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More on the Benefits and Costs of Trademark Monitoring for Franchisors

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For franchisors, the benefits of trademark monitoring can be substantial and the costs relatively low, as I  wrote last October for the IAFD discussing the benefits of trademark monitoring programs.  Here are four real-world examples of how trademark monitoring has helped (or could have helped) franchisors and other business owners maintain control of their brands online.*

*While the following examples are based on real cases, facts have been modified to maintain complete confidentiality with respect to the actual matters involved.

1. The Franchisee Who Never Paid

A new franchisor was subject to financial assurance in certain registration states, and had opted to defer collection of initial franchise fees. A new franchisee signed a franchise agreement, received training and certain materials, but then never opened for business--and never paid the initial franchise fee.

It appears that they had intended to do so--as trademark monitoring revealed they had set up a website and commented on forums using the franchisor's trademarks (in violation of the franchise agreement). But then he went silent (and apparently changed his address) when it came time to pay.

Through monitoring the franchisor's trademarks online, we were able to keep tabs on the "franchisee's" conduct (and use it to the franchisor's advantage) while termination and other enforcement remedies were pursued.

2. The Sudden Competitor

In a case where an effective monitoring program would have significantly mitigated damages and the scope of the parties' dispute, a new client came to me after a significant amount of damage had already been done. The client owned a registered trademark for use on apparel and in connection with retail services, but someone else had previously registered the corresponding ".com" domain name and kept it dormant for years.

The client operated successfully under similar domain names (e.g., "trade-mark.com" and "trademark.net"), until she started receiving complaints and comments that were wholly unrelated to her website and products. As it turns out, shortly after she launched her business, the ".com" owner launched a commercial site that was causing confusion and misrepresenting the client's brand.

Fortunately, we were able to make a strong argument for bad faith that helped produce an efficient settlement, but the settlement costs and loss of business likely could have been reduced substantially if the alleged infringer had been identified and targeted much earlier in the process.

Given actual prior knowledge of the domain name, this would have been a particularly easy issue to address through trademark monitoring.

3. The USPTO Registrant

In another case where trademark monitoring would have saved significant costs and headaches, a new client came to me after delaying in filing for initial trademark registration. He had been using his trademark online for close to a year, but had simply put off registration with the USPTO.

In performing the trademark clearance research in connection with the application, I discovered that someone else had filed for registration of an identical trademark for use in connection with substantially identical professional services only a month and a half earlier. A month and a half may not sound like much, but for small business owners (and bad faith infringers), this is plenty of time to put lots of money and effort into building a new online brand.

Somewhat fortunately, again, this appeared to be a case of bad faith, and that helped expedite a favorable settlement (withdrawal of the competing USPTO application), but the potential damage if we had not reached a settlement was substantial. Had the business owner been engaged with an effective trademark monitoring program, it is likely that (i) the bad faith user would have been spotted before they applied for registration, or (ii) at the very least, the competing application could have been addressed much sooner after its initial submission (of course, the issue may have been altogether moot if the client had just timely sought to register his trademark).

Either way, the risk of loss and paralyzing uncertainty likely would have been mitigated substantially through effective trademark monitoring.

4. The Unauthorized Reseller

Finally, in another case where trademark monitoring served its purpose, an author of business publications was able to discover that an unauthorized individual was re-selling digital copies of her publications online - using her name to promote them - without her authorization. While we could not immediately track down the infringers, being aware of the problem, we were able to make effective use of the Digital Millennium Copyright Act to get the infringing copies removed from the Internet in less than a week.

The client will need to continue to monitor to make sure that the infringer does not resurface on some other ISP, but under the circumstances trademark monitoring allowed her to protect her reputation and maintain exclusive control over the distribution of her works for only marginal additional fees.

Conclusion

As these examples demonstrate, for franchisors, the benefits of trademark monitoring can be substantial. Not only does trademark monitoring allow franchisors to promptly address instances of potential third-party infringement, it also allows them to (i) monitor franchisees' representations of their brands, and (ii) identify and address possible unauthorized disclosure and redistribution of their confidential and copyrighted materials. This day in age, franchisors (and really all companies) shouldn't be without a strategy for protecting their trademarks online.

Jeff Fabian assists business owners in minimizing risk and protecting their intellectual property assets so that they can stay focused on running their businesses. Visit www.fabianip.com for more information, and follow Jeff on Twitter @FabianOnIP.

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About this Entry

This page contains a single entry by Jeffrey Fabian published on March 6, 2012 12:43 PM.

Marketing Mechanism Constitutes Tax Nexus In Tennessee was the previous entry in this blog.

Do You Know this Signal? Sold But Not Opened? is the next entry in this blog.

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