In trademark law there is a saying,“Use it or lose it,” which is just what it sounds like: in order to amass and maintain rights in a trademark, its owner mark must use it.
What is this obligation and what does it mean?
The obligation to use means that trademark owners must use their trademark seriously within the country to designate their goods and services in business life. Germany regulates it in § 26 MarkenG (German Trademark Act), the EU in Art. 51 of the European Trademark Regulation.
In the current situation, most fashion brands have closed their brick-and-mortar stores. This means many trademarked products are not being sold or only being sold through the brands online presence. Depending on the future duration of the ongoing lockdown, companies should be aware of what they can do to ensure that their trademark rights are fully protected.
In fashion and retail more generally, the trademarks, themselves, and their uses can be widespread. Fashion-centric marks – which can be any words, phrases, symbols, or designs, or a combination thereof, that identify and distinguish the source of the goods of one party from those of others – range from the traditional word marks, such as brand names, and logos to elements of product packaging (including color) and even elements of the appearance of certain famous products.
The danger lies not in losing the main trademarks like the brand name or logos, but not using all trademarks in the portfolio. For example, brands are not putting their “retail services” class of services to use. According to the Nice Agreement, owners categorise trademarks in relation to the products and services they use them or.
How to use
The decisive factor in assessing the use of the trade mark is its function as an indication of origin. According to consistent case law, the indication-of-origin function is the classical main function of the trademark. This means that it must be suitable to individualise products of a certain company in order to enable the consumer to distinguish it from others. Exclusive use as a company name without direct reference to the goods is not sufficient. Mere sham acts, do not fulfil the requirement of genuine use as well. Rather, use is only genuine if it constitutes a customary and economically reasonable use of the mark.
Any case of use must establish the connection between the owner and the offered goods or services. In this context, the customary practice in the trade is decisive. Normally, the physical affixing of the trademark on the goods is necessary. In the case of internet trade the use of the trademark on the website may be sufficient. The assessment is always made from the point of view of the average consumer, who is deemed to be reasonably well informed and reasonably observant and circumspect.
In principle, the obligation to use the mark is satisfied only if the proprietor of the mark uses it himself. However, European trademark law expressly provides that use by third parties is also sufficient if it has been made with the prior consent – not toleration – of the trademark owner. This means the licence, whereby an informal agreement may also suffice.
Duration of use
Under European law, compulsory use generally begins with the registration of the trademark. However, a so-called grace period for use applies for the first five years. Within this period, the trademark owner may slowly build up his trademark if he does not yet meet the requirements for genuine use. After the first five years, however, genuine use must take place. If a trademark owner stops using it again, the interruption may last for a maximum of five years. If the grace period is exceeded, the trademark is liable to be cancelled. Anyone can then apply to the Trademark Office to have the trademark cancelled from the trademark register.
In US trademark law, the duration is much shorter. A trademark shall be considered “abandoned” if its use has been discontinued with no intent to resume use. Non-use for 3 consecutive years constitutes prima facie evidence of abandonment.
Significance for infringement disputes
If a trademark owner presses claims against third parties based on his trademark due to its infringement, he cannot assert them if he has not used his trademark in the last five years for the products on which he is basing his claim. This is also a consequence of the compulsory use. Any challenged party in a trademark infringement dispute must howether first of all raise the non-use defence himself. The owner must then prove that he used the trademark as such within this period. Proving this can be very difficult and time-consuming and sometimes even impossible. For example, MacDonalds of all brands, lost its European Trade Mark because it could not sufficiently substantiate its serious use of its “Big Mac” trademark.
How to care for your trademark
Depending on the classes of goods and services at issue, this may well extend their trademark’s life span. At least, lockdown isn’t going to last for three to five more years. The EUIPO considers Covid-19 to be an extenuating circumstance. Therefore, disuse owed to the virus related shutdown will likely not lead to losing a trademark. But brands need to take caution not to forget their trademarks and let them fall into disuse.