Brands reveal how they choose whether to litigate
Private practice and in-house counsel delve into the considerations they take before pulling the trigger on litigation, including budget, overall harm and likely outcome of the case
Speaking at the Managing IP Global Trademark Forum in New York yesterday, private practice and in-house counsel from CME, Verizon and Sterne Kessler highlighted the challenges of litigation when they delved into considerations including budgetary constraints and the likely outcome of a court case.
In an ideal world, brands would be able to litigate against every instance of malicious infringement to help defend their reputation and protect the public.
But in reality, there are always practical considerations for when to pull the trigger on litigation. Every company has a finite enforcement budget, and it’s important to go through a cost-benefit analysis to make sure that an action is actually worthwhile.
Ksenia Takhistova, director and legal counsel at US non-profit organisation CME in New York, said it was important to align the goals of the company’s legal and business teams to ensure that litigation would complement an overarching business strategy.
“When you are on the trademark owner side and thinking about your brand and seeking damages, you must align your legal and business teams first to understand how to be helpful to the business and work out whether it makes sense to litigate,” she said.
“In the short term, when your mark is being used without approval, you will want to stop that infringement as soon as possible. But then you must consider how it affects the business's long-term goals.”
Speakers noted that money was one of their main considerations when looking at the prospect of litigation. Takhistova at CME pointed out that every business has different budget considerations depending on its overall aim and size.
Large companies, she said, might not be as “strapped for cash” as smaller firms, but even they must work out where and when it makes the most sense to enforce trademark rights.
“If a mark is infringed in the US and Europe at the same time, it may make more sense to come after the infringer in Europe first because it can take less time and money to enforce there than if you were to go for full-blown district court litigation here."
Patrick Flaherty, managing associate general counsel at Verizon in Virginia, added that counsel should also consider other more cost-effective ways of spending an enforcement budget to deter infringers before resorting to litigation.
He noted that it is possible to bolster a mark in some countries by using it. In those instances, an effective strategy might be to spend money on marketing in those countries to buttress the registration and deter infringers.
In other cases, Flaherty said, it might make more sense to offer money to an infringer to help with the costs of a name change, especially in places where it might take a long time to resolve a matter.
Monica Riva Talley, director at Sterne Kessler in Washington DC, added that counsel must also look closely at the remedies available to them and whether they will ultimately achieve the business’s aim for the case.
“Injunctions are often a great remedy, but they can be useless against a counterfeiter, for example, if you don’t know who they are or they go away. What’s the benefit of that action against not doing anything, and how do you change that equation to work in your favour?”
Flaherty said that trademark owners might also want to save their money by not sending out cease and desist letters where they are unlikely to be effective.
“We have found that foreign infringers do not respond to letters from US attorneys – and even less so from US in-house counsel. We decided not to waste our time and rather to immediately get our foreign outside counsel on the case when we find a foreign infringer.”
What’s the harm?
The overall harm that an infringement was likely to cause the business and consumers was another important consideration speakers identified when it came to managing litigation.
Riva Talley at Sterne Kessler pointed out that there’s always a simple choice when counterfeit goods are involved. “It’s easier to make the case for litigation with counterfeiting because consumer health and safety is involved, and it is often a huge goodwill issue,” she said.
Flaherty at Verizon added that his business has developed a hierarchy of brands that dictates the priority put on the enforcement of a particular mark. When it comes to the Verizon brand, for example, the business will always seek to protect its rights aggressively.
“We take the positon that the mark is so famous and well known that from a dilution perspective it is important to go after anyone who infringes, regardless of the chances of success in a foreign country, for example. This has been a very successful strategy for us to date.”