Category: Uncategorized

U.S. Copyright Office Accepting Comments on Current U.S. Moral Rights Protections and Potential Reforms

As reported in multiple news outlets, the U.S. Copyright Office (USCO) published a Notice of Inquiry concerning a USCO study to review current U.S. laws protecting moral rights of creators of original works—namely the rights of attribution and rights of integrity, as well as evaluate reforms to provide additional protections for such rights. Separate from copyright protections, moral rights are intended to preserve the relationship between an artist and their work, regardless of the expiration of copyright protections under applicable law and any transfer(s) of copyright title. While recognized in many foreign jurisdictions as rights available to creators of all forms of copyright-protected works, the U.S. only recognizes moral rights for creators of visual art works under specific conditions codified in the Visual Artists Rights Act (17 U.S.C. § 106A) (VARA).

In this inquiry, USCO is seeking public comment on: (1) availability of rights of attribution under state and federal unfair competition laws—which was largely restricted by the U.S. Supreme Court in Dastar Corp. v. Twentieth Century Fox Film Corp., 539 U.S. 23, 34-35 (2003); (2) expansion of rights of attribution and rights of integrity under VARA to musical and audiovisual performers—thereby bringing the U.S. into compliance with the WIPO Copyright Treaty, WIPO Performances and Phonograms Treaty, and recent international legal trends; (3) new and trending means to license rights of attribution and rights of integrity (e.g. Creative Commons licenses); and (4) changes in technology to improve identification and attribution of licensed works.

Comments are being accepted until March 30, 2017 via USCO’s online portal here.

Going Back To Where It All Began

I am honored to announce that I will be returning to my alma mater—Gonzaga University School of Law to speak on state, federal and foreign trademark prosecution and licensing for cannabis businesses at the Second Annual Gonzaga Intellectual Property Merit Scholarship CLE on September 23, 2016 in Spokane, Washington. We have an amazing panel with speakers on a number of interesting IP issues. Hope you can make it, and if you cannot, it will be webcasted so watch it online. See you there!

Protecting Trademarks From Foreign Domain Name Infringement

Co-Authored By Josie Isaacson, Gonzaga University School of Law, J.D. 2015.

As the Internet has arguably become the main venue for global commerce, and as domain name registration becomes even more user-friendly, it comes as no surprise that trademark owners and right holders are facing an ever-increasing battle against foreign domain name infringement.

Facebook recently faced and effectively overcame this problem. A U.S. representative of the Ghana-based social networking website Ghana Nation, registered a similar domain to Facebook’s name (facebookghana.com). When Internet users accessed the website utilizing the domain, they were redirected to Ghana Nation’s website. After failed attempts to privately acquire the domain, Facebook filed a Uniform Domain Name Dispute Resolution Policy (UDRP) arbitration complaint against the registrant at the World Intellectual Property Organization’s (WIPO) Arbitration and Mediation Center.

In this UDRP arbitration proceeding (Facebook Inc. v Host, Case No. D2015-1057 (WIPO Aug. 14, 2015), Facebook provided conclusive evidence of their rights to the domain name and that bad faith use of the domain occurred. This included: (a) evidence of the well-known recognition of the FACEBOOK trademark around the world; (b) registration of the FACEBOOK trademark in multiple countries, including the United States, the European Union and Ghana; (c) evidence of the ownership of several Facebook-related domains across multiple top-level domains (e.g., facebook.biz and facebook.org) and multiple top-level country extensions (e.g., facebook.us and facebook.eu); (d) evidence that the registrant had no affiliation with Facebook; and (e) evidence showing that the registrant used the domain to take Internet users to a competing social media platform. Based on this evidence, the WIPO Administrative Panel warranted a transfer of the domain from the registrant to Facebook.

As Facebook’s recent cross-border domain name dispute illustrates, trademark owners or rights holders need to take important measures to protect themselves against foreign domain name infringement. However, before digging into what steps they can take to protect themselves against such acts, it is important to first understand how domain infringement occurs and the available enforcement tools to protecting trademarks from foreign domain name infringement.

How Does Domain Name Infringement Occur?

