There is no doubt that litigation can be a useful tool for brands looking to enforce their intellectual property (IP) rights, but it starts to lose its shine when you consider the “unpredictable outcomes” and “spiraling budgets,” said Shelagh Carnegie, partner at Gowling WLG (Canada).

It should come as no surprise then that many brand owners seek to avoid litigation and instead search for alternative ways to resolve disputes quickly and cost effectively.

Ms. Carnegie added: “Litigation is often a very lengthy process that can pull on the resources of a company. Often you don’t want your people to have to be excused, given the time commitment [of litigation] and the emotional drain of being a witness.”

According to Emily Roberts, partner, Burges Salmon (UK), “Nobody wants to get bogged down in costly litigation that drags on, but if you fail to police your trademarks it totally undermines the investment you have made in your brand.”

So, with the ever-increasing costs of litigation and the uncertain results, what other avenues can brand professionals use to effectively navigate enforcement without breaking the bank, wasting precious time, or damaging their reputation?

Before delving into suggestions for legal teams looking for creative and cost-effective solutions, we need to look at the current enforcement landscape.

The Pandemic Squeeze?

Budgetary constraints have been happening for a long time—even before the COVID-19 pandemic.

“Companies are always looking at legal budgets as an overhead expense and a drain on company resources,” Ms. Carnegie noted. Added to this, the pandemic’s ramifications are being seen across the world, and brands are not immune.

Since the start of the pandemic, many businesses have been in crisis mode. While budget cuts and freezes and the redirection of resources became common occurrences, brands still had to tackle the same enforcement issues as in pre-pandemic times—and then some.

Another practical issue during the pandemic has been the impossibility of in-person counterfeiting investigations amid lockdowns, said Ms. Roberts, adding that it was doubtful whether infringers would even receive correspondence if you sent it to their postal address.

“We had to be much more creative when looking to enforce in that context,” she said.

For example, her law firm began “digging” online to source other ways of contacting people to conduct brand enforcement.

Relaying his experience during the pandemic, Peter Chong, director of Civil Enforcement, Intellectual Property Department, Greater China, Louis Vuitton (China) Co. Ltd., said that he had a slight pause in his work between February and April 2020.

“But online investigations and evidence preservation continued and the economy remained open,” he noted. “Amid the pandemic, many businesses accelerated their shift to be more digital and sell online and on mobile apps. Unfortunately, infringers did the same.”

Lockdowns globally drove an e-commerce boom. Unfortunately, this shift exacerbated the existing brand protection challenges. With an increase in consumer demand and disruption to supply chains, a lot of opportunistic players looked to exploit the circumstances.

Juan Porta, attorney at law–IP agent, Ryan Lussich & Asociados (Argentina), explained that as many consumers turned to online purchasing for the first time or stepped up these purchases, there was “huge disruption,” with some smaller companies “trying to copy the mainstream trademarks by creating ‘intelligent’ copies or simply selling counterfeit goods.”

He believes that the accelerated shift to e-commerce requires a different approach that includes more significant surveillance on cybersquatting and phishing sites.

Europol’s “Counterfeits, substandard goods and intellectual property crime in the COVID-19 pandemic” report, released in April 2020, found that criminals quickly exploited consumers’ fears and anxieties surrounding shortages of genuine products—particularly pharmaceutical and healthcare products.

“After the widening outbreak and introduction of restrictive measures to contain the outbreak, these types of products rapidly appeared on the market in all EU member states,” said the report. “It is expected that with an end to, or with the diminishing impact of, the pandemic, criminals will shift to alternative goods.”

For brands looking to enforce their rights, there was an added layer of public relations concerns, said Signe Naeve, director, corporate counsel, Intellectual Property, Starbucks (US).

“Smaller businesses in particular are struggling, so we might approach infringement and enforcement with a much softer touch than we would if everyone were in a much better state,” she added.

Agreeing, Ms. Roberts explained: “Big brands had to be cautious about the timing and tone of taking enforcement action during the pandemic. Some enforcement issues could wait, but you can’t wait forever.

“We had to be mindful of our approach to taking enforcement action and think about how to tackle those issues in a business climate where greater stakes are at play.”

