The start of a new year is a great time to take stock of where your company’s business has been and where it is headed. If you have not done a trademark audit within the last few years, here are five good reasons why you should make it a priority in 2013.
1. You may identify gaps in your registration coverage.
Often, taking a fresh look at a company’s trademark portfolio reveals significant gaps that should be filled. An attorney conducting a trademark audit will be on the lookout for:
- Failure to seek registration of important marks
- Registrations covering fewer than all goods/services
- Registrations covering fewer than all countries
- Registrations containing unnecessary disclaimers
- Registrations on the Supplemental Register
- Ownership not properly recorded
- Section 15 (incontestability) declarations not filed
It is much easier to address issues like these as a matter of routine trademark portfolio maintenance, rather than in response to a crisis created by a third party’s unauthorized use of the company’s trademarks or some other external event.
2. You may wish to weed out applications and registrations that lack commercial value.
It is advisable to periodically trim the deadwood from your trademark portfolio so that you can better manage and direct your company’s trademark resources. A trademark audit is a good opportunity to identify trademark applications and registrations that should be designated for abandonment.
3. You may uncover potential risks, such as infringement, breach of contract, and abandonment risks, that can be managed before they materialize.
An important component of any trademark audit is a review of how the company uses trademarks – both its own and those of others – in the marketplace. In many cases, companies use the trademarks of third parties in improper ways, yet need only make some basic changes to come within the scope of the fair use or nominative fair use doctrines. Similarly, companies can often avoid infringing and diluting the trademark rights of others with some thoughtful analysis and counseling. Many companies inadvertently abandon their trademark rights by improper usage, including failure to affix the mark to goods or by using the mark as a descriptive or generic term. It is important to confirm that the company is not in breach of any agreements or court orders that may limit its trademark use. These types of problems can be very difficult to correct once they are identified and challenged by others, but easy to correct when the company is not under a microscope.
4. You may not be adequately policing your own licensees or third parties.
Companies that fail to police their licensees are often leaving money on the table. A company that licenses its trademarks should periodically audit its licensees’ books to ensure that royalties are being paid in the correct amount. Licensors should take appropriate action to ensure that the trademark is being used properly and the quality of the licensed products is acceptable. A licensor does not have to conduct regular inspections in order to meet its obligation to exercise quality control, but rather remain aware of the quality of the products and step in if there is a quality problem that could reflect poorly on the mark.
Trademark owners should also take steps to ensure that their trademark is not being misused by others. While it is best to monitor the marketplace for infringing activity on an ongoing basis, a trademark audit presents a good opportunity to review the landscape and identify any third party infringements that require attention.
5. You may benefit from putting in place trademark policies.
An attorney conducting a trademark audit will take a close look at the company’s trademark policies and consider how they could be improved. Given the rise of social networking and nontraditional marketing campaigns, the risk that a company’s trademark will be misused – inadvertently or not – by the company’s present and former employees, agents, affiliates, and partners is greater than ever. It is therefore increasingly important that the conduct of these parties be addressed in clear, written policies.
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There are many good reasons to conduct a trademark audit. Resolve to audit your trademark portfolio in 2013!
Checklist image by Alan Dean.