Unlike other forms of trademark infringement, domain name infringement, whether in a domestic or foreign context, occurs in three specific ways: cyber-squatting, typo-squatting, and domain name confusion.

Cyber-Squatting

Cyber-squatting is where a person or entity registers a domain of a famous or already existing trademark before the actual trademark owner or rights holder is able to register that particular domain. The registrant (squatter) does this usually in an attempt to sell the domain (or extort) t0 the trademark owner when the owner eventually wants to use or acquire rights to the domain, or when the squatter’s use of the domain leads to divergent Internet traffic towards the squatter’s domain website. The British Broadcasting Corporation (BBC) faced foreign-based cyber-squatting in 2000, when a U.S. entity who had a history of buying up confusingly similar domains to known company names and brands (e.g. www.chasevisa.com and www.yahow.com) registered the domain www.bbcnews.com before the BBC had the chance to acquire the domain.

BBC brought a WIPO UDRP proceeding against the registrant that same year (British Broad. Corp. v. Data Art Corp., Case No. D2000-0683, WIPO Sept. 20, 2000). Despite the fact that BBC did not register the domain first, BBC’s extensive worldwide use of the BBC NEWS trademark for decades firmly established BBC’s trademark rights to BBC NEWS. Further, the fact that the registrant purchased the domain long after BBC had been using the BBC NEWS mark worldwide, and as the registrant had a history of purchasing domains that were confusingly similar to well-known trademarks, the WIPO Administrative Panel was able to establish that the registrant had no legitimate interest to the domain, granting its transfer to BBC.

Typo-Squatting

Typo-squatting is where a registrant registers a very similar or misspelled version of a famous or already existing trademark, preying on the common mistakes Internet users make when typing a domain name address. Microsoft has combatted foreign typo-squatters multiple times, including their 2004 WIPO UDRP proceeding against a U.K.-based squatter over the domain micorosft.com (Microsoft Corp. v. Macafee, Case No. D2004-0027, WIPO Mar. 1, 2004). As in Facebook and BBC’s proceedings, Microsoft was able to establish their rights to the MICROSOFT trademark through trademark registrations in multiple countries, domain name registrations including MICROSOFT across multiple top-level domains, and the registrant’s history of registering confusingly similar domains similar to existing brands. As such, Microsoft prevailed over the domain registrant and won rights to the domain name.

Domain Name Confusion

Domain name confusion can occur when two entities have the same name or when a parody site registers a famous mark as a domain name before the actual famous person or entity can register it. Although not cross-border focused, a good example of such confusion is the U.S. case of People for the Ethical Treatment of Animals, Inc. (PETA) v. Doughney, 113 F. Supp. 2d 915 (E.D. Va. 2000), where the actual PETA organization brought suit against a parodist registrant who operated the website “People Eating Tasty Animals.” The registrant lost on parody grounds, and the domain was transferred to PETA, because the PETA trademark was used in the domain name and the parodist page did not simultaneously appear to Internet users–meaning Internet users would be confused between the domain names of PETA and parodist.

How Do You Combat Foreign Domain Name Infringement?

Now that you know how domain name infringement occurs, it is important to now look at what steps a trademark owner can take to prevent such acts.

Pre-Litigation Enforcement

Prior to taking more formal resolution procedures, such as initiating a UDRP arbitration or legal proceeding, a trademark owner can send a simple demand letter to prompt a domain registrant to transfer a similar or confusing domain to the trademark owner. A formal settlement agreement can help to ensure the transfer of a domain to the business or trademark owner if the registrant consents to the transfer. However, if the registrant refuses to transfer the domain, the trademark owner would need to proceed with more formal domain name dispute resolutions, as provided below.

