A trademark audit is a review of a brand owner’s current trademark portfolio to ensure that the brand owner’s trademark usage and trademark holdings are sufficient, comprehensive, and accurate. Good practices requires that a trademark audit be conducted yearly, or any time an existing trademark portfolio is acquired, even if there has already been IP due diligence. The primary goal of conducting a trademark audit is to ensure that there are no deficiencies in protection.

Trademark Audit Step 1: Check for Common Law Use and Proper Use of Registered Trademarks

The most basic trademark audit involves a thorough review of a brand owner’s own printed materials, product packaging, hang tags, displays, advertisements, promotions, and online presence, including its website and social media accounts. The existing trademark portfolio is compared to all current trademark usage, to ensure accurate and comprehensive trademark protection.

Trademarks are Protected by a Registration, a Pending Application, or documented Common Law Use

Flagship and important brands should already be protected by registered trademarks. Trademark applications should be filed for new brands that are currently in use or expected to be used in the near future. Use is generally a pre-requisite to securing trademark protection in the U.S. However, U.S. trademark law also permits a brand owner to ‘reserve’ a trademark for a product/service that they are in the process of developing or expect to launch, by claiming an intent-to-use (“ITU”) filing basis. A trademark filed based on ITU gives notice to third parties that the brand owner is claiming rights in the trademark, even though the mark is not yet in use. The ITU trademark application will only proceed to registration, once it has been used in the U.S.

Common Law Trademark Protection

U.S. law grants a measure of protection to trademarks that are in use in U.S. commerce but are not the subject of a trademark application or registration. This type of trademark protection is referred to as ‘common law protection.’ To take advantage of common law trademark protection, a brand owner must keep accurate records and track the dates of first use along with the locations where the trademark has been used.

While useful, common law trademark protection in the U.S. is limited to the geographic area where there is evidence of use. A lack of sales or distribution to a location may mean no common law protection. Therefore, a federal U.S. trademark registration is preferable because it has a nationwide reach.

Word Marks and Stylized Word Marks

If registrable, a word mark should always be the primary focus for trademark protection. This is because a word mark protects use of the trademark in any font, style, size, layout, or color. However, if a trademark is used in a specific or unique font or stylized depiction, this specific usage should also be registered to ensure the maximum breadth of protection.

Examples:

COCA-COLA® and WHOLE FOODS MARKET® and

A Trademark Registration or Application Covers all Relevant Goods and Services

All registered trademarks should be reviewed to ensure that goods and services in use with the subject trademark are covered by an application or registration. Any goods or services no longer in use should be similarly removed from a trademark registration.

It is not uncommon for successful brands to expand the offering of products or services of an existing trademark. Many brand owners mistakenly believe that their trademark registration covers any new goods or services offered in connection with the trademark. However, a trademark registration is static, and its breadth of protection does not automatically expand to match use of the trademark. Additionally, U.S. trademark law does not permit amending an existing trademark registration to add new goods or services.

Example:

SLEEPYTIME is registered for pillows in class 20. The brand owner is now also selling SLEEPYTIME branded bed sheets. The brand owner assumes that their current registration will also cover bed sheets. However, bed sheets is classified in class 24, and would require a new trademark application to protect these goods with a trademark registration.

If a third party files a trademark application for TIME TO SLEEP for bed sheets, the USPTO should cite the existing SLEEPYTIME trademark registration as a barrier to registration of TIME TO SLEEP for bed sheets, as the marks are confusingly similar and the goods are highly related, despite being in separate classes.

While the USPTO is a good first line of defense, it is not ideal to rely on it to guard against confusingly similar trademarks, since a trademark Examiner may not view TIME TO SLEEP as confusingly similar to SLEEPYTIME or could fail to cite the existing registration because the goods are in different classes. To better guard against this type of infringement, it would be prudent and less expensive to file a new trademark application for SLEEPYTIME for bed sheets, rather than have to oppose a trademark application for TIME TO SLEEP.

