Co-Authored By Josie Isaacson, Gonzaga University School of Law, J.D. 2015, Magna Cum Laude; Washington State Bar Pending.
Last month, global sportswear company Adidas introduced a new sneaker design featuring a blue and yellow floral pattern. While unsymbolic to most global consumers, the design has a completely different connotation in Sweden. A very similar blue and yellow flower design is the logo for the Sweden Democrats Party (Sverigedemokraterna, SD) – a nationalist party described by some as racist. To add insult to injury, Adidas launched the new shoe design the same week the SD launched an unpopular anti-beggar campaign in Sweden’s capital Stockholm utilizing similar designs, which was shut down due to widespread public criticism.
It should come as no surprise that a product’s name or design may be perceived differently depending on the cultural lens thru which it is viewed. Cultural misunderstandings can have potentially devastating consequences for a company and its products as it can ruin product launches and marketing efforts no matter how much financial resources and time is spent on foreign marketing and promotional efforts.
So how can a business prevent foreign cultural misunderstanding?
The first way to prevent cultural misunderstanding is to understand how it manifests. Typically, it appears in three ways:
- Color Symbolism. Color symbolism can vary widely from country to country and often can take on unexpected diametric meanings. For example, the color purple in Western cultures such as the United States has a strong connection to royalty, wealth, and honor in the military (e.g. Purple Heart). However, in other cultures such as Brazil and Thailand, purple represents mourning.
- Design Symbolism. The same global variation in meaning can be shown for design features of a product or trademark, where a design element may be innocuous in one culture but negative in another. For example, a logo with a blue eye in the United States has no apparent meaning by itself. However, in other cultures, a blue eye is commonly linked to the negative meaning of the “evil eye” curse.
- Translation Differences. Differences in translation between languages are the most common form of cultural misunderstanding. For example, when the American Dairy Association’s popular “Got Milk?” slogan expanded into the Mexican market, the slogan lost its appeal when the Spanish translation of the slogan read “Are you lactating?”
Next, it is important to do your homework, namely prior foreign market research. Any amount of time and money invested in foreign cultural research prior to introducing a new product in a new market can be a lifesaver. Prior research can be anything from a simple Internet search, to performing formal trademark clearance, to even organizing a focus group of people from the target foreign market. Here is a breakdown of these measures:
- Conduct an Internet Search: An Internet search is by far one of the cheapest research methods to identify cultural differences in words, colors, and symbols in the target market. If Adidas had searched Google.se or a local Swedish search engine, they might have become aware of the flower symbol through searching for “blue and yellow flower” or an image search of similar symbols. However, an Internet search alone will not provide comprehensive results without utilizing other search and research methods.
- Trademark Clearance: A formal trademark clearance search can expose any potential conflicting registered trademarks being used in the target market. For example, SD has a number of design mark registrations of their flower symbol at both the Swedish Patent and Registrations Office (Patent-och Registreringsverket – PRV) and at the European Union trademark office (Office for Harmonization in the Internal Market (OHIM)). By identifying these conflicts early, a trademark clearance search can not only reduce the risk of cultural miscommunication, but also limit the risk of foreign trademark infringement.
- Focus Groups: Organizing a focus group can be the best way to get the real feel for how the consumer in the target foreign market will perceive and respond to a new product or service being introduced in the country. Many cultural differences are subtle or varied enough that an Internet or trademark clearance search may not reveal them. While relatively more expensive, obtaining personal cultural knowledge from conducting a local focus group survey can be very informative and help to ensure a product or service overcomes cultural miscommunication.
What’s the Takeaway? While it is unknown what prior research steps Adidas took before introducing the blue and yellow floral design in Sweden, relatively simple prior research measures could have been taken to prevent their failed foreign product launch. As each foreign market has its own sensitivities, there is the potential for cultural miscommunication in every country. Taking steps to research the potential meanings or perceptions to a mark or design prior to launching the product or service abroad will not only save a company money and time but also protect against bad publicity.