UDRP Arbitration

The UDRP is the main dispute settlement tool to combat foreign domain name infringers by facilitating a streamlined, multi-jurisdictional, and often less expensive dispute resolution process. It was adopted by the Internet Corporation for Assigned Names and Numbers (ICANN; a non-profit corporation that manages the Internet’s domain name system), as a way to simplify domain name disputes, by creating one set of rules that every domain registrant must follow. UDRP arbitration can be sought by a trademark owner or rights holder through WIPO’s Arbitration and Mediation Center (as shown in cases above) or the National Arbitration Forum. The benefits of the UDRP are that it offers a speedier and cheaper option to obtain dispute resolution over a domain, through streamlined evidentiary and procedural processes, with the flexibility of allowing a trademark owner or rights holder to seek enforcement through national legal systems.

However, the UDRP has potential downsides as well. The only remedy available from a UDRP proceeding is either the transfer or cancellation of the disputed domain name, disallowing the recovery of damages. Further, as a UDRP panel does not have to follow strict precedent and has a relatively less-defined evidentiary standard, the UDRP arguably has more unpredictable outcomes than litigation. Lastly, as the parties to a UDRP proceeding can always seek litigation, a UDRP arbitration proceeding may be a non-permanent dispute resolution measure.

So if you choose a UDRP proceeding, what must a trademark owner or rights holder prove to have an infringing domain name transferred or cancelled? According to URDP Rule 3(b)(ix), a successful UDRP complaint must establish three primary elements including that:

  1. The registrant’s domain name is identical or confusingly similar to a trademark or service mark in which the trademark owner has rights;
  2. The registrant’s has no rights or legitimate interests in respect of the domain name; and
  3. The registrant’s domain name has been registered and is being used in bad faith.

While these elements seem straightforward, trademark owners and rights holders should work with a qualified attorney to evaluate the merits of their case prior to initiating a UDRP proceeding.

Litigation

The final alternative in combatting domain name infringement is litigation. The upsides to litigation include the availability of damage recovery and formal precedent and procedural rules of evidence. The downsides are increased legal costs, longer proceedings, and often jurisdictional issues, especially for cross-border domain disputes. Like UDRP proceedings, trademark owners and rights holders should work with a qualified attorney to evaluate the merits of their case prior to initiating a legal proceeding.

How Do You Prevent Foreign Domain Name Trademark Infringement?

Before seeking these identified enforcement procedures, there are a number of measures a right holder can take to ensure favorable outcomes to any foreign domain name dispute. These include trademark prosecution, domain name registration, and domain name monitoring.

Trademark Prosecution

The most important way to prevent foreign domain name trademark infringement is to first acquire trademark rights to the domain name in question. Regardless of the country, trademark registration (aka prosecution) is the most effective way to establish trademark rights as it grants the greatest amount of rights possible to a trademark under a country’s laws, and a presumption of exclusive ownership to a trademark in that country. While it is impossible to know what country (or countries) a potential infringing domain registrant will be located, a trademark owner wishing to prevent foreign domain name trademark infringement should consider trademark prosecution in the countries they offer their goods and services. Beyond a prudent means to protect trademark rights, proof of prior trademark registrations in multiple countries strengthens any domain name infringement case against a domain registrant. As in Facebook’s UDRP action, Facebook was able to establish its rights to the facebookghana.com domain based on its prior trademark registrations for FACEBOOK in Ghana and the United States, where the registrant and their principal was based, as well as other major markets such as the E.U. As with any means of trademark protection, trademark prosecution is an essential protection tool.

Register Domains Early and For All Variations

Registering a trademark as a domain early, including in any popular top-level and country designations, can help to eliminate foreign domain name infringement. In Facebook’s dispute above, early registration of the Facebook trademark in various top-level domains and multiple country designations helped to show that consumers would be confused as to a false connection between Facebook and the infringing domain facebookghana.com. Registering domain names early and across popular top-level and country designations establishes priority in the use of the domain names and starts the growth of an online user base accessing the domains.

In addition to registering domains with the exact trademark, it is also good to consider registering domain names with similar misspellings. Such as with Microsoft, typo-squatters will prey on consumers who incorrectly type a company name like Micorosft. Microsoft’s registering misspelled versions of their name may have prevented their 2004 domain dispute from ever happening.

