Dangerous practice of hostile takeover of trademark business name.
The practice of hostile takeover of trademark business name always looks the same.
After obtaining a registration certificate, such a company massively sends warning letters to competitors. It requests that they cease selling goods using a trademark reserved for them and paying compensation.
As a patent attorney, I have often met with such stories. Sometimes, in one week I had legal advice with several companies that received the same warning letters.
Each of these companies the portal such as an eBay, Amazon or Polish Allegro blocked sales offers.
How do companies hostile takeover of trademark business name of Chinese producers?
The problem results from the fact that many producers from China introduce goods to the territory of Europe, which they do not protect in any way from the legal side.
Let’s say we’re talking about a steam iron called FENIX.
First, one company shyly decides to bring it to Europe. When it sees that the model is liked by customers, it imports a larger amount of goods. This is immediately noticed by the competition, which also orders them from China. Over time, others do the same.
At some point, the company that bought such irons is the first to see that the market is flooded with competitors’ offers. It decides to fight it by registering for itself:
- the name of the iron as an EU trade mark,
- the appearance of the iron as a community design.
Patent Office – „first come, first served”.
The chances of success of such tactics are high. Trademarks are registered in the opposition procedure. This means that every trade mark will get protection unless someone opposes to registration. An expert dealing with such an application does not check whether the applicant has the right to such a brand. It also does not verify who is the producer.
It is even easier to register Community designs because there is not even a 3-month period for filing oppositions.
The effect of this may be that a „creative entrepreneur” within a few months will have a monopoly on the sale of steam irons called FENIX throughout the European Union. Possibly every iron with this appearance.
What legal tools does a „creative entrepreneur” gain?
Such an entrepreneur does not have to go to court immediately. Relying on the obtained registration certificate, he can remove offers of competitors from such portals as eBay, Amazon or Allegro.
Did you build post reaches on Facebook or Instagram? One day you may notice that your account has been deleted. This can happen after the complaint of the owner of the rights to the mark.
A few months ago, a shocking case came to me.
Someone has reserved over a dozen variations of designs depicting fanciful wall clocks. These goods have been imported from China for dozens of companies from all over Europe for many years. The evidence for this was mass.
What’s more, I even found registrations of individual designs in national patent offices.
The entrepreneur who reserved the designs cut all the competition on eBay. It was enough that he sent a registration certificate to the portal and blocked the sale. Thus, until these designs were annulled, this man monopolized all sales.
As I wrote, the owners of such rights try to intimidate their competition.
By law firms, they send letters requesting the cessation of sales and further importation of the disputed goods. And in many cases such aggressive steps turn out to be effective. Companies that rarely deal with lawyers or courts prefer to let go, even when they feel that they are facing unfair injustice.
How to react to hostile takeover of trademark business name and the manufacturer’s product?
1) Registration of the trademark by the distributor.
In the case of trademarks, only the manufacturer has legal tools to react accordingly. If the mark has been already filed for registration, than the opposition can be filed. And recently we had such a case in our patent & trademark agency.
My client was selling goods from one producer from the east.
However, he noted that his competitor had filed for protection the trade mark he trades. He could do little because he was not entitled to the rights to the brand. So he had to convince the producer to act.
The problem is that it was a huge company and breaking through to the decision-maker bordered on a miracle. But the miracle happened, literally on the last day of the opposition.
Apparently, the assistant gave the president our documents for signature when he boarded the plane 🙂
The case finally ended well. As part of the negotiations, the opponent transferred the trademark rights to the producer. Thanks to this, a competitor has never obtained a legal tool to block the sale to my client.
Such happy endings as the above are rare.
Most often no one notices the application and the sign is formally registered. The market finds out about this when the owner begins to enforce his rights.
2) Registration of an industrial design by the distributor.
In the event of registration of a product appearance in the form of an industrial design, anyone may attempt to invalidate such a right. From designs, the law requires that:
- they were new,
- they had an individual character.
If, therefore, you find evidence that the identical design was offered before the date of filing for protection, there is a good chance of invalidating such a right. In the case of very similar designs, you can rely on the fact that the design did not have individual character.
Only this contentious proceedings can last for years.
Invalidation of the trademark.
If the mark has already been registered, the manufacturer may try to invalidate it. The basis for such a request may be an allegation of filing in bad faith.
Formally, however, until the final decision, the owner of this trademark can exercise his rights and block competition. The dispute itself, if the person entitled to the sign will appeal, can safely take even 4 years.
Hostile takeover of trademark business name – who gains and who loses?
The practice of hostile takeover of trademark business name is extremely dangerous for the manufacturer himself. It means that if it sells its good to someone other than the person authorized to sign, it will break the law. The effect of all the confusion is often such that local European competitors are afraid to place new orders.
Here you can say that everyone is losing.
- First of all, final customers. If one company monopolizes import and sale, it can freely increase product prices.
- Secondly, competitors who want to trade fairly, and can not, because someone has used the legal traps to monopolize the market.
- Thirdly, the Chinese manufacturer is losing out on this, which may after some time be noticed that more companies are giving up new orders.
Only a „creative entrepreneur” gains on this procedure. Even if it does not scare off all of its competition, it’s definitely a big part of it. And that means there will be fewer products on the market. He can fill this gap with his product range.
How not to let the hostile takeover of trademark business name?
I always say that prevention is better than cure. Before hostile takeover of trademark business name, it’s easy to defend yourself. But you have to think about it before you get into trouble.
1) Register your trademark.
The Chinese producer should register his trademark in the European Union. It eliminates all problems.
If someone files his brand to protection eg in Poland, the manufacturer will easily invalidate it. It is enough to refer to its earlier EU mark.
2) Monitor your trademark.
However, it is best not to allow registration at all. To catch such an applicaton, you need to monitor your trademark.
It’s about watching what applications go to the patent offices. If necessary, you will be able to file an opposition.
As a patent attorney, I can take care of formalities for you. I work completely online so the distance is not the problem at all.
Just contact me.