In its 2016 Inquiry Report into Intellectual Property Arrangements, the Productivity Commission identified numerous sources of evidence for “trade mark cluttering” in Australia. In August 2017, the Australian Government published its response to that Report and endorsed a number of “decluttering” measures proposed by the Commission.
According to the Report, trade mark cluttering occurs when the scope of statutory protection extends beyond the legitimate commercial interests of the owner. Cluttering results in a bloated register which undermines the confidence of new market entrants wishing to secure their ability to use and register new brands.
Major causes of trade mark cluttering as identified in the report include:
- trade mark registrations which are overly broad in scope;
- the absence of effective policing of unused trade marks; and
- the five-year grace period that shields new registrations from non-use attack.
Trade mark applicants are under no requirement to declare the nature or scope of their interest in a mark at the filing stage. As a result, applicants habitually claim protection in respect of goods and services extending well beyond those of genuine commercial interest. This might be a product of defensive posturing, unrealistic brand aspirations or a trigger-happy approach to the selection of goods and services (made all too easy by IP Australia’s “picklist” of goods and services).
The concept of trade mark use is embedded into the definition of “trade mark” but the Trade Marks Act does not charge the Trade Marks Office (TMO) with responsibility for verifying that a mark is in use or for removing unused marks from the Register. That function is effectively outsourced to other users of the system, who may (at their expense) oppose applications filed without an intention to use or seek removal of unused registrations. There are no maintenance requirements for trade mark registrations beyond the payment of renewal fees. An unused registration that is not challenged for non-use will sit on the Register for an initial 10-year term and, subject to payment of renewal fees, remain registered indefinitely.
The Trade Marks Act extends a 5-year grace period to trade mark registrations (2 years beyond the minimum required by TRIPS). Registrations within their initial 5-year term are effectively immune from attack under s 92(4)(b). The grace period has been justified as an allowance for the time taken to establish a new business venture (Burrell & Handler at 338). However, that allowance may be overly generous having regard to the typical trajectory of nascent commercial enterprises. Indeed, a 2016 report from the Australian Bureau of Statistics found that around half of Australian start-ups fail within 3 years of establishment.
The Productivity Commission recommended the following “decluttering” measures that would take effect as amendments to the Trade Marks Act:
- reducing the non-use removal grace period from 5 years to 3 years;
- requiring trade mark applicants to disclose whether they are using or intend to use the mark on filing, registration and renewal;
- requiring owners of registrations secured on an “intent to use” basis to provide evidence of use following expiry of the non-use removal grace period; and
- collecting and publishing on the TMO database the use information supplied by trade mark owners and inviting owners to remove their registrations where appropriate.
The Government has supported, in principle, the balance of the above recommendations but sought further research to better understand the sources and extent of trade mark clutter before it considers which aspects of the recommendations to implement.
If the aim of the proposed reforms is to reduce trade mark clutter by imposing greater rigour around the requirement of ongoing use, it is doubtful whether recommendations (2) – (4) above go far enough. The recommended scheme contemplates the undesirable scenario in which a mark remains registered while the fact of its non-use is on the public record. In the absence of disincentives for maintaining unused registrations, it is difficult to imagine trade mark owners complying with requests issued by IP Australia to voluntarily withdraw or restrict their trade mark registrations.
Far from empowering the TMO to more actively police use or to strike-off registrations that are not supported by evidence of use, the proposed scheme still relies on other users of the system to challenge vulnerable registrations. It is therefore unlikely to meaningfully reduce trade mark clutter. It may also do little to bolster the confidence of new market entrants seeking to understand their infringement exposure. A published statement regarding the use status of a potentially conflicting mark might be illuminating, but the data is only current at a particular point in time. A statement that a mark is not in use might provide false confidence if use has recommenced.
Between the relatively soft approach endorsed by the Commission and the rigorous maintenance scheme enforced by the United States Patent and Trademark Office (USPTO), there must be a suitable and economically viable model for ensuring that trade mark owners meet ongoing use requirements. The Commission considered a requirement for proof of use at renewal but, based on a 2004 ACIP Report, considered the cost/benefit ratio undesirable. Having regard to advances in digital technology since 2004, and the fact that the USPTO manages to operate an electronic system for filing specimens of use, one wonders whether the view expressed by ACIP remains a compelling argument against demonstrated use at renewal.
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This article is an extract from Spruson & Ferguson’s Asia-Pacific Regional Trade Mark Update. You can view the entire summary here.
Trade Marks Team