Domain Name Monitoring

As trademark monitoring services help to detect general trademark infringers, domain monitoring services can help to catch infringing domain registrants. Several service providers offer domain monitoring services, constantly searching for confusing and similar domain name registrations in addition to providing alerts to changes in ownership to specific domains. Such monitoring can help to detect domestic and foreign domain name trademark infringement, as well as help trademark owners strategize the acquisition of domains.

What’s the Takeaway?

In the end, robust trademark prosecution, domain registration, and domain monitoring can help to reduce foreign domain name infringement. If a trademark owner or rights holder does confront a infringing registrant, swift action should be taken to protect trademark interests, including pre-action enforcement, and possible UDRP arbitration or legal action if needed. While most trademark owners do not have Facebook’s resources to fight foreign domain name trademark infringement, most owners can take prudent measures to prevail against foreign domain infringement if the correct steps are taken to secure and enforce domain name and trademark registrations worldwide.

A Tale of Two Meanings: Preventing Cultural Miscommunication in Brand Development and Protection

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.

A Great Honor in the Trade-Related Twitter World

Today I was recognized by one of my favorite trade and export-related blogs, Shipping SolutionsInternational Trade Blog, as being an Export Thought Leader on Twitter. I was flattered to be listed among other persons and organizations I highly admire in the export world, including Becky Park DeStigter (@IntlEntreprenr), The International Trade Administration (@TradeGov), U.S. Customs & Border Protection (@CustomsBorder), and other distinguished people and organizations.

A link to the blog article can be found here.

Thank you Shipping Solutions for the recognition. It is truly an honor!

A Breakdown of Russia’s New Notice and Takedown Legislation

Last month, Russia formally adopted multiple online copyright enforcement reforms to its Anti-Piracy Laws (Federal Law No. 364-FZ; “Reforms”). Including in these Reforms were streamlined Internet Service Provider (ISP) injunction procedures, the establishment of a digital fingerprinting system to allow for the online identification of copyright protected works, and the establishment of Russia’s first statutory notice and takedown procedures—allowing qualifying persons or entities who have rights to copyright-protected work(s) (collectively, “Rights Holders”) the ability to extrajudicially petition Russian-based website owners, and eventually their ISPs, to remove infringing hosted content.

On its face, Russia’s new notice and takedown procedures provide qualifying Rights Holders a highly needed extrajudicial enforcement tool to fight online copyright infringement in one of the world’s most infringing online markets. In April 2015, Russia was listed on the Office of the U.S. Trade Representative’s (USTR) Priority Watch List in the USTR’s 2015 Special 301 Report, identifying countries who do not provide adequate protection for intellectual property. The 2015 301 Report cited Russia for having “persistent” online copyright piracy problems, as well as being the home of several piracy websites that “damage both the market for legitimate content in Russia as well as in other countries.”

While Russia’s new notice and takedown procedures in many ways mirror similar procedures in other jurisdictions, there are some important differences Rights Holders should be aware of concerning the new procedures. To understand these differences, it is important to first look at the actual notification procedures.

Procedures: Based on an unofficial translation of the Reforms, a Rights Holder must provide the operator of an infringing Russian-based website notification of an alleged infringement including:

  • Name of the legal owner or authorized agent of the copyright protected work(s), including their location, address, passport information, telephone number, fax number, and email address;
  • If an authorized agent, provide an attestation as to his or her representation of the owner(s) of the copyright-protected work(s);
  • Identification of the copyright protected work(s);
  • Identification of the domain name(s), network address(es), and other identifying information of the infringing website in question;
  • Consent to use personal information included in the notification; and
  • The Rights Holder’s claim that the copyright-protected work(s) and being used on the identified website(s) without the owner’s of the work(s) permission or any valid legal grounds.

Within 24 hours of receipt of a Rights Holder’s notification, the website’s operator will need to either:

  • Request additional information from the Rights Holder concerning their notification;
  • Remove the allegedly infringing content; or
  • Provide proof that the website operator is authorized to use the allegedly infringing content.

If the website operator does not restrict access to the allegedly infringing content within 24 hours after receiving the Rights Holder’s notice, the website’s ISP will have three days to block access to that website. If the ISP restricts access to the website in question, the ISP must notify Russia’s telecommunication agency (Federal Service for Supervision in the Sphere of Telecom, Information Technologies and Mass Communications (Roskomnadzor)) of the incident, and such data will be placed in a infringement registry.

