Coronavirus (COVID-19)—issues for brand owners

Coronavirus (COVID-19)—issues for brand owners

IP analysis: David Stone, partner at Allen & Overy, discusses the difficulties the coronavirus (COVID-19) pandemic poses to brand owners involved in trade mark registry proceedings and trade mark litigation, what brand owners can do to mitigate the risk of future challenges to their trade marks, and the rise of counterfeiting during the pandemic.

What practical difficulties might the COVID-19 pandemic create for brand owners who are involved in registry proceedings and/or litigation in respect of their trade marks, and what action should IP lawyers be advising them to take to address them?

Trade mark offices and courts around the world—like brand owners and IP practitioners—are adapting to new ways of working as a result of the COVID-19 pandemic. Fortunately, the majority of trade mark offices have long since made electronic filing and communication available to their users, which enables proceedings to continue with only minimal disruption. Similarly, courts in many jurisdictions, including the UK, have made remote hearings available to parties via Skype or other tools.  Therefore, for a lot of brand owners, protection and enforcement of their IP rights can continue more or less as usual.

Remote hearings take a little getting used to, but they do work, can be really efficient, and may well be one of the innovations that carries over after restrictions have lifted.

As a result of the pandemic, many trade mark offices around the world have extended (EU Intellectual Property Office (EUIPO)) or suspended (UK and Spain) deadlines or made extensions readily available to brand owners upon request (US and Canada). The majority of these automatic extensions or suspensions commenced in mid-March 2020 and will continue until at least the end of April 2020. For example, opposition deadlines have been extended to 4 May 2020 by the EUIPO and to at least 28 July 2020 by National Institute of Industrial Property (INPI) in France. In the UK, certain steps in the application process cannot be completed electronically, so once normal business resumes, there will be a backlog of applications to be published and registered. The downside for trade mark applicants is the resulting (potentially significant) delays in publication or registration of their applications. This could, in turn, delay the ability of brand owners to enforce their rights.

Of course, in some circumstances, the extended timelines will be welcomed by brand owners. In ongoing registry proceedings or litigation, brand owners can likely avail themselves of additional time to gather evidence from the business or licensees. Some trade mark offices have even extended the deadlines to claim priority from a first filing under the Paris Convention (eg EUIPO) or have relaxed the documentary requirements for filing trade mark applications where they would usually require legalised Power of Attorneys to be filed simultaneously (eg UAE and Saudi Arabia).

We are encouraging clients to work towards meeting their original deadlines where this is possible. This will avoid a deadline build-up and heavy workload for brand owners post-COVID-19. More importantly, it will avoid any challenges by third parties at a later stage to the legality of the extended deadlines.

What has been the impact of the pandemic on activity by counterfeiters and what steps can brand owners take to combat it?

The pandemic has led to a spike in medical counterfeit goods such as face masks, disinfectants, pharmaceuticals and fake COVID-19 tests. Given their dangers to the health of consumers, these have been a prime focus of law enforcement agencies even as their overall workload has shifted. EUROPOL published two reports in March 2020 and April 2020 highlighting efforts made to date to stop the distribution of these dangerous items.

In parallel, as physical stores selling non-essential goods have shut their doors in much of the world, there is an increased risk that consumers looking for goods online may come across counterfeits. This concern extends to future availability of counterfeit goods—the Anti-Counterfeiting Group in its latest press release warned that criminal counterfeiters are in manufacturing overdrive preparing vast stocks of goods to market once the health crisis is over.

As a result, even as the impact of the lockdown is felt across all business sectors, brand owners should resist the temptation to cut back on their IP protection strategies and should, where possible, review them to ensure that they have the necessary trade mark and design registrations as well as up-to-date notices filed with the border authorities to streamline the process of dealing with counterfeit goods.

In addition, digital services are not immune to the counterfeiting trend, with The Guardian reporting the appearance of numerous convincing sign-up pages to popular entertainment streaming services, aiming to obtain personal information of unsuspecting consumers, including their credit card details.

While there may be a number of valid reasons why a business may want a COVID-19-specific domain name, brand owners should be also aware that there may be additional hurdles to their registration—EURid (the registry manager of the .eu domains) announced that registrants of such domains will be required to validate their data and submit a statement that their registration is in 'good faith', and Nominet (the registry manager of .uk domains) is suspending suspicious registrations until it can obtain evidence of their good intentions.

What steps should brand owners be taking to protect their portfolios and, in particular, to mitigate the risk of future challenges to their trade mark registrations based on lack of genuine use?

Mitigating the risk of non-use attack is a consideration. In most jurisdictions, trade marks must be used genuinely to create a market for the goods and/or services for which the mark is registered. If the proprietor does not use the mark, then a third party can seek to revoke it on the basis of non-use. It is a defence, however, to show that there are ‘proper reasons’ for non-use—a provision which has its origins in the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs), which recognises import restrictions and other governmental requirements as ‘proper reasons’.

Many consumer-facing businesses are not using their trade marks genuinely during the ‘lockdown’—restaurants, bars, airlines, hairdressers. At first blush, the risks posed by a non-use attack appear to be low—in the EU, there must be no use for a period of five years, so it would really only be businesses right at the end of the five-year period who were about to launch, but were prevented from doing so by COVID-19. That's going to arise very rarely. For most businesses, they will be able to start trading in the near future.

The predicted (severe) recession creates a further risk—the EU General Court has held that an economic downturn does not amount to a proper reason for non-use, even if the consequences of a recession last for many years. As businesses reduce product lines/services in a downturn, they risk exposing their trade marks, and potentially will be unable to resume providing those goods/services in the future if the marks are revoked and new rights acquired by third parties.

How might the owners of protected designations of origin and protected geographical indications be affected?

Protected geographical indications (PGIs) and protected designation of origins (PDOs) protect the names of specific products, to promote their unique characteristics, which are linked to their geographical origin and traditional production process. While there are differences between the schemes, they all require at least one of the stages of production, processing and preparation to take place in the region. Protection relies on a product specification that defines the local production methods and, if necessary, the origin of any raw materials.

With the COVID-19 ‘lockdown’ in place, many smaller agricultural producers are struggling to comply with elements of the relevant product specification. For example, it may be difficult to source raw materials in the usual way or to comply with traditional production methods, which may involve strict time limits that have become unrealistic with much of the labour-force being unavailable. Fortunately, the EU regulations governing these schemes allow temporary amendments to product specifications to help producers that are having difficulties complying with production requirements. This is a simple process, involving notification to the European Commission together with an explanation of why the amendment is necessary. The protection for some of Europe’s best-known foodstuffs have already been amended. For example, the milking times for the PDOs Parmigiano Reggiano and Mozzarella di bufala Campana and the deadline for planting of seeds for the French GI Oignon de Roscoff have all been extended to give local producers more time to comply. It is likely that we will see more changes before the end of the crisis.

Interviewed by Barbora Kozusnikova.

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