I am happy to announce that I have the honor of publishing an opinion article in the European Intellectual Property Review (EIPR) to be released this month. Titled “Improvement over the Rest or More of the Same? Australia’s Proposed Extraterritorial Online Copyright Injunctive Reforms,” the article examines Australia’s recently-implemented copyright injunctive reforms that will allow a rights holder to obtain an injunction against a foreign-based website, and evaluates the reforms in relation to its foreign counterparts in the United States and Europe.
It is that time of year again when the Office of the U.S. Trade Representative (USTR) releases its annual report on Notorious Markets—The 2014 Out-of-Cycle Review of Notorious Markets. As we reported on last year, this annual review identifies foreign physical and online markets reported by U.S. businesses and industry organizations as being engaged in substantial IP piracy and counterfeiting.
This year’s review identified several foreign social media and file transferring websites, as well as a number of Internet service providers (ISPs), as being notorious markets including those hosted or located in Argentina, the British Virgin Islands, Canada, China, Czech Republic, France, Netherlands, Panama, Philippines, Poland, Russia, San Marino, Spain, Switzerland, Ukraine, the United Kingdom and Vietnam. Additionally, physical markets in Argentina, Brazil, China, Ecuador, India, Indonesia, Mexico, Nigeria, Paraguay, Thailand and Uruguay were also identified as being notorious markets.
The USTR also highlighted a number of recent developments including efforts by certain previously listed Chinese sites to curb piracy activities on their websites, as well as increased enforcement actions by rights holders and government officials to shut down physical and online markets in Brazil, the European Union and Ukraine among others.
What’s The Takeaway? As we have said before, every foreign market has its own IP protection challenges. U.S. businesses that operate abroad or are expanding into new markets should review the USTR’s 2014 Out of Cycle Review of Notorious Markets to help evaluate the IP protection risks associated with particular markets they wish to enter. Doing so can help to ensure that such businesses can better protect their IP assets abroad.
The United Kingdom Intellectual Property Office (UK IPO) released a report today providing a comprehensive and insightful breakdown of online copyright enforcement regimes in multiple countries. Titled International Comparison of Approaches to Online Copyright Infringement, the report evaluates online enforcement regimes in many of the world’s major markets including Brazil, Canada, France, Italy, The Netherlands, South Korea, Spain, the U.K., and the U.S. Beyond providing in-depth details and statistics on each country’s online enforcement procedures that international IP policy nerds like myself find interesting, the report highlights how each country’s enforcement regimes have dealt with the proliferation of broadband Internet and various online media services. It is also a good primer for practitioners to understand online copyright enforcement procedures across borders. Give it a read!
The New York Times and other news outlets reported last week that The Hershey Company, the global confectionary behemoth, settled its U.S. federal trademark lawsuit against leading U.S. importer of British confectionery products, LBB Imports, LLC (Case 1:14-cv-01655-JEJ), who had allegedly infringed Hershey’s own trademark-protected brands, as well as those it has exclusively licensed, through LBB’s unauthorized importation of popular UK brands and UK versions of existing U.S. brands including CADBURY DAIRY MILK, CARAMELLO, TOFFEE CRISP, YORKIE, MALTESERS, ROLO and KIT KAT.
Although these news reports have largely focused on U.S. consumer dissatisfaction over inaccessibility of these UK chocolate varieties as a result of the settlement, this case also underscores the important role trademark licensees have in the cross-border enforcement of their licensed trademarks. Hershey attested in their complaint that it has produced and promoted Cadbury’s brands in the U.S. for over 25 years, and that it is Cadbury’s exclusive U.S. licensee of several of its U.S. registered trademarks including Cadbury’s logo (U.S. Reg. No. 1,107,458) and its DAIRY MILK brand (U.S. Reg. Nos. 1,403,327, 4,224,494 and 1,460,259) (collectively, the Cadbury Marks).