The converse is also true: any goods and/or services no longer being offered in connection with a registered trademark must be deleted from the trademark registration. Deletion of goods and services that are no longer in use is typically done during trademark maintenance. The consequences of failing to delete goods or services that are no longer in use include:

It can increase the success of a cancellation action filed by a third party.

In some cases, it may be considered fraud on the USPTO and subject to serious penalties.

Finally, the USPTO has started to conduct its own trademark audits, and may request that a trademark owner to submit proof of use of the mark in connection with randomly selected goods or services listed in the trademark registration. If such proof cannot be submitted, the USPTO may cancel part or all of the registration.

Checking Licensees’, Distributors’ and Resellers’ Usage to Prevent a Loss of Protection

After conducting a review of the brand’s own materials, a similar review should verify use by authorized licensees, distributors, and resellers. Even authorized trademark users are often guilty of incorrect or inconsistent use, which may be harmful to a brand. A brand owner’s failure to properly control and oversee its licensee’s use of its trademarks could result in the invalidation of its trademarks.

Trademark Audit Step 2: Ensure Correct Marking and Use

Trademarks are correctly marked

The TM and registration notices (commonly circle R) notify the public, consumers and competitors that the brand owner is asserting rights in the trademark.

Trademarks used in common law that are not the subject of a trademark registration should be marked with the ™ symbol. Similarly, trademark applications pending in the USPTO should also be marked with the ™ symbol.Once the trademark has registered, all uses in connection with the mark such as product packaging, labels, displays, websites, and social media should be marked with a registration notice.

Examples of acceptable marking include:



Registered, U.S. Patent and Trademark Office; or

U.S. Pat. & Tm. Off.

The registration notice should be used after the entire trademark as it is registered. A word or phrase not subject to the trademark registration should come after the ®.

Example:

Incorrect: LOGITECH MOUSE®

Correct: LOGITECH® MOUSE

A registration notice should never be used in conjunction with a common law trademark or a pending trademark application because it may result in a weakened position in the event of litigation or may form the basis of an opposition or a cancellation action.

For trademarks that are no longer being used in U.S. commerce, all registration notices should be phased out and removed from websites, packaging, displays, labels and tags, both in print and online. Continued use of registration notices can be viewed as a fraudulent claim of protection.

Trademarks are correctly used

Trademarks must always be correctly used to ensure continued protection and to avoid having the trademark becoming generic. A trademark that is generic cannot be protected by a trademark registration and is available for anyone to use. Examples of trademarks that have become generic due to a loss of legal protection in the U.S. include: Escalator, Laundromat, and Trampoline.

Word marks should always be used as an adjective and not as a noun or a verb.

Examples:

Incorrect: I will run you a Xerox®. [Xerox® used as a noun]

Correct: I will run you a photocopy on the Xerox® machine. [Xerox® used as an adjective]

Incorrect: I like to Google™ famous people. [Google used as a verb]

Correct: I like to run Google™ searches on famous people. [Google used as an adjective]

Changes to Registered Trademarks

In order to maintain protection, a trademark must be used as registered. A word mark may be used in any font, style, size, layout, or color. A design mark registered in black and white may be used in any color or size. These uses do not qualify as changes to the trademark.

Examples of significant changes to a word mark include addition or deletion of words, punctuation, or spacing. Changes to a design mark include any alterations to the design, even minor stylistic updates. If a trademark is no longer being used as it is registered, then an existing trademark registration can no longer be maintained and a new trademark application should be filed. It is better to file for a new trademark application before the existing trademark is due for maintenance, rather than after discovering that the existing trademark cannot be maintained because use of the mark does not match the trademark as registered. This way, there are no gaps in protection of the trademark.

In select cases, the USPTO will permit changes to a trademark registration, if the USPTO considers the change to be an immaterial alteration. Examples of alterations that the USPTO has permitted include:

Modernizing minor stylistic changes to a design;

Changing the placement of a word relative to a design;

Removal of “THE” or “INC.”;

Amending from one word to two or vice versa; and

Removal of quotation marks.

