Trademark Misuse - Keeping Distributors, Affiliates and Licensees from Infringing

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International intellectual property law firm Fish & Richardson recently sponsored a presentation to the Association of Corporate Counsel, San Diego Chapter entitled “Misuse of Trademarks by Distributors, Affiliates or Licensees.”

International intellectual property law firm Fish & Richardson recently sponsored a presentation to the Association of Corporate Counsel, San Diego Chapter entitled “Misuse of Trademarks by Distributors, Affiliates or Licensees.”

According to Lisa Martens, a Fish trademark and copyright principal and a presenter, “Many companies grapple with distributors, affiliates or licensees that exceed the scope of their license or continue to use the IP of an owner after the termination of an agreement, essentially becoming infringers. This can result in deception of the public and cause great harm to a company.”

Blake Bilstad, senior vice president, general counsel and secretary of Provide Commerce in San Diego, was also a presenter at the program. Provide Commerce works with licensed affiliates throughout the world under the brands of ProFlowers, Cherry Moon Farms, Shari’s Berries, RedEnvelope, ProPlants and Personal Creations. Affiliates advertise Provide Commerce’s products and website in exchange for a portion of the business their efforts generate and are licensed to use specific trademarks and images owned by Provide Commerce.

Despite contracts with affiliates, trademark misuse happens. According to Martens, there is a spectrum of misuse ranging from well-meaning affiliates that, by trying to be helpful, inadvertently violate the agreement to those that are blatant infringers, using malicious business tactics. “The more egregious the actions, the more aggressive a company’s response should be,” stated Martens.

When an affiliate copied banner ads from the Provide Commerce website that it was not authorized to use, Martens was able to resolve the matter quickly by contacting the affiliate to request immediate removal of the images, and the affiliate complied. However, when another licensee repeatedly violated the scope of a limited license, Fish & Richardson, on behalf of Provide Commerce, had to threaten termination of the agreement while attempting to negotiate a favorable outcome. The process was lengthy and difficult despite having an agreement in place.

According to Bilstad, one of the challenges a company like Provide Commerce faces is trying to identify the infringer. If an affiliate is using mass email blasts to promote Provide Commerce’s products, sometimes the only way to track them down is through the hyperlinks within the email text. It can be especially problematic and troublesome if the email recipient has opted out of other Provide Commerce affiliates’ emails. Provide Commerce includes provisions in its agreements that specifically state what content must be included in each email and provides an email template for licensees to use.

Martens and Bilstad suggested using free Google alerts that can track how affiliates not only use a licensor’s name but also images on the web. There are also vendors that will, for a fee, track the use of a company’s domain names, trademarks and images.

Tracking what affiliates are using to market is one of several suggestions that Bilstad and Martens provided during the presentation. Others include:

•Registering trademarks, copyrights, company names and domain names to prevent your licensees from doing so and to allow you to enforce against misuse when necessary.

•Anticipating licensee confusion. “Not everyone is going to read the fine print,” stated Martens, so to the extent you can simplify the process by providing them with the specific materials they are entitled to use, you may be able to avoid future misuse.

•Calling out IP issues explicitly in your agreements and including terms that state how materials must be disposed of once the agreement expires or terminates.

If a company finds that their IP is being infringed, Martens and Bilstad suggested the following enforcement options:

•Start by contacting the party directly, on a business level, in hopes of resolving the issue quickly and informally. Sometimes a simple telephone call may be all that is needed to clarify a misunderstanding. If that doesn’t work, you should follow up in writing to document the fact that you have put them on notice of the violation and demonstrate your attempts to resolve the matter amicably.

•Use a cease and desist order from outside counsel. Some infringement, such as retail signage, may take time to remove, so consider negotiating specific phase-out periods for such uses.

•For a willful infringer who simply refuses to comply with all of your demands, litigation may be necessary. Martens noted that timing is important, as getting a preliminary injunction against an affiliate for infringement is much harder to do the longer a company waits. While it is worth taking some time to try to resolve the matter by taking the above steps before resorting to litigation, she advised that an action for a preliminary injunction should be filed within three months of learning of the infringement, underscoring the necessity to act quickly.

•Utilizing news releases and other public relations tools that discuss a company’s actions and successes against infringers can send a strong message to other potential infringers. Bilstad noted, however, that bad PR can sometimes result from aggressive actions against affiliates, so he suggests using such tactics carefully.

About Fish & Richardson:

Fish & Richardson is a global law firm providing strategic counseling and litigation services to innovative clients who seek to protect and maximize the value of their intellectual property (IP). With more than 375 attorneys and technology specialists practicing IP strategy and counseling, IP litigation, and business litigation, Fish is known for its superior technical expertise. Fish has been named top patent litigation firm in the country for seven straight years, a premier IP firm for America’s biggest companies, and an elite top tier law practice. For more information, visit http://www.fr.com or follow @fishrichardson on Twitter.

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Teresa Warren
TW2 Marketing, Inc
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