IP Considerations for New Businesses and Start Ups

IP Considerations for New Businesses/Start Ups
Harriet Seymour, Partner
12 August 2014

Overview
1) The value of IP and why you should protect
www.fieldfisher.com 2
your brand.
2) What can you protect?
3) Choosing a trading/product name
4) Developing and extending your protection.
5) Enforcing your rights (and steering clear of
trouble).

1) The value of IP and why you should protect your brand
• Customers will pay a substantial price premium for a
brand and remain loyal to that brand.
• For example, in the pharmaceutical field, brands often
survive generic competition post patent expiry and
can maintain a premium e.g Nurofen.
• Customers “trust” branded products and pay for that
reassurance.
• Price comparison of premium brands vs. “own brand”
supermarket products.
• Opportunities to profit from IP during ownership i.e
licensing opportunities and ultimately, the price on
sale.

The value of IP and why you should protect your brand
Value of top brands 2013 (Interbrand)
Rank (2012
ranking)
Brand 2013 Brand Value
($millions)
1 2 Apple 98,316
2 4 Google 93,291
3 1 Coca-Cola 79,213
4 3 IBM 78,808
5 5 Microsoft 59,546
6 6 GE 46,947
7 7 McDonald’s 41,992
8 9 Samsung 36,610
9 8 Intel 37,257
10 10 Toyota 35,346

What is a trade mark?
• Anything that is capable of distinguishing your
products or services from those of your
competitors:
“Any sign capable of being represented
graphically which is capable of distinguishing
goods or services of one undertaking from
those of other undertakings”.
2) What can you protect?

What can you protect?
Trade marks can be:

Functions of a trade mark
• Distinguish your goods / services: “badge of origin”
• Guarantee quality: “what the public wants is the
same again”
• Indicator of origin: “Who makes it? Where does it
come from?
• Business asset in itself if registered
• Symbol of goodwill whether registered or not
• Advertise / promote goods & services

For example…
CHRISTIAN
LOUBOUTIN

A sign may not be registered if an absolute ground for
refusal applies, namely if the sign:
• is devoid of any distinctive character
e.g. APPLE for apples – but ok for computer software
and hardware and music labels.
• Is descriptive including nature, quality, purpose and
geographical origin.
Needs to apply in respect of the goods and services which
is why JUICY is ok for clothes but not for apples.
There are also (less common) shape objections,
deceptiveness objections and public policy / morality
objections.

• has become customary in the current language or
in the bona fide and established practices of the
trade;
e.g. XEROX, you cannot “xerox” a document but
can copy it on a XEROX brand copier.
• Trade mark owners can lose their registrations
when challenged …

Examples of lost registered trade marks:
 Petrol
 Escalator
 Cellophane
 Touch-tone
 Dry Ice
 Videotape
 Heroin

Relative grounds for refusal
• Relative grounds means that the application is
examined in relation to earlier marks on the register
that are identical or similar with a likelihood of
confusion.
• UKIPO and OHIM do not examine on relative
grounds (although the UKIPO used to).
• Other countries still examine on relative grounds e.g.
USPTO, Chinese IPO, IP Australia, IPONZ and
many more.
• An earlier rights search can help establish risk of
conflicts (as well as infringement risks).

• Registering your trade mark gives you the exclusive
right to use your mark for the goods and/or services
that it covers.
• If you have a registered trade mark you can put the
® symbol next to it to warn others against using it.
However, using this symbol for a trade mark that is
not registered is an offence. In that case you would
use ™.
• A registered trade mark may put people off using
your trade mark without your permission.
• A registration allows you to take legal action
against anyone who uses your trade mark without
your permission.

• It will allow Trading Standards Officers or Police to bring criminal
charges against counterfeiters if they use your trade mark.
• Is your property, which means you can sell it, or let other people have a
licence that allows them to use it.
• If you don't register your trade mark, you may still be able to take action
if someone uses your mark without your permission, using the common
law action of passing off (BUT this can be much more difficult and
expensive to prove than infringement of a registered trade mark NB
“Holy trinity” – Goodwill, misrepresentation and damage).
BUT
⃰ A domain name/URL does not give you rights in the name.
⃰ A registered company name does not give you rights in the name.

How do you challenge other parties’ applications
and registrations?
• Notice of opposition – oppose an application during
the opposition period. A watching service is important
so that you are made aware of publication for
opposition purposes.
• Invalidate a registration – challenge basis of the
registration because of earlier rights or other grounds
but after it has been registered.

• Revocation action – challenge basis of the application
on the basis of non-use.
• “Use it or lose it” in the UK and EU there is a five year
grace period from registration date (not application
date) where you don’t need to use your mark and it is
not vulnerable to revocation on the basis of non-use.

Designs
• Laws vary greatly across the world.
• Separate systems exist in the EU and the UK.
• Design protection takes two forms:
Registered design protection gives stronger
protection and involves filing an application.
Unregistered design protection gives weaker
protection without the need to file an application.