While brands can use social media to message about enforcement missteps they may have made in this climate, they can also utilize social media to communicate with buyers and stem counterfeits at their roots.

Mr. Porta has, in recent times, seen good results when brands communicate with their audience through social media channels.

Global Footprint

Aside from the pandemic, increasing globalization is playing its role in the changing nature of enforcement, with parties having to think carefully about in which countries they choose to enforce their rights.

Anessa Kramer, partner, Honigman (US), noted: “Trademark enforcement is increasingly global in nature, so deciding where to sue and investigating the global footprint is important. Increasingly, globalization is making trademark enforcement more expensive. And there are more landmines: you can’t enforce in one country without considering the impacts in another.”

Turning to Europe, brand owners must carefully consider how the United Kingdom’s departure from the European Union on January 31, 2020, affects their enforcement activities.

Ms. Roberts explained that prior to Brexit, pan-European injunctive relief would have covered the United Kingdom and other EU member states. Now, a pan-European injunction will not extend to the United Kingdom, and there will be a need to bring separate proceedings in the United Kingdom to try and stop infringement there.

Tied into Brexit is the changing doctrine of exhaustion of IP rights. A temporary regime is in place, with the United Kingdom unilaterally participating in the European Economic Area’s (EEA) regional exhaustion regime (IP rights in goods first placed on the market in the EEA are considered exhausted in the United Kingdom, but not vice versa).

But this will not last forever: the U.K. government is seeking comments on the country’s future regime of exhaustion and parallel trade going forward. Whatever the regime, brand owners must keep abreast of any changes.

Prevention Is Better than Cure

In this context, how are brand practitioners protecting and enforcing their IP rights when high-cost litigation is less palatable?

In the brand protection arena, prevention is clearly better than cure. Ms. Roberts recommended that brand owners invest in quality clearance advice, secure registered trademark protection, and monitor infringement, so that “these issues can be nipped in the bud early and you have the right tools in place to protect your brand.”

For Starbucks, the enforcement strategy starts from the ground up, with the retail company engaging with Customs offices and agencies. In addition to registering its trademarks with Customs, Starbucks shares letters from authorized importers and manufacturers with Customs throughout the world and trains them on how to identify counterfeit Starbucks goods.

In other approaches, Ms. Kramer noted that clients have experienced success with Customs by recording their trademarks and then preparing a Product Identification Guide to help Customs officers identify counterfeit products. “The more education you can give to assist them, the better,” she said.

Further, Ms. Kramer suggested that brands consider copyright filings. “We have had situations where law enforcement has become interested in assisting us when there was a registered copyright filing but not a trademark registration for the goods at issue,” she pointed out. “In one particular case, the counterfeiter was producing the packaging without any product in it; the copyright helped.”

Ms. Naeve added that Starbucks utilizes an online, third-party anticounterfeiting resource, which can identify counterfeit listings on online marketplaces, social media postings, apps, and websites.

“We utilize algorithms and other tools through our online enforcement. It’s like playing Whack-a-Mole, but you have more mallets,” she said, adding that being able to identify a large volume of counterfeit postings helps to connect the dots and identify the manufacturers behind fake goods.

Additionally, Starbucks takes advantage of brand registry partnerships and targeted watch notices. “We start with having watch notices for our key trademark applications, which can put us on notice of potential infringers,” Ms. Naeve said. “For example, we might see a trademark application that has a similar logo and, after an investigation, we realize that that company might have other potentially infringing IP.”

Similarly, Ms. Carnegie suggested looking for marketplace trends across jurisdictions, to see where there is an increase in copycats and what is giving rise to that.

“Where you can see the same trends emerging, you need to ensure you have registrations in place for your key marks. If a copycat problem emerges, you’ve identified it, and you have that arsenal ready to go,” she added. “Having a defensive arsenal will put a lot more teeth into any demand you make.”

When litigation seems inevitable, where should you draw the line?

According to Ms. Naeve, “In the IP space, Starbucks doesn’t tend to have a lot of litigation, but when we do, it’s very strategic. We engage in litigation in situations when we feel it is important to stand our ground.”

