Should you renew a trademark that you're not using?
A trademark is one of the most cost-effective assets of a business. The renewable term of a registered trademark is almost universally 10 years, and when the cost of renewing is amortised across this term, it can come down to an investment of less than a couple of hundred dollars per year. This is value for money when you consider the value of a trademark in brand positioning and the protection of a product, service or even an entire business reputation.
However, a prudent owner of an intellectual asset never spends money on it unless the cost of doing so is justified by the needs of the business in which it is used. If an asset such as a trademark is not being used, it should not be renewed - should it? But not so fast! It is true that a trademark becomes vulnerable to removal from the Australian Trademarks Register if it has not been used (provided that five years has passed since its date of registration). However, this is only one of several factors to be considered in taking a business decision about renewal.
The premise of the following suggestions is that while a trademark may have become vulnerable through non-use, this can be addressed by minimal, new and genuine use in commerce:
- Why is the trademark unused right now? Is it because there are no products or services utilising the trademark? Or is it that the company is still committed to the product or service, but actual sales or service delivery under the trademark is not occurring because of other business factors such as the economic environment? Before abandoning the trademark, a decision must be made about dropping or repositioning the product or service first. Perhaps the contributing circumstances will change.
- Is there value in reinvigorating the trademark? If it was successful the first time around, perhaps it can be used to stimulate new revenue streams. A great example of this strategy is the relaunch by Pacific Brands of the Antz Pantz brand. The "Sick 'em Rex" campaign, successful when the brand was first launched, was reintroduced about a decade later to achieve great market penetration of Antz Pantz products a second time around.
- Is the trademark of some value to another part of the business or to an external party? This is a particularly good question if there is a residual market reputation in the trademark (despite the non-use), or a significant financial investment was required to achieve registration or to build the brand in the market originally. Any decision to remove an intellectual asset from the books should be preceded by asking whether a last return on that investment can be obtained by divestment rather than abandonment.
- Does the trademark have elements (words or figurative) in common with other company trademarks? If so, then keeping it alive may act as a defence to competitors strategically positioning their own trademarks closer to those other company trademarks in use (working assets). In other words, the trademark may help to keep a visual and aural distance between a company and its competitors. Remember, the mark is vulnerable to removal, not invalid. A competitor must take positive action to remove it. While it remains on the register, it creates at least a perception of a barrier to entry for competitors.
- Does your company want competitors to have the advantage of that residual reputation mentioned above by being able to re-register the trademark in their name? Having abandoned a trademark registration, your company does not want to have to argue why a competitor’s use is deceptive or misleading because the company still wants to claim that reputation and realises too late that it is inextricably linked to the trademark. Understand the full value of a trademark, not just its cost.
The principles of good intellectual asset management apply equally to small and large investments. Sometimes the benefits of even a small spend on trademark renewal can be counterintuitively vast, and the downsides of the "saving" unexpected.
This is an Insight article, written by a selected partner as part of IAM's co-published content. Read more on Insight
Copyright © Law Business ResearchCompany Number: 03281866 VAT: GB 160 7529 10