needs of market competition and continuously improve its market share and brand awareness.

Frank Liu is a partner and Shan Lin is a paralegal at Tiantai Law Firm

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Tiantai Law Firm
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No.1133 Changning Road, Changning District
Shanghai 200051, China
Tel: +86 21 5237 7006
Fax: +86 21 5237 7009
E-mail:
frankliu@tiantailaw.com
sandyshan@tiantailaw.com
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