In order for a design to be protected by:
Registered UK or Community design (both):
1. It must be new
2. It must have individual character.
UK Unregistered design:
1. Original
2. Must not be commonplace (anywhere in the
EU)

Copyright: what is it?
• Arises automatically: not registrable (in the UK)
• The right to stop copying/reproduction and other
certain things being done to your creative works
without your permission.
• Balance between creator/investor’s interests and
those of user achieved through limitations and
exceptions to copyright.
• NB: works do not become free to use because
someone else has put them on their website.
• Image libraries (e.g. Getty) copyright claims are big
business

What does copyright protect?
• Original “underlying” works:
• Artistic (incl. photographs and drawings)
• Musical
• Literary (incl. computer software and certain databases)
• Dramatic (dance/mime)
• Composite or “signal” works
• Sound recordings
• Films
• Broadcasts
• Typographical arrangements
• e.g. printed versions of literary, dramatic or musical works
(books, sheet music etc)

What does copyright protect?
• Requirements for Original Works:
• Original.
• Recorded in writing or otherwise.
• Created by “qualifying person”.
A “Qualifying Person” is:
• A British citizen;
• Domiciled or resident in the UK; or
• Resident of Berne Convention country – see
http://www.copyrightaid.co.uk/copyright_information/berne_convention_signatories

ip
Copyright ownership
• First ownership of copyright:
• Where works are created by employees in the course of
employment, the employer is the first owner.
• BUT where works are commissioned, the author remains
the first owner of copyright and an assignment is
necessary to vest ownership in the commissioner.
• Protection lasts for 70 years after death of
author (literary, dramatic, musical or artistic
works).

3) Choosing a trading/product name
Two main issues on selection:
1. Absolute grounds issues i.e. making sure it
qualifies as a trade mark and can be
registered; and
2. Earlier conflicting rights i.e. will your use
infringe someone else's existing rights?

Choosing a trading/product name
1. Avoid trademarks that may not be
accepted for registration.
As well as considering the availability of a mark
in terms of earlier conflicting rights (infringement
risks) also consider avoiding certain types of
marks which are inherently difficult to register.
This will include words and images.

a. Avoid purely descriptive words.
Words which describe a characteristic of the
goods or services sold under the mark will be
refused. It is a tough test: it is enough that the
mark "may serve" to designate characteristics of
the goods.
Examples: LITE, BLUE, CRUNCHY

b. Avoid non-distinctive /"generic" words.
Ideally you want a brand / mark which stands
out so avoid generic terms such as MINI,
PREMIUM, ULTRA, UNIVERSAL,
WONDERFUL (or accept that they add little from
an enforcement perspective).

2. Coin a new mark: invented words are the
best
Not easy, but ideal if you can come up with them
(or pay someone else to)!
Think like George Eastman (founder of Kodak
Eastman) …

George Eastman – a trade mark should
be:
– Short
– Vigorous
– Incapable of being misspelled to an
extent that will destroy its identity
– It must mean nothing

ARBITRARY OR
FANCIFUL
ALLUSIVE DESCRIPTIVE
GEOGRAPHIC
PERSONAL NAME
KODAK LINKEDIN COCA-COLA
GOOGLE CABLE & WIRELESS NOKIA
APPLE WALL STREET
JOURNAL
TOYOTA

3. Avoid other people's marks:
Clearance Searching
• When to search?
• Where to search?
• Why should I bother?
Infringement risks
Market knowledge
Citations risk (on application)

4) Developing and Extending your Trade Mark Protection
Trade mark registration – options
Within the European Union:
• Community Trade Mark (CTM) registration
• National registrations, country by country
Beyond the European Union:
• National (local) and International registrations (Madrid
System) – NB. Contracting parties
• Some multi-country options (eg NW Africa, OAPI)

Developing and Extending your Trade Mark Protection
Going International –review your trade mark portfolio
Check the territorial extent of trade mark protection -
• It is not always obvious e.g. A CTM covers 28 EU member
states, plus future accession countries so Switzerland,
Iceland and Norway are not covered.
• Check clearance issues - will I be sued if I start using the mark
in this country?
• Most countries have "a use it or lose it" rule with differing periods
for non-use. Check if there are any challenges to the use of the
trade mark.

Developing and Extending your Trade Mark Protection
Going International and keeping the protection useful
• Re-file new versions (NB. logos)
• Check the coverage of the goods and services.
• Be aware of (slow) prosecution time frames and build them into
your plans.
• Consider passing on costs e.g. trade mark costs can be built into
the fee that a franchisor might charge a franchisee in the
International Development Agreement.

5) Enforcing your rights (and steering clear of trouble)
Trade mark infringement
• A person infringes a registered trade mark if he uses in the
course of trade a sign which is:-
• identical to the trade mark for identical goods & services; or
• identical or similar to the trade mark for identical or similar goods &
services where there is a likelihood of confusion; or
• identical with or similar to a trade mark of repute where use of the
sign is without due cause and takes unfair advantage of, or is
detrimental to, the distinctive character or repute of the mark (s10
of the Trade Marks Act 1994 (“TMA”)).
• To infringe the use must also affect one of the functions of the
trade mark e.g. its ability to designate origin.

