U.S. and European Companies Spend Twice as Much of Their Trademark Budget on Enforcement Than Those in Asia
12 May 2015
LONDON / WASHINGTON D.C., 12 May 2015 – Companies headquartered in the U.S. and Europe, spend significantly more of their trademark budget on enforcement than companies in Asia, according to new research conducted by leading global law firm Hogan Lovells. In the U.S. 43% of a company's trademark budget is spent on enforcement and 38% in Europe. However, only 17% of budget is spent on enforcement in Asia.
The survey of major multi-national brand owners revealed that, when enforcing their trademarks, the use of enforcement methods varies around the globe. Not surprisingly, cease and desist letters are the most commonly used method with 92% of respondents saying that they use cease and desist letters always, often or sometimes. However, companies headquartered in Europe more frequently use a broader range of enforcement method options – for example, customs seizures, civil actions, criminal actions and seizures at trade exhibitions) than companies headquartered in the U.S. and Asia.
Lloyd Parker, head of intellectual property in Asia & Middle East at Hogan Lovells, based in Tokyo, said:
"Whilst in Asia, there are some cultural reasons for being reluctant to litigate and weaknesses in some aspects of the legal enforcement systems, Asian companies, particularly Japanese companies, should consider increasing the enforcement portion of their total trademark budget expenditure and using a greater range of enforcement methods to better protect their brands and business."
The survey also revealed that trademark owners are potentially forgoing opportunities to reduce costs and create trademarks which are stronger from both a marketing and legal perspective by not involving trademark department personnel earlier in the process of creating new potential trademarks to be considered before formal clearance searches are conducted.
According to respondents, 72% of suggestions for new trademarks "often or always" come from the marketing department or the relevant business unit (55%). In comparison the participation of the trademark department being involved is much lower (10%). This situation is particularly prevalent in companies headquartered in the U.S. where the corresponding figure for involvement of the trademark department is just 5% as compared to 9% for companies headquartered in Asia and 20% for companies headquartered in Europe.
Lloyd Parker added:
“It's no surprise that trademark creation is predominantly driven by marketing departments and business units in charge of the relevant products and services being offered. However, it is surprising how only a very small percentage of companies involve their trademark department in the initial creation of potential trademarks before formal clearance searches are commenced. Companies that follow the practice of using a cross disciplinary team - that is, a team made up of members from marketing, business units and importantly the trademark department - regularly comment that such an approach has resulted in greater efficiencies, in terms of both cost and time. It also contributes to the creation of trademarks which are stronger from both a marketing and legal perspective."
The survey also showed that while interest in non-traditional trademarks, such as color, sound, scent, motion, shape or taste is high (70% of respondents) converting that interest into registered trademarks is still difficult as only 17% of respondents have already registered a non-traditional trademark. Companies headquartered in Europe are leading the way with 40% of European respondents saying they already have registered non-traditional trademarks, compared with just 24% of U.S. headquartered companies and 6% of Asia-Pacific headquartered companies.
Registrations should increase in the future with 18% of all respondents saying they are actively looking to create non-traditional trademarks for which registrations can be applied for in the future. However, the survey suggested that the complexity of non-traditional trademarks leading to a low success rate for registration was the main reason behind the reluctance of many respondents to develop this newer breed of IP, with 38% of companies citing this as the major reason.
Other highlights of the survey included:
- Nearly three quarters of respondents favor direct filing over use of the Madrid System
- Charging trademark license fees within company groups is more common for companies headquartered in Asia-Pacific than the U.S.
- A full 81% of European companies and 80% of U.S. companies said they sourced new trademark suggestions "always" or "often" from their marketing departments, according to the survey. In comparison the corresponding figure for Asian companies was just over half.
- Among U.S. companies, 67% said that business units "always" or "often" suggested new trademarks, followed by 50% for European firms and 44% for firms in the Asia-Pacific region
- Forty percent of European companies said they already have non-traditional trademarks, compared with just 24% of U.S. companies and 6% of Asian companies
- The Food & Beverage and Automotive sectors were far and away the leaders in developing non-traditional trademarks, with 56% and 50%, respectively, saying they have already registered non-traditional trademarks
- Some enforcement methods, although effective, are rarely used, with respondents in Europe and the U.S. using more enforcement weapons than those companies headquartered in Asia
- On average, U.S. headquartered brand owners spend 2.5 times more of their budget on enforcement than their Asia counterparts
Click here to request a copy of the report.
About the survey:
Administered in April, the survey was part of the “Global Trademark Management Benchmarking Report: 2015,” and included 65 major multi-national B2B and B2C brand owners with headquarters across the United States, Europe and Asia-Pacific. Survey participants represented a wide range of industries.