Ok, now that we know the procedures, what are the main takeaway points?

Additional Steps May Be Needed: Unlike most national notice and takedown procedure systems, notices under Reforms are to be sent to website operators prior to sending to the website’s ISP. While a website operators and ISP can often be one and the same, e.g. Facebook or Google, Russia’s notice and takedown procedures may require submitting an additional notice to an ISP if a website operator fails to remove infringing content identified by a Rights Holder in a notice under the procedures.

Qualifying Content: Prior to passage of the Reforms, the Anti-Piracy Laws only covered “movies, including movies, TV films”, thereby excluding many other works normally qualifying for copyright protection in Russia and other countries. The Reforms expands qualifying works to “objects of copyright and (or) related rights (except photographic works and works obtained by processes similar to photography.” While these changes expand protection under the Anti-Piracy Laws beyond solely movies to songs, written works and other normally copyright-protected works, it expressly excludes “photographic works.” Excluding photographic works from protection under the new notice and takedown procedures means Rights Holders of such works would need to seek a judicial order to remove infringe content hosted by a Russian-based website, subjecting such Rights Holders to potentially substantial enforcement delays and costs.

Prosecution Requirements: Like the U.S., Russia does not require prosecution (registration) of copyright-protected works in order to utilize the Anti-Piracy Laws’ new notice and takedown procedures.

Country-Specific Restrictions: Although not identified in the Reforms, notifications sent through the Anti-Piracy Laws’ new notice and takedown procedures will likely need to be sent in Russian. Further, to ensure compliance, foreign Rights Holders will likely need to work with qualified Russian counsel to effectively utilize the new notice and takedown procedures. This can have additional costs and time delays for foreign Rights Holders.

What’s The Takeaway? Absent prior statutory provisions, the Reforms’ notice and takedown procedures do provide Rights Holders greater means to protect their works online in Russia. However, due to limitations on qualifying works, and additional and country-specific procedures beyond similar notice and takedown procedures in other countries, it remains to be seen whether Russia’s statutory notice and takedown procedures will become an effective extrajudicial enforcement tool against cross-border online copyright infringement.

Last Minute IP Speaking Event

For those that will be around Seattle this Friday, March 27th, I will be speaking at the Seattle Angels Meetup Group’s Pitch & Demo Night on IP protection for start-ups and entrepreneurs. It will be from 4:00-7:00 P.M at the Good Bar in Pioneer Square. Regardless of your interest in IP, it should be a good networking event for entrepreneurs or anyone working at a start-up.

Hope to see you there!

Presentation on Cross Border IP Protection for U.S. and Canadian Businesses

For those interested in U.S. and Canadian IP protection issues, I will be giving a presentation at the April 2, 2015 King County Bar Association (KCBA) – Intellectual Property Section meeting in Seattle, Washington on U.S. and Canadian cross-border IP protection issues. Particularly, the presentation will cover IP protection issues that U.S. businesses should consider as they expand into Canada, and conversely, IP issues Canadian businesses should consider as they enter the U.S. market.

The April 2nd KCBA IP Section meeting will be held at KCBA’s headquarters at 1200 Fifth Avenue, Suite 700, Seattle, Washington 98101. A webcast of the meeting will be made available to KCBA IP Section members. Further details on the webcast are available here.

Hope you can make it!

Recap to Online Copyright and Trademark Enforcement in the U.S. and Abroad

For those who did not have a chance to attend my January 20, 2015 presentation Online Copyright and Trademark Enforcement in the U.S. and Abroad, the Washington State Bar Association International Practice Section’s Blog, The Global Gavel, has provided a summary of my presentation. It overviews the main issues discussed and key takeaway points. Those with further questions should feel free to contact me.

A link to the presentation summary can found here.

Recent U.S. Case Highlights Important Role Licensees Have in Cross-Border Trademark Enforcement

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, CARAMELLOTOFFEE CRISPYORKIE, 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.