Trade mark housekeeping – no better time to audit your trade mark portfolio

29 April 2020

There is no better time to audit your trade mark portfolio than now. During an economic downturn whether caused by a global pandemic or other economic factors brand owners are typically faced with more limited marketing and legal budgets. On the plus side, brand owners have more time for trade mark housekeeping, such as conducting a trade mark audit. A trade mark audit will assist with managing limited resources in difficult times as the benefits include cost savings, protection of core brands for relevant goods and services, dispensation with applications for weak marks, and non-renewal of registrations for trade marks that are no longer in use.

Equally, the results of a trade mark audit can identify new brands that can be exploited, potentially opening up new lines of licensing revenue, and uncover any nasty surprises such as discovering that an important trade mark registration has lapsed.

What is a trade mark audit?

A trade mark audit is the examination of a brand owner’s trade mark portfolio, to determine the status and value of any registered or unregistered marks based on current business activities and strategies. The exercise involves evaluation of which marks a brand owner ought to protect, enforce, exploit or dispense with.

What steps can in-house counsel or brand owners take to conduct a trade mark audit?

Step 1: Identify the system in place, if any, to record the known trade mark portfolio

A brand owner may have an existing system or method in place to record trade mark matters. Whether it be a docket1 or a different type of a database, it is important to consider whether trade mark records are held by different people within a business, and to consolidate all records onto one internal trade mark register.

Alternatively, external lawyers might manage the brand owner’s marks using a professional trade mark management tool. If such a tool exists, a brand owner should enquire about gaining access to it, to be able to conduct its own audit.

Step 2: Update or create a docket

In house counsel or brand owners should review their company’s docket and any information collected in Step 1 to update it; or create a similar index by listing all of the registered and unregistered marks it owns.

It is important to consider unregistered marks because some jurisdictions will recognise use of a trade mark instead of registration of a trade mark to establish an owner’s rights.

For each mark, a docket should detail its:

  • Elements (including logo and/or words);
  • Registration or application number, and corresponding international registration number (if any);
  • Country of registration and designating country/countries (if any);
  • Registered or applied-for class(es) and specification(s);
  • Registration status;
  • Filing date or intended filing date;
  • Date of first use (in its country of registration and/or designating country/countries);
  • Actual use (and any period(s) of suspended use) including use by others (for example, by way of licensing);
  • Advertising and promotion expenses in respect of the goods and/or services for which it is used;
  • Yielded earnings in respect of the goods and/or services for which it is used;
  • Encumbrances (if any);
  • Projected use in the future; and
  • Upcoming deadlines.

Keeping these records up to date can save time and costs down the track when such information is required for enforcement purposes, or to satisfy evidence of use requirements.

Step 3: Review the brand owner’s business objectives and IP strategy

In consultation with the relevant business representatives, in house counsel should confirm the brand owner’s business objectives (and IP strategy in particular), as they will almost certainly have changed as a result of a slowed economy. These objectives will form the benchmarks by which use and value of a given trade mark will be assessed.

Step 4: Analyse use and registration of each mark

Having established the brand owner’s business objectives and IP strategy, the following aspects of use (or non-use) should be analysed:

Ownership and encumbrances

The chain of title to a mark should be examined, including confirmation that the applicant for each mark matches with the ownership arrangement in place at the time of the audit. Any encumbered trade marks should have their security or lien agreements reviewed for commerciality, and a decision to a retain or remove them should be made.

In addition, ensuring that any existing security interests over trade marks that arose prior to 30 January 20122 have in fact been registered on the Personal Properties Securities Register (PPSR) so they do not lose priority. Any security interests in trade marks arising on or after 30 January 2012 must also be registered on the PPSR to preserve their priority.

Lastly, ensuring that any security holders record such interests on IP Australia’s Register of Trade Mark to gain additional notification benefits.

Licence agreements

All current and proposed licence agreements should be reviewed for compliance, having special regard to the rights and obligations of the parties to them, pursuant to the country/countries covered therein.

It is possible that clauses have been triggered by events owing to an economic downturn, and it is important that a brand owner is aware of the obligations and limitations which apply to the parties.

Lastly, checking that licence agreements are in place to prevent removal of any trade marks for unauthorised use.

Proper use of a mark

A brand owner should confirm that a given trade mark is being used uniformly across its operations, in the capacity and to the extent designated in its business strategies. Proper use is critical to the defensive trade mark strategy of a brand owner, in the event that its rights are infringed or that it becomes the subject of a claim for removal for non-use of one of its marks.

Cost benefit analysis

An audit presents an excellent opportunity for brand owners to consider whether use of a given mark has been generating and will generate a desired level of revenue when weighed against the marketing and financial objectives of a business. A brand owner should first establish its critical marks (core brands) and its critical markets.

In house counsel should then, with reference to these groupings and in consultation with the necessary business representatives, distinguish marks and markets of greater importance from those of lesser importance. It may be that, following disbandment of a particular marketing strategy, dispensation with a corresponding trade mark application will follow. A less straightforward decision will be dispensation with a weak mark which has been objected to by a trade mark examiner, especially where it is not expected that objections to the mark will be overcome easily, if at all.

An audit could also identify registrations that are no longer in use but are due for renewal, a decision can be made to allow the mark to be removed from the Trade Marks Register for non-payment of renewal fees, or potentially licensing the mark to a third party to create a new line of licensing revenue.

Brand owners should bear in mind the timeframes and costs attached to each of its marks, which may dictate the feasibility of any proposed strategies.

Step 5: Devise a trade mark portfolio strategy based on audit results

Taking into consideration the results of an audit, brand owners should formulate new strategies to strengthen its portfolio of marks, including timeframes for their execution and review. Brand owners should be sure to tie up loose ends for registrations and applications that are being amended or abandoned in every relevant jurisdiction, as well as attending to proper execution of changes or updates to licensing agreements as necessary.

Step 6: Conduct trade mark audits at regular intervals and maintain upkeep of records

Trade mark audits should be scheduled for completion at regular intervals to ensure a brand owner’s intellectual property rights always cover a business’ activities and fit within the business’ brand strategies as they evolve over time. For example, many brand owners have had to modify their business models to provide new product lines to meet consumer demand such as hand sanitiser, or protective clothing but have not sought to protect their marks and brands for these new products.

All records relating to a brand owner’s marks should be updated on an ongoing basis to ensure the formal audit exercise can be carried out in reliance on as much accurate information as possible.

Simplifying the audit process

If you are interested in conducting a trade mark audit internally and you have already opted to have your trade marks catalogued in our secure database, you can easily access your portfolio online using your client account. Alternatively, you can access the noticeboard on the database, which only you and your lawyer can view, to provide us with instructions to carry out a trade mark audit for you.

We are experienced in assisting in-house counsel to carry out professional trade mark audits and can guide legal teams to conduct their own audits by advising on the nuances of IP law that will apply to a particular portfolio of marks. If you would like assistance with auditing your portfolio of trade marks, please contact us.

This article was written by Helen Kavadias, Partner.

1 A docket is a list of all of the registered and unregistered marks a brand owner owns, including information about each mark such as details of use and status

2 The commencement date of the Personal Property Securities Act 2009

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