While it is unclear what contractual obligations Hershey had with Cadbury concerning enforcement of the Cadbury Marks in the U.S., in regards to infringing imports or otherwise, Hershey likely had substantial legal and business incentives to enforce the Cadbury Marks against LBB. Often, foreign distributors, manufacturers, and promoters have licensed rights, and in many cases, contractual obligations, to enforce rights in their licensed trademarks including preventing the importation of infringing goods and parallel importation shipments (aka grey goods). Beyond legal obligations, licensees like Hershey have financial incentives to enforce their licensed trademarks rights as it is often necessary to protect business opportunities, as well as relationships, that accompany cross-border licensing arrangements.
As these licensed rights and obligations have substantial legal and business implications, it is important for licensing businesses to know and understand such rights and obligations, and develop enforcement strategies based on the same. So how do licensees do this? Well, here are a few things licensees should consider:
Evaluate and Understand Contractual Rights and Obligations. The first and most important thing a licensee should do when entering a cross-border licensing arrangement and considering enforcement measures based on that arrangement is to evaluate and understand their rights and obligations of enforcement. This requires that a licensee read and evaluate whatever agreement(s) acknowledge their licensing arrangement to identify such rights and obligations. Such rights and obligations may be detailed in a stand-alone trademark licensing agreement, they may be included in a more comprehensive distribution or service agreement, or they may be covered multiple agreements.
Regardless of what type of agreement(s) such rights and obligations are acknowledged, licensees need to identify three things:
(1) their rights to enforce rights in licensed mark(s);
(2) their obligations to enforce rights in licensed mark(s); and
(3) the extent and territoriality of such rights and obligations.
Licensed rights include a licensee’s optional ability to enforce rights in licensed mark(s), while obligations are a licensee’s contractual duty to enforce rights such mark(s). The extent and territoriality of such rights and obligations is particular important in cross-border IP protection as it is needed for a licensee to establish both the subject and geographic scope of their rights and obligations. In Hershey’s case, being Cadbury’s exclusive U.S. licensee of the Cadbury Marks likely gave Hershey rights and obligations of enforcement for such Marks in the U.S. However, Hershey was likely not given rights of enforcement for all Cadbury brands, nor rights of enforcement for the Cadbury Marks outside the U.S. as Hershey is identified as having only licensed certain Cadbury brand lines, and only in the U.S.
In any instance, a licensee needs to know their licensed rights and obligations, as well as its scope and territoriality.
Develop Tailored Strategies to Fulfill Licensing Obligations. Once particular licensed enforcement rights and obligations are identified, a licensee must evaluate what such obligations mean for their business. If a licensee is obligated to enforce rights in licensed mark(s) under their particular licensing arrangement, they may be required to monitor use of the marks in commerce, register (aka prosecute) the marks with national trademark authorities, record trademark registration(s) with national customs agencies to monitor and detain infringing imports, and/or conduct litigation enforcement.
In Hershey’s case, Cadbury had already registered the Cadbury Marks with the U.S. Patent and Trademark Office, and it remains unclear what Hershey’s obligations were under their licensing agreement(s) with Cadbury to record such registrations, monitor commercial use of the Marks, or even litigate their rights against potential infringers such as LBB. However, if Hershey’s did have monitoring and enforcement obligations in their licensing agreement(s) with Cadbury, their lawsuit against LBB would likely have been fulfilling these obligations as Hershey went after an allegedly unauthorized importer of Cadbury’s brands in the U.S., which it would have not otherwise known without attaining monitoring services and potentially other enforcement measures.
In short, licensees, like Hershey, have to find ways to fulfill their licensing obligations that are tailored to their particular obligations and business. As such, licensees should establish a budget to conduct such enforcement services, and consider retaining qualified counsel to ensure effective execution of obligated enforcement activities.