She explained that Starbucks will typically litigate if it is “protecting an important mark or deciding we don’t want to set a precedent that we’re going to settle for high amounts in what we consider frivolous lawsuits and open a door for future similar grounds of litigation.”

In agreement, Ms. Kramer said that it is essential to “develop a strategy that identifies the priorities of enforcement, with knowledge that you cannot always go after everything.”

She recommended avoiding “cookie-cutter” enforcement, such as the overuse of template demand letters.

In addition, she said, “Consider the right team for the right projects. Within my own firm, sometimes I’ll delegate a matter to a particular attorney with the notion that they may be a better fit for the client under the circumstance at hand.”

Essentially, brand practitioners must have a clear strategy in place and know where they are willing to draw certain lines.

In China, litigation is often inevitable, Mr. Chong said, noting, “Other methods of enforcement are hopeful. You can send an infringer a cease-and-desist letter and hope they will respond. But 95 percent of the time, they don’t respond, so we have to take the civil litigation route.

“The respect and awareness of IP in China is still improving. If a recipient receives a letter, they might stop temporarily, but they are very unlikely to admit wrongdoing, sign undertakings, or pay compensation,” he added.

Mr. Chong said that the amount of compensation is improving in China and because civil litigation is done in a systematic manner with scale, brand owners can undertake litigation at a “reasonable cost”—much lower than, say, in Europe and North America.

In his view, civil litigation is the “only way to impose a cost on infringers,” as well as “to make an impact and deter others.”

“To make an impact and deter others, we must file civil litigation. We must obtain a civil judgment to order the defendant to cease infringement and pay compensation,” he said. “For imitations or lookalikes also, civil litigation is the only avenue of enforcement.”

According to Ms. Carnegie, brand owners must clearly define their goals to help “drive the various levels of enforcement you are willing to take on.”

Enforcement is a “long-distance race,” added Mr. Porta, and it must be addressed with a multipronged approach.

“The first recommended step is to define clear objectives, review the status of your IP rights, and strengthen your IP position, if necessary, with more protection so you can be more effective when acting.

“From there, a roadmap with clear objectives for the mid and long term should be defined to prepare and execute an effective strategy.”

Ms. Naeve summarized: “It’s easy to get caught up in every shiny thing that crosses in front of your vision. Take a step back and decide what your priorities are, where is the biggest harm, and where your enforcement dollars can have the biggest impact.”

Want to learn more? Attend Navigating Enforcement Where Purse Strings Are Tight (today, November 17, 8:10 am–9:15 am EST).

Moderator: Shelagh Carnegie, partner, Gowling WLG (Canada)

Speakers:

• Anessa Kramer, partner, Honigman (US)
• Signe Naeve, director, corporate counsel, Intellectual Property, Starbucks (US)
• Emily Roberts, partner, Burges Salmon (UK)

In addition, watch this session on demand from Monday’s Asia Virtual Event, Enforcement: Fighting Counterfeits and Imitations in the Online and Brick and Mortar Worlds.

Moderator: Patsy Lau, partner, Deacons (Hong Kong SAR, China)

Speakers:

• Peter Chong, director of Civil Enforcement, Louis Vuitton (China) Co. Ltd. (China)
• Gretchen Stroud, senior associate general counsel, IP, Gilead Sciences Inc. (US)

Video courtesy of Envato Elements / vectorfusionart

2021 INTA Awards: INTA Members for a Better Society

The Association’s INTA Members for a Better Society commends the efforts of businesses and individuals that strive to improve the world around them.

This year, global financial services company Mastercard International Inc. (US) was nominated to receive the prestigious award.

Mastercard has been an INTA corporate member for more than two decades, with employees participating in various committees that advance the work of the Association.

Among its myriad efforts in 2020, Mastercard launched its True Name initiative, which is designed to empower transgender and nonbinary cardholders to use their true names on their cards, as well as its Solidarity initiative to help curb systemic racism worldwide through actions across three pillars: people, market, and society.

From left to right: Francesca Silverman, Colm Dobbyn, and Cathy Lueders of Mastercard International Inc. (US) accepted the award on behalf the company.