Enforcing your rights (and steering clear of trouble)
• “Use of sign” includes:-
• affixing it to goods or packaging;
• offering goods or services for sale, or supplying goods &
services under the sign;
• importing or exporting goods under the sign; and/or
• using the sign on business papers or in advertising.
• This is a non-exhaustive list.
• “Use” does not need to be in a graphic sense -
oral use is enough.

Defences
• In the UK, a registered trade mark is not infringed by:
• Use of another registered trade mark in relation to the goods and
services for which it is registered (s.11(1) TMA).
• Any of the following, provided the use is in accordance with honest
practices in industrial or commercial matters (s.11(2) TMA):
• “the use by a person of his own name and address”;
• “the use of indications concerning the kind, quality, quantity, intended
purpose, value, geographical origin, the time of production of goods or
rendering of services, or other characteristics of goods or services”;
• “…where [use] is necessary to indicate the intended purpose of a product
or service (in particular, as accessories or spare parts)”.
• Use of an “earlier right” in a particular locality.
• No knowledge requirement.

Some examples…

Passing off and unfair competition
• In the UK, passing off occurs where:
• Party A enjoys goodwill and reputation in a particular mark or
get-up;
• a misrepresentation is made by Party B in the course of trade
that is likely to cause consumers to believe that Party B’s
business is in some way connected to that of Party A; and
• such misrepresentation results in damage to Party A.
• Unregistered rights are more difficult and expensive to
enforce. It is virtually impossible to enforce rights in
unregistered marks in some countries. e.g. China
• Trade mark infringement and passing off are completely
separate actions.

Community design right infringement
Test:-
1. Identify overall impression of registered design
(what strikes the mind of the informed user when
the design is carefully viewed)
2. Identify overall impression of the allegedly
infringing design
3. If they do not differ, there is infringement.
For Unregistered Community Design Right, it is also
necessary to show that the contested use results from
copying the design.

An example:
“a bucket bag with a double row of large eyelets threaded with a
belt and interrupted by a clasp strap appearing to run around the
bag longitudinally, and with handles which terminate in a lozenge
shape integral with the eyelet design”

Copyright – primary infringement
• Restricted acts include doing the following without
consent of copyright owner in relation to the work,
or a substantial part of it:
• copying (s. 17 of the Copyright, Designs and Patents Act 1988
(“CDPA”));
• issuing copies to the public (s.18 CDPA);
• communicating the work to the public (s. 20 CDPA); and/or
• making an adaptation, or doing any of the above in relation to
an adaptation (s. 21 CDPA).
• No knowledge requirement (but must prove work
copied).

Copyright – secondary infringement
• The following are prohibited if the person concerned
knows that they are infringing (or potentially
infringing):
• importing an infringing article into the UK otherwise than
for private or domestic use;
• possessing an infringing copy in the course of business;
• selling or offering for sale an infringing copy;
• exhibiting in public or distributing an infringing copy in the
course of business; or
• providing means for making infringing copies.

s
Copyright defences
• Temporary copies
• Research for non-commercial purposes and
private study
• Criticism and review (subject to
acknowledgement)
• Reporting current events (subject to
acknowledgement)
• Prescribed educational and library uses

Remedies for infringement of IPRs
Civil Remedies
• Civil remedies are broadly the same for
infringement of all IP rights:
• Injunction
• Damages (subject to knowledge)
• An account of profits
• Delivery up/destruction

Remedies for infringement of IPRs
Criminal Remedies
• Criminal remedies exist for:
• trade mark infringement (in relation to goods, not services);
• copyright infringement; and
• registered design infringement.
• But not for:
• passing off; or
• unregistered design infringement
• Remedies include:
• fine and/or imprisonment;
• delivery up of infringing copies can also be ordered.
• Criminal remedies generally require knowledge.

Groundless threats
• When a threat of proceedings for trade mark
infringement is made, an “aggrieved” person may
bring a claim against the threatener for:
• a declaration that the threat is unjustifiable;
• an injunction to prevent further threats; and
• damages (s.21 TMA).
• There are exceptions for threats worded in a
particular way (e.g. threats relating to “the
application of a mark to goods or their packaging”).
• Similar provisions exist in relation to threats
regarding patent infringement and design right
infringement.
• Be very careful when threatening infringement.

Conclusions
• Trade marks and brands are vital to all businesses
• In a competitive marketplace, you need to do
everything you can to stand out
• Choose your trade marks carefully
• Register appropriately, considering other IP rights
too
• Do everything you can to maintain your rights
• Pick your battles

Questions:

Contact Details
Harriet Seymour | Partner
Fieldfisher
dd: +44 (0)20 7861 4899
Email: harriet.seymour@fieldfisher.com

IP Considerations for New Businesses and Start Ups

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