Trademark Audit Step 3: Check for Correct Recordation of Changes in Ownership

A proper audit requires a careful review of the brand owner’s U.S. and foreign trademark portfolio to ensure that all changes in ownership have been accurately recorded with the trademark office and are up to date. This is especially important for a pending foreign trademark application that is the basis for a priority claim in the U.S. The priority claim may fail if a change of ownership is not timely recorded before the U.S. application is filed.

Some foreign jurisdictions have mandatory recordation requirements, which means that any change in ownership must be recorded as soon as possible. Similarly, in some jurisdictions, a failure to properly record current ownership or a license can make the trademark registration vulnerable to third party cancellation. It is important to check with foreign trademark counsel to ensure correct compliance with all applicable rules.

Trademark Audit Step 4: Foreign Trademark Protection

Since trademark protection is territorial, a U.S. trademark registration does not have effect outside of the U.S. Trademark protection should be contemplated in countries where brand owners are engaging in the following activities:

Manufacturing

Importing

Distributing

Selling

Licensing

Offering, or providing their product/service, or

Where they intend to do so in the near future.

Unlike the U.S., most countries do not require that a trademark be used as a prerequisite to securing a trademark registration. In many countries, trademarks are usually only vulnerable to cancellation between 3-5 years after registration, depending on the country.

Trademarks in China – A Special Consideration

China should be a primary consideration when contemplating foreign trademark protection. It is common for bad actors to monitor the U.S. trademark database for new applications (or even existing registration) and to file an identical application in the Chinese Trademark Office or in a related class. Such a pre-existing application(s) or registration(s) can prevent a legitimate brand owner from securing protection of its own trademark in China. In some cases, the infringer uses the trademark application or registration as leverage to encourage the legitimate brand owner to “buy back” its own trademark. This is because it is usually difficult and expensive to oppose an infringing trademark through legitimate channels due to the Chinese Trademark Office requiring a large volume of evidence that supports use of the trademark in China. Such evidence is not always possible to secure or may not be persuasive because it does not qualify as ‘China-wide’ evidence. In a worst case scenario, the owner of an infringing trademark registration can register the trademark with Chinese customs and prevent a legitimate brand owner from importing or exporting its goods in or out of China.

Revisit Existing Foreign Trademark Protection

Since businesses evolve, it is prudent to revisit early trademark filings and existing foreign registrations to ensure that the scope of protection sufficiently covers the goods and services and to prevent infringers from fraudulently registering the brand owner’s own marks.

A brand owner may consider additional protection for new and ancillary goods and services, and should be apprised of current filing strategies that prevent the registration of infringing trademark.

Taking Advantage of New International Registration (IR) Extension Countries

Owners of existing IRs registered through the World Intellectual Property Office (WIPO) should consider whether it makes sense to designate any of the new countries that have joined the IR scheme in the years since their IR has registered. Since 2013, 11 countries and one ‘group of countries’ have acceded to the Madrid Protocol and may now be designated through an existing IR. These countries include Algeria, Cambodia, Gambia, India, Indonesia, Laos, Mexico, Rwanda, Thailand, Tunisia, Zimbabwe, OAPI (African Intellectual Property Organization consisting of – Benin, Burkina Faso, Cameroon, Central African Republic, Chad, Congo Republic, Equatorial Guinea, Gabon, Guinea, Guinea-Bissau, Ivory Coast, Mali, Mauritania, Niger, Senegal and Togo). With Afghanistan joining in 2018, and Canada and Hong Kong expected to join in 2019, extending protection from the existing IR is a relatively simple and cost effective way to add these countries to a trademark portfolio.

Conclusion

A trademark audit is the sum of many moving parts and should be conducted periodically to ensure the robustness of a brand’s trademark portfolio. All brand owners should consider having their trademark portfolio audited periodically. A trademark audit conducted by an experienced trademark attorney examines the current status of the brand owner’s trademark portfolio to ensure its holdings accurately and adequately protects the brand owner’s interests in the U.S. and abroad. The trademark landscape is constantly evolving so it is important that a trademark portfolio evolve with it. A trademark protection strategy deployed ten years ago may no longer be sufficient to protect the brand in the present.