Consider Business Implications of Optional Licensed Rights. A licensee’s fulfilling of their licensed legal obligations is relatively straightforward, yet determining when and how to enforce licensed optional rights of enforcement is more complex, and often has more business than legal implications. Although a licensee may have optional rights of enforcement, the nature of the licensing arrangement and business relationships may obligate a licensee to adopt trademark enforcement measures. This is because the success of a licensing arrangement often depends on a licensee’s exclusive use of their licensed mark(s) in a particular country, requiring enforcement measures if such exclusivity is jeopardized. Further, licensors often urge their foreign licensees to enforce their licensed trademark rights regardless of contractual obligations, making such acts the basis for continuing their licensing arrangements. As such, a licensee may wish to adopt enforcement measures for their licensed marks despite having no obligations to do so to ensure profitability and continuation of their licensing arrangement, and to protect their existing business relationship with their licensor.
In Hershey’s case, they have been Cadbury’s exclusive U.S. licensee of the Cadbury Marks for over 25 years. Even if their rights of enforcement were optional, Hershey likely had substantial incentive to enforce rights in the Cadbury Marks as LBB’s imports jeopardized their exclusive use of such brands, and Hershey’s failure to enforce such rights may have harmed their long existing relationship with Cadbury.
Like Hershey, any licensee with optional rights of enforcement needs to consider the impact of non-enforcement on the business opportunities available in their licensing arrangement, as well as its impact on their relationship with their licensor.
What’s The Takeaway? As more and more businesses seek local foreign businesses to assist them with promoting their brands abroad, licensee businesses will be increasingly required to understand what rights and obligations they have in their trademark arrangements, and what measures they should take to fulfill those obligations, especially in deterring infringing imports. As these enforcement rights and obligations have substantial legal and business implications, licensees should work with their licensors and qualified counsel to determine how to best fulfill their enforcement obligations.
As this year comes to a close, I posted my last posting on The IPKat as a guest contributor about updates to Australia’s proposed injunctive online copyright enforcement reforms. This posting discussed recent updates to a blog posting I made on this blog in August concerning these proposed reforms. Particularly, I highlighted recent implementation and freedom of speech concerns about the proposed reforms.
The IPKat posting is available here.
Dublin, Ireland-based Sherwin O’Riordan (SOR) Solicitors has provided us with this beautiful and insanely informational infographic on the current state of European patent registration. Taken from the most recent European Patent Office statistics (2013 Annual Report and 2014 Facts and Figures), the infographic highlights some interesting trends in European patent prosecution including:
-Patent Application Filings on the Rise: In 2013, there were 265,690 European patents filed, the largest number of annual filings to date, and representing a 2.8% increase over 2012.
-Foreign (and Corporate) Registrants Were the Largest and Often Most Successful Registrants: On average, one in four patents were granted registration in 2013. Interestingly, those countries that were the most successful in getting a European patent registered were mostly from outside Europe as the U.S., Germany and Japan had the three most successful registration rates per country. Large enterprises made up almost two-thirds of patent applicants in 2013. South Korea-based Samsung was the single largest patent filer in Europe with 2,833 applications in 2013 alone, followed by Siemens with 1,974 applications.
-Medical Patents Led Registration, Tech and Transport Patents Grew The Fastest: The Medical industry had the largest amount of European patents per technical field in 2013, however computer technology and transport were the fastest growing during the same.
-The Swiss Led the Way Among Europeans: Switzerland appeared to be Europe’s most inventive country in 2013, leading all other European countries in European patent applications per million inhabitants.
-Revocation After Registration is Common: In 2013, almost one in three European patents were revoked after being granted registration.
Special thanks to James Sherwin and everyone at SOR Solicitors for sharing this infographic with The IP Exporter!
The Office of the U.S. Trade Representative (USTR) announced yesterday that it is requesting public comments to assist the USTR in identifying significant barriers to U.S. exports of goods and services, including foreign IP protection deficiencies. The comments are being collected for inclusion in the USTR’s annual National Trade Estimate Report on Foreign Trade Barriers (NTE Report) that identifies barriers to U.S. exports including the “lack of intellectual property protection (e.g., inadequate patent, copyright, and trademark regimes).”
