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Playing for leverage in multi-jurisdictional IP disputes

Are you ready for a trademark battle pitched across multiple continents? Yesterday’s session Have Dispute Will Travel: Managing Multi-Jurisdictional Trademark Disputes showed what such an endeavor may look like and why coordination between jurisdictions is key.

The panelists presented a case study involving a fictitious guitar company, Hendrix Guitars, with each speaker playing a different role: Hendrix’s CEO, its in-house counsel, and its outside counsel in Europe and Asia.

Hendrix owns the ALLADIN mark in the United States, a Community Trade Mark in Europe and a mark in Hong Kong, where it has a sourcing office to work with its original equipment manufacturer (OEM) in China. Its United Kingdom-based rival Bowie guitars owns the mark ALLADIN SANE in the UK, Germany and China. Bowie’s marks in Germany and the UK predate Hendrix’s European Community mark.

Hendrix has traditionally sold in the U.S. while Bowie has been selling in the UK and Germany, but now both companies are keen to expand into each other’s markets. Bowie recently entered into a deal with the Iggy Pop Company in Detroit to distribute its products in the U.S.

Anessa Owen Kramer of Honigman Miller Schwartz and Cohn acted as Hendrix’s CEO and asked her in-house counsel Jeremy Kaufman of Fox Entertainment Group to devise a strategy for dealing with Bowie. She has no interest in entering into a co-existence agreement.

Multiple options

Owen Kramer’s legal advisors laid out the various options in their jurisdictions. For example, Kaufman observed that in the U.S., there is usually a correlation between the aggressiveness of the response and its cost. An infringement suit would be the strongest response, but would rack up the bill. Challenging Bowie’s registrations at the USPTO’s Trademark Trial and Appeal Board would be less expensive, but the potential remedies would be much more limited. Another option, filing a preliminary injunction, may be an attractive solution, allowing Hendrix to get injunctive relief relatively quickly and at lower cost, although damages are not available.

Jeremy Dickerson of Burges Salmon in the UK considered Hendrix’s European options. He highlighted several danger spots, such as the fact that Bowie can use its national UK and German marks to attack Hendrix’s CTM. Options to consider include converting the CTM into national trade marks and also seeking a declaration of non-infringement in the UK.

Nick Redfearn of Rouse acted as outside Asia counsel and addressed issues in his region. For example, the lack of a registered trade mark in China may allow Bowie to file an infringement suit based on Hendrix’s OEM activities there. As Redfearn explained, the issue of whether manufacturing for export markets constitutes use of the mark in China is still unsettled, though he noted that several cases have found that it does not.

The panelists emphasized that coordination is key in disputes that span multiple countries. An argument made in one country may have consequences in others. For example, Dickerson warned that getting a declaration of non-infringement in the UK based on no likelihood of confusion may have a negative effect on Hendrix’s attempts to bring an infringement suit in the U.S., where it would try to make the opposite argument. On the other hand, Redfearn pointed out that a declaration of non-infringement in China may not have the same problem since that would be based on non-use.

Similarly, a well-planned action in one country can benefit your position in another. Dickerson and Kaufman pointed out that given that Hendrix’s position is strongest in the U.S., achieving a positive result there, such as securing a preliminary injunction, can give it leverage against Bowie in other jurisdictions.

Seeing these legal actions in a global business context is essential to a commercially successful resolution. As Owen Kramer pointed out, even though Hendrix’s CEO may not wish to settle, the reality is that often these disputes and actions in various countries are really a way for a company to improve its negotiation position and gain leverage for an eventual global agreement between the companies.

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