by Deborah Portilho
Trademark World, issue 177, May 2005, p. 31-34
The term ‘recycling’ is commonly associated with tangible commodities, but in the world of Intellectual Property there are also opportunities for recycling.
A huge proportion of the existing western-language words have already been adopted as trademarks. It is therefore not surprising that companies in different market segments all over the world have difficulty in finding available words, and even in coining words to be used as trademarks. However, while marketing teams rack their brains to create new trademarks, there is an abundance of duly registered trademarks simply sitting on the Register and not being used by their owners.
This seems to be the scenario not only in Brazil, but globally. In fact, there have been an increasing number of multinational companies which have drastically reduced their trademark portfolio worldwide, concentrating their investments and efforts on asmaller number of trademarks, particularly in their umbrella brands. Mergers, acquisitions and downsizing, have certainly significantly contributed to this trend. Furthermore, stressful economic downturns and increasing competition have lead companies to focus on their core businesses and their leading brands, rather than diversifying their products and trademarks.
This trend seems to have begun in the late 90’s and became more evident as of 2002, when companies such as Unilever, Procter & Gamble and Nestlé announced their decisions to reduce their trademark portfolios. According to the Brazilian press, Procter & Gamble shrank to one-third the number of its local trademarks. In turn, Unilever announced that only 400 out of its 1,600 marks would be kept; while the others would become extinct or sold. It is important to note that the trademarks that are likely to be sold are those that are still alive in the market, or the discontinued brands that have potential to be revived. The failed trademarks and the ones that have been registered for more than a decade, but have never been used, are likely to be simply abandoned.
Another reason for the reduction of trademark portfolios is that some companies have been adopting a strategy of globalisation, as their goods circulate round the world and need to have global brands rather than several local trademarks. The Swiss-based Nestlé is one of these companies. Two of its Brazilian chocolate brands – LOLO and CRI – changed to MILKY BAR and CRUNCH, respectively, which are the trademarks already adopted for the same products in the United States and in other countries. Nestlé’s popular ice-cream brand in Brazil – YOPA – and its yogurt CHAMBOURCY are now identified solely by the company’s house-mark NESTLÉ. SÃO LUIZ, which used to be the brand for Nestlé’s line of crackers and cookies, was simply abolished. The French company L’Óreal, owner of the MAYBELINE trademark, acquired COLORAMA, Brazil’s best-selling nail enamel brand, now identified by the mark COLORAMA followed by MAYBELINE as the second brand. However, it is expected that sooner or later the mark COLORAMA will disappear.
Accordingly, for different reasons, especially the inevitable globalisation that weare experiencing, most multinational companies, at least as far as Brazil is concerned, have had to choose which marks of their large portfolios will survive and which will die. Consequently, Registers are overloaded with abandoned marks owned by companies in different market segments and there is no indication that this tendency will change in the near future.
The pharmaceutical segment
While in other areas mergers and acquisitions lead to a reduction of trademarks, this does not happen in the pharmaceutical segment.
In fact, mergers of pharmaceutical companies are motivated by the need to meet the high levels of growth demanded by Wall Street, which cannot be met due to the general decrease in the number of new patented medicines. For example, in 2002, Pfizer launched 31 new products, while ten years before it had launched 52. Since this reduction is being experienced not only by Pfizer, but by nearly all companies in the pharmaceutical sector, they are consolidating their efforts in order to reduce costs and increase their sales. However, unlike companies in other areas, pharmaceutical companies cannot concentrate their efforts in their house-marks or umbrella brands, as most medicines must be identified by specific trademarks. Moreover, behind these mergers and acquisitions there is a need to increase the number of successful products with a view to increase profitability. Consequently, the number of active trademarks tends to grow, not shrink.
Even so, every year pharmaceutical companies abandon hundreds of trademarks. The major reason for this is that, before a new pharmaceutical product is launched in the market, laboratories file applications for several marks, in hope that at least one will achieve registration. Normally, more than one registration is granted, but only one is used. The others are usually kept for decades for a possible future use, which does not always occur.
Another reason that accounts for the great number of non-used marks on the Register, regardless of the segment, is the fact that in Brazil evidence of use is not required for renewal of the term of trademarks. Therefore, even when a given trademark is not being used, its owner can apply for its renewal and simply keep it on the Register up until it decides to abandon the mark. Accordingly, the Brazilian Register is overloaded with unused trademarks from all market segments.
But there is a peculiarity with the unused trademarks of the pharmaceutical companies in Brazil.
Finding new pharmaceutical trademarks
As previously mentioned, companies in all areas are having difficulty in finding available words, and in coining words to be used as trademarks. In the pharmaceutical area the situation is even more complicated, as not just any word or coined name can be used to identify a pharmaceutical product, especially if it is a similar product. In this regard, it seems easier to create atrademark for an original reference product than for a similar product.
In fact, original reference products can be identified by fanciful trademarks, as in the case of ALLEGRA – Aventis’ fexofenadine. Furthermore, the manufacturers of reference products, which are normally the companies that developed the chemical substance, have the prerogative of adopting the Brazilian Common Denomination for the substance as the product’s trademark. A further option for these companies is to adopt only a portion of the Common Denomination, as in Bayer’s Brazilian mark CIPRO for its ciprofloxacine product.
Similar products, however, have a more limited choice in terms of trademarks. In fact, in order to gain market recognition by doctors and consumers, and in order to compete in the market with other products already established in the same category, the trademark of a similar product normally needs to meet one of the following conditions:
• it must recall the trademark of the reference product
• it must be formed by the radical of the name of the chemical substance, according to the International or Brazilian Common Denomination
• it must recall the health problem or disease for which the product is intended for
• it must indicate the therapeutic purpose of the product.
Of course, if there were to be massive advertising for the launch of the similar product (even if restricted to doctors and to health professionals), it could be identified by a totally new unrelated trademark, but the high investments in this case would hardly pay off.
In view of the above, and since almost all possible combinations of radicals, prefixes and suffixes, as well as descriptive terms, that could be used to form a new trademark, have already been registered, manufacturers of similar products are left with few alternatives when creating their trademarks.
Brazil and pharmaceutical companies
Most probably in view of this, the difficulty in creating new trademarks and sometimes even to take advantage of the fame and prestige of a product being marketed abroad by a third party, there is a noticeable tendency among Brazilian laboratories to adopt existing registered trademarks for their products. To accomplish this, these companies either look for registrations that have been deemed extinct, or institute cancellation actions based on non-use against the registration on the trademark of interest. It seems obvious that the most attractive trademarks for the national laboratories which are looking for unused marks to identify their products are those owned by the multinational companies.
However, it is important to note that the fact that a given mark is not being used in Brazil, or in any other particular country, does not necessarily mean that it has been ‘abandoned,’ or that it is no longer of interest to its owner. Most often, it simply means that the mark is not used in that country, but can be widely used in others. There are numerous examples that can be cited. Pfizer/Pharmacia’s famous medicine for prevention and treatment of symptoms associated with motion sickness, DRAMAMINE, has been registered in Brazil for more than 40 years. A company named União Química Farmacêutica Nacional S/A requested the cancellation of the DRAMAMINE registration on the grounds of non-use, and filed an application for the same mark, for the same product, which has been pending on the Register since 1998. It is expected that the Brazilian Patent and Trademark Office will reject União Química’s application on the basis of the International renown of the original DRAMAMINE product, as it has done in the past in similar situations. Obviously, Pharmacia has filed a new application for its mark, which will replace the original registration in case it is ultimately cancelled.
GlaxoSmithKline’s unused trademarks are another target for the Brazilian laboratories, and there are several examples that can be cited. VELAMOX, which is a trademark used in Italy and in France by GSK for its amoxicillin lg, was registered in Brazil by Sigma Pharma to identify the company’s amoxicillin product, currently in the market. Another example is the mark TRANIMET. The registration on this mark was not renewed by GSK, and a company called Royton Química e Farmacêutica filed an application for the same mark TRANIMET to identify its cimetidine product, whose reference product is GSK’s TAGAMET. In view of the similarity between the marks TAGAMET and TRANIMET and the fact that Royton copied TAGAMET’s trade-dress, a lawsuit was filed against Royton in order to compel the company to change its products trade-dress and to adopt a different trademark sufficiently distinct from TAGAMET. In view of its poor chances of success, Royton signed an agreement to end the lawsuit, by means of which it agreed to change the products trademark and trade-dress, and to formally withdraw the application.
ASTRINGOSOL and BACTOPEN are other examples of trademarks that were no longer of interest in Brazil to GSK’s predecessor, SmithKline Beecham, and were thus abandoned, the former by failure to renew, and the latter by lack of defense in a cancellation action based on non-use. Applications for these marks were filed in Brazil by Laboratório Americano de Farmacoterapia and by EMS Indústria Farmacêutica Ltda, respectively, and are likely to issue to registration.
The mark GENIOL, which identifies a popular analgesic sold in Argentina, is another example. This mark was duly registered in Brazil in the name of GSK Argentina S/A and a company named Kley Hertz S/A filed a cancellation action based on non-use against it, and simultaneously filed an application for the mark GENIOL in its name, which was forcefully opposed by GSK. Both proceedings are still pending, but it is expected that, even if the registration is ultimately cancelled, the PTO should reject Kley Hertz’s application on the basis of the fame and reputation of the GENIOL product in the neighbor country Argentina.
Another mark that exemplifies the situation is SOMINEX, which is a traditional trademark in the United States for an OTC nighttime sleep-aid manufactured and sold by GSK. Since GSK’s predecessor SmithKline Beecham had no interest in this trademark in Brazil, the company EMS Indústria Farmacêucia registered it in its name and currently sells a similar product to the original SOMINEX, but with different active ingredients, as can be inferred from their packaging: The above are a few examples of the actual interest of Brazilian pharmaceutical companies in adopting already existing trademarks, either because of the difficulty in creating new trademarks for pharmaceutical products, or just to take advantage of the fame and prestige of the product being marketed abroad by the original owner with that particular trademark.
Regardless of the reasons, it is important to mention that, no matter if the company files a cancellation action against a given registration, or chooses to adopt an already extinct trademark, it must file a new application for the selected mark and wait at least four of five years to obtain the registration, which is how long the Brazilian PTO is currently taking to grant registrations.
A new market opportunity
For obvious reasons, a company cannot wait for four or five years, and sometimes even more, for its mark to achieve registration, but this has been the reality in Brazil for more than a decade. Accordingly, instead of performing clearance searches and running the risks of having a given trademark ultimately rejected, Brazilian companies are looking for trademarks that are “safe,” i.e., are not likely to encounter problems with registration, as they are already registered, but either not in use or dead.
Accordingly, a new market opportunity is opening up. Trademarks are valuable intangible assets which can be bought and sold independently of any other assets of the company. Furthermore, a registered trademark is a statutory monopoly in a name, device or in a combination of both, and even when it is no longer of interest to its owner, it is still valuable and can be negotiated.
Yet, there are companies, especially multinationals, which have numerous registrations for trademarks that are not used, and probably never will be. Every year these large companies abandon dozens of registered trademarks, consequently losing all of the investments made throughout the years in filing and maintaining these registrations. In other words, there are companies losing money by abandoning the trademarks that are no longer of interest to them, while there are others spending time and money applying for registration of abandoned marks, sometimes of the very same marks. Would it not be better if, instead of losing, both sides could profit from this situation?
Assuming the answer is in the affirmative, as it should be, then the solution is a simple one: instead of abandoning trademarks that are no longer of interest, the owners could put them up for sale, possibly on a specialised website. If a mark is sold, an assignment of the registration to the interested party can then be recorded. If not sold, its owner could let it become abandoned, as originally planned.
Another great advantage of having a bank of marks for sale is a possible reduction of third parties’ attempts to register those marks that are not used in Brazil, but are still of interest to their owners. In fact, if there is a list of trademarks to be sold, as a logical corollary, the fact that a given trademark is not in the list is a clear indication that the owner wishes to maintain it, even if it is not being used in that particular country. Therefore, the existence of such a list is not only a guarantee to the purchasing party that the mark chosen is free to be used, but also a way the owner has to indicate its interest in maintaining the registrations of the trademarks that are not being used.
No matter how one looks at the situation, there is no downside whatsoever for any of the parties involved – only advantages. In fact, after considering the marketing, financial and legal aspects, the possibility of ‘recycling’ trademarks not only seems to be feