Declaration of Use for Trade Marks — Why and Why Not?

In an increasing number of countries, a declaration of use must be filed either before a trade mark is registered or at renewal. However, declarations of use are not a requirement under New Zealand trade mark law. This raises the question – is implementing a declaration of use requirement the right way to go?

The Current Situation in New Zealand

Under New Zealand law, an application for a trade mark is filed based on current, or intended, use of a trade mark. The action of filing a trade mark is considered enough to support a claim to use or an intention to use. No extra declaration or evidence to show use is required, so registrations can be obtained for broad goods and services. In addition, at renewal, a trade mark can be secured for a further 10-year term on payment of a fee without any requirement to show use on all the goods and services covered.

For this reason, unless a third party seeks to revoke a registration for non-use, trade mark registrations can exist for years without the trade mark ever being used.

The Effect of a Declaration of Use Overseas

Countries requiring a declaration of use during the application phase also necessarily require that an application is limited to the goods and services where use can be demonstrated before registration. Owners who file for wider goods or services must limit the application to area of use to secure final registration, or otherwise risk losing the entire register right under attack on the ground the claimed use was fraudulent.

Declarations of use before or at renewal also provide the trade mark owner an opportunity to review the register right and keep it relevant to current use. In this way the register is “cleaned” of trade marks no longer used on the goods/services covered by the registration without requiring third-party intervention.

In Favour of a Declaration of Use Requirement

With the increasing ease of the trade mark application process, comes the increase in risk of speculative trade mark applications.

Reduces Burden on Businesses: If legislation does not require proof of use before applications mature to registration, or at renewal, then the burden necessarily falls on businesses to “clean” the register of potentially spurious trade marks that bar their own trade mark applications.

Businesses must then factor into branding strategy the cost and delay of oppositions, invalidity actions and non-use actions, increasing cost and complexity.

Encourages Careful Branding: The additional requirement of a declaration of use before registration would encourage traders to consider the application more than a “tick-box” matter. Having an extra hurdle between application and registration should discourage speculative registrations and encourage considered decisions around branding.

Increased Weight in Enforcement: A registration secured after filing a use declaration, or a renewal supported by a use declaration, will provide at least initial demonstrable use. The underlying registration can then be assumed to be valid at the time of the declaration and this would add weight to the impact of a registration in an infringement action.

Ongoing Audit: On-going renewal declarations would also incentivise traders to keep their trade marks in use matching the trade marks on the register, and vice versa.

Against a Use Declaration Requirement

A system requiring declarations of use may stifle brand expansion given the economies of re-filing for each new iteration of a brand.

Continual Need for Registration Review: Filing for limited goods may also result in unworkably narrow register rights that do not allow for reasonable expansion of products or services offered over the lifetime of a business. Each new use could require a new trade mark application, meaning traders must bear in mind future expenditure in keeping the register up to date.

Risk that Register Rights are Sacrificed: The cost of needing to continually update trade mark registrations may mean registration of trade marks is not pursued as an avoidable expense. This could be to the detriment of the business’s ability to protect its interests in the future.

Encourages Complicated Fair Trading Litigation: If a registration for broader goods/services than those in use at the time of filing is not allowed, business owners may also be forced to adopt a litigious position through fair trading legislation or other commercial avenues because the deterrent value of a narrow registration is also less.

Excessive Legislative Hurdle: Current legislation already provides means through opposition, invalidity action and revocation for non-use where third parties can keep the register clear of trade marks unsupported by use or a genuine intention. Adding an extra legislative requirement during the application/renewal stage may be an excessive hurdle for genuine businesses.

Burden of Action Sits with Trade: Where there is no requirement under legislation to file additional documents, the costs of keepings the register clean sits with businesses who will benefit from the outcome. Public costs (through portioning of taxes) will not need to accommodate extra administrative steps at the Government level to ensure compliance with law.

Our View

While there is a risk of a cluttered register where proof of use before registration is not required, a registration limited by actual use is arguably too inhibitive.

A registration that covers an area of bona fide intended use broader than the current use provides trade mark owners with the margins of exclusivity necessary to develop a business over time. Overly restricted trade mark registrations run the risk increasing compliance cost in securing registered trade mark protection. Faced with increased cost at early stages, businesses may well decide to forego registered trade marks, leaving themselves open to uncertainty and potential cost in the future by relying on common law rights.

A good compromise may be to require a use declaration at renewal. This will allow for normal business growth and will prevent un-used trade marks remaining on the Register where the owner has no use to justify the monopoly granted by a registration.

Recommendations

The best way to ensure a wide sphere of rights is to identify a trade mark which is wholly distinctive for goods/services to be covered.

A distinctive trade mark is not only easier to register, but it is also typically easier to enforce under the Trade Marks Act and under common law rights.

Having identified a strong brand, owners should recognise that there is an art in crafting a description for trade mark applications which reflects intended use and is broad enough to provide a good sphere of rights. A well-filed trade mark will meet the bench-mark of current laws and will also be able to translate to accommodate any new requirements in the future, such as use declarations.

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