18 Aug 2019

Enforcement of IP rights: the value of registration

Authored by: Hadef & Partners, Sector Groups

In brief:

  • The registration of the intellectual property (“IP”) rights associated with a brand is an essential and recommended step in protecting a potentially highly valuable and often integral asset of any brand.
  • Registration also enables a wider choice of enforcement options which can be easier, cheaper and more effective than would be the case with unregistered rights, or which may not be available to unregistered rights at all.
  • In this article, we highlight the importance of registration of IP rights in the context of enforcement, and provide an example of a recent case where our team successfully enforced a client’s registered trade mark rights in the UAE.

Overview

The registration of the intellectual property rights associated with a brand is an essential and recommended step in protecting a potentially highly valuable and often integral asset of any brand. Additionally, it provides a much stronger basis on which to enforce an intellectual property right against others.

As a general comment, registration enables a wider choice of enforcement options, which can be easier, cheaper and more effective than would be the case with unregistered rights, or which may not be available to unregistered rights at all.

Given that the costs of registration at the outset will undoubtedly be less than the costs to i) establish unregistered rights and ii) secure court orders to enforce unregistered rights in the event of a dispute,  it is a false economy to not register and protect the intellectual property rights associated with a brand.

Value of a brand

Whether a business offers a good or service, the brand associated with those goods or services is central to both the operation of the business as well as its overall value.

It is important to remember that the ‘brand value’ is separate to the worth of any physical assets of the business, and can be very valuable in its own right.

According to ‘BrandZ Top 100 Most Valuable Global Brand ranking 2019’, the three most valuable brands as at June 2019 are:

  • Amazon worth an estimated USD 315.5 billion;
  • Apple worth an estimated USD 309.5 billion; and
  • Google worth an estimated USD 309 billion.

Protecting the brand

Due to the importance and inherent significance of a brand, it is essential that brand owners (large and small) take steps to protect the intellectual property rights that comprise their ‘brand’. These intellectual property rights will vary depending on the brand, and may comprise some or all of trade marks; copyrights; designs; confidential information/trade secrets; or patents.

In previous articles, we have described the need to protect a brand and have suggested strategies which can be employed by brand owners to ensure that the associated intellectual property can a) be protected and b) does not infringe any earlier intellectual property rights of a third party. See our articles here and here for more details.

The second step is especially important since, if a third party has already registered similar or identical intellectual property rights, this can result in costly litigation, possible rebranding, and a loss of goodwill in the marketplace for your brand.

Lack of registration is a false economy

While the importance of a brand is generally accepted, it is not uncommon for brand owners to take only partial steps, or none at all, to protect the intellectual property rights associated with their brand. 

The most common reason is the perceived cost of protection, particularly in those countries where there are comparatively high official fees to register an intellectual property right. This reasoning becomes more prevalent in periods of slow economic growth or where there is pressure on available budget.

When one considers that the ‘brand’ is a key element in the decision of a consumer to purchase a particular good or service, it is misguided not to take steps to protect it. The cyclical nature of an economy means that periods of decline are followed by growth, so the lifespan of a brand can be spread across many of these cycles, as can the expense of protecting it.

For example, trade marks are the most common intellectual property right for any brand, and they serve as the ‘face’ of the brand for many years, sometimes decades. Ford (launched in 1903), Kelloggs (launched in 1906), Cadbury (launched in 1824) and Pepsi (launched in 1898) are just some of the many ‘household name’ brands that are over a century old.

The capital investment in developing a brand, securing market share and growing the underlying business over many years, together with the associated growth in goodwill and reputation, should be accompanied by steps to protect the brand.

Relying on unregistered rights is possible in various countries, however, the extent to which these rights can be relied upon, and therefore the outcome of any action relying on these unregistered rights, can be uncertain. Additionally, the time and cost spent on gathering the evidence needed to establish these unregistered rights can be significant.

From a commercial perspective, brand owners seeking external investment, or contemplating selling all or part of a business, will be engaged in a  due diligence exercise into their business which, where a brand is concerned, will invariably look at whether the brand has registered (stronger) or unregistered (weaker) rights as part of the assessment of the relative ability to enforce rights in the brand against others, and consequently the overall value of the brand. Whether any intellectual property rights are registered or unregistered can have a direct impact on the amount of the investment or sale consideration, and can even affect whether the transaction takes place at all in circumstances where a brand is seen as fundamental to the business.

Enforcement through registration

As a brand develops and gains increased recognition in the marketplace, it becomes more ‘attractive’ to consumers. This results in a corresponding increase in the goodwill and reputation associated with that brand.

However, this growth also means that the brand can catch the attention of third party infringers. They seek to ‘ride on the coat tails’ of the efforts made by the rightful brand owner and trade off the goodwill and reputation that has been established in the marketplace in connection with the brand by the rightful brand owner.

Having a registered right in place provides a wider range of enforcement options and prospects of success than an unregistered right. For example:

  • actions for trade mark infringement rely on having registered rights in a particular trade mark. This is of particular importance in civil law jurisdictions where recognition of unregistered rights may be very low or non-existent, and common law remedies such as passing-off are not available.
  • where it is possible to record a trade mark right (such as before customs or other enforcement authorities), there is often a pre-requisite that the trade mark right is registered, before the authority recordal can take place.
  • where enforcement authorities are able to act on the basis of unregistered rights, this is usually by way of a court order. In addition to the time and expense it can take to obtain a court order, there is of course the possibility that it will not be granted. Where infringing goods are in transit, and time is of the essence, there may be only a very short period of time in which to take action. In these cases, a registered right, recorded in advance with the enforcement authorities, can potentially mean the difference between able to seize the infringing goods or not.

A recent example of successful enforcement of registered rights

In a recent case, Hadef & Partners was successful in relying on registered trade mark rights to take action against a third party entity a number of retailers, and a manufacturer, in relation to the manufacture, distribution and sale of infringing beverages. This case, which involved coordinating with UAE enforcement authorities and conducting raids in a number of Emirates, demonstrates the value and importance of registered intellectual property rights and the ability of our enforcement practice to successfully utilise these rights against infringers.

Summary

The protection of intellectual property rights through registration provides brand owners with an enhanced ability to take action against infringers, and to minimise the time, cost and potential uncertainty of outcome for actions based on unregistered rights.

This enhanced ability includes the option to assert infringement and seek a wider range of remedies (such as injunctions or damages) than would otherwise be potentially available.

Registration also means that practical and proactive measures, such as setting up trade mark watching and monitoring procedures, and recording the registered intellectual property rights before enforcement authorities, can be far more effective as methods of preserving, as well as potentially enhancing, brand value. These measures can give brand owners the earliest possible opportunity to take action against infringers, with a greater prospect of success and without, necessarily, the need for perhaps costly and time-consuming court orders.

For more information, please contact us on sectors@hadefpartners.com.