Last year’s NTE Report identified several U.S. export markets as possessing IP protection trade barriers, or at least IP protection concerns, including Angola, Argentina, Australia, Bahrain, Brazil, Cambodia, Canada, Chile, China, Colombia, Dominican Republic, Ecuador, Egypt, El Salvador, Ethiopia, European Union (member states), Ghana, Guatemala, Hong Kong, India, Indonesia, Iraq, Israel, Japan, Kazakhstan, Kenya, Kuwait, Laos, Malaysia, Mexico, Morocco, New Zealand, Nicaragua, Nigeria, Norway, Pakistan, Panama, Paraguay, Peru, Philippines, Russia, Saudi Arabia, South Africa, South Korea, Sri Lanka, Switzerland, Taiwan, Thailand, Turkey, Ukraine, United Arab Emirates, Uzbekistan and Venezuela.
Public comments for inclusion in this year’s NTE Report are due to the USTR by no later that October 29, 2014. Further instructions on the NTE public comment submission process are available here.
Check out my post today on The IPKat about the European Commission’s recent annual report on EU counterfeit enforcement efforts and how EU customs authorities and rights holders have recently increased their efforts to stop the flow of counterfeit goods arriving by mail into the EU.
It is available at: http://ipkitten.blogspot.com/2014/08/ec-reports-on-annual-counterfeit.html.
On Tuesday, the U.S. House of Representative’s Subcommittee on Courts, Intellectual Property and the Internet held a hearing on a number of proposed reforms to U.S. copyright laws that have a number of potential implications for internationally focused businesses. Reforms that were discussed at the Tuesday hearing included termination rights, resale royalties, moral rights and copyright terms. Among those who testified included representatives from the U.S. Copyright Office, the Songwriters Guild of America, Inc. (“SGA”), the Future of Music Coalition (“FMC”), the American Enterprise Institute (“AEI”),and the Creative Commons USA (“CC”).
Although a substantial amount of testimony given at the hearing was related to particular U.S. industries needs (e.g. music and visual arts), potential U.S. termination rights, resale royalties, moral rights, and copyright term reforms has implications on nearly all businesses both in the U.S. and abroad.
To better understand the potential implication of these reforms, it is best to evaluate them individually.
One of the reforms discussed at the Tuesday hearing that arguably has the greatest likelihood of being implemented, as well as trade-related importance, is termination rights. Under 17 U.S.C. § 203 of the U.S. Copyright Act, a creator of a copyright-protected work (“author”) may cancel the transfer or license of rights to the work 35 years after its transfer or license to another party. However, the elimination of such rights has been recently proposed in U.S. free trade agreement (FTA) negotiations. In the Trans-Pacific Partnership Agreement (TPP) negotiations, the U.S. has proposed IP Chapter terms that would arguably eliminate termination rights in TPP member states (Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, United States and Vietnam). This means an author from a TPP member state would be unable to terminate the transfer of rights or license of their work in the U.S. or other TPP member state(s) as currently provided under U.S. law.
Representatives from the FMC and CC testified on this issue, both calling for upholding existing termination rights under U.S. law. The FMC went even further and explicitly called on Congress to ensure that such termination rights continue to be made available in international agreements the U.S. enters such as the TPP.
Whether the U.S. decides to uphold or eliminate termination rights will have global implications for international businesses. If the U.S. decides to uphold termination rights in the U.S. Copyright Act and FTAs, it would provide content-producing businesses greater rights and flexibility in protections in their works, both in the U.S. and abroad. In contrast, eliminating termination rights would provide businesses who purchase rights to protected works greater assurance that their ownership or rights to such works will be protected.
Regardless of the benefits or drawbacks of eliminating termination rights, it remains unclear from the Tuesday hearing how Congress will decide to proceed.
Tuesday’s hearing also included testimony on whether the U.S. should adopt resale royalty requirements. Some of the U.S.’ major trading partners, such as Australia, the EU, and Russia among others, require that authors (in most cases, visual artists) be entitled to royalties for the resale of their works. However, the U.S. has yet to adopt such measures despite their voluntary recognition in Article 14ter of the Berne Convention for the Protection of Literary and Artistic Works (“Berne Convention”), and several U.S. federal and state legislative attempts to do so. The main argument against such royalties is that oppose the first sale doctrine, which generally allows for the unrestricted domestic secondary sale of copyright protected works.
During Tuesday’s testimony, the sole testifying entity, the U.S. Copyright Office, stopped short of calling for the U.S. adoption of resale royalty laws. The Copyright Office recognized the disadvantages visual artists have compared to other authors in recouping the true value of their works, and that over 30 countries have now adopted resale royalty requirements. However, their testimony stated that mandated resale royalties were not the only means to remedy such disadvantages as voluntary initiatives and best practices could also be utilized, and that the true benefits of a resale royalty regime is difficult to quantify.
Based on such timid testimony, it appears unlikely that the U.S. will seriously consider adopting mandated resale royalties as currently provided in EU and other countries in the near future. The lack of a current and potentially future mandated U.S. resale royalty regime emphasizes that visual artists and other authors will need to find alternative means in order to obtain effective compensation for their works.
The Tuesday hearing also evaluated to what degree the U.S. should adopt stronger moral rights protections. Moral rights, as detailed under Article 6bis of the Berne Convention, gives an author non-economic rights in a work even after the transfer or sale of their work including the right of attribution that allows them to object to the distortion, mutilation or modification of their work. Currently, the U.S. only extends such rights to visual artists under 17 U.S.C. § 106(A) and in an arguably less encompassing manner. In contrast, many major U.S. export markets such as Australia, Canada, China, and EU have more robust moral rights protections.
None of those who testified on moral rights argued for an explicit extension in the U.S. despite acknowledgements of its benefits. The SGA and FMC stressed that freedom of speech and fair use considerations should be balanced with any moral rights considerations, and the CC highlighted the difficulties and costs of establishing exclusive attribution rights. Based on these testimonies, it appears unlikely that the U.S. will adopt moral right reforms in the near future.
Lastly, but arguably the most contentious issue of this hearing was copyright term reforms, namely the period of time in which a qualifying work is entitled to copyright protection. Under 17 U.S.C. § 302, a copyright protected work is entitled to protection for the life of the author and 70 years after their death for a natural person author, and 95 years for works created by legal entities. Such copyright terms are well beyond international norms as Article 7 of the Berne Convention establishes copyright protection for the life of the author and 50 years after their death for a natural person, and 50 years for legal entities. The U.S.’ extended copyright term is controversial as it is argued to harm the public through unnecessary taxation and limits on creative freedom, especially as the U.S. has proposed that other countries adopt similar terms in FTAs such as the TPP and the U.S.-Australia FTA, just to name a few. Despite these criticisms, such extended terms give U.S. and other FTA member state authors and copyright owners longer copyright protections in their works.
The testimony provided in the Tuesday hearing varied widely as to whether the U.S. should amend its copyright terms, both in the U.S. Copyright Act and FTAs. The CC called for a reduction in copyright terms, while the FMC and AEI took a less argumentative stance by disagreeing with any term extensions. Contrastingly, the SGA rejected any term reductions. The CC was only group to identify copyright term issues in FTAs by highlighting widespread criticism towards the U.S.’ attempt to propose U.S. copyright terms in the TPP and the CC’s efforts against the same. However, the lack of a comprehensive rejection of the U.S.’ current copyright terms or more robust efforts to prevent their inclusion in U.S. FTAs means that any reforms to the U.S. copyright terms are unlikely.
What’s The Takeaway? The Tuesday hearing highlighted that the U.S. is at least evaluating copyright reforms that may harmonize U.S. copyright laws with other countries. Although it appears unlikely that the U.S. will adopt moral rights, copyright term or resale royalty reforms, the potential invalidation of termination rights does seem to be a potential possibility in the near future, especially in light of the U.S.’ TTP IP Chapter Proposal. Businesses and authors with substantial copyright portfolios should be aware of these reform efforts and adjust their copyright protection policies as needed in order to best protect rights in their works, both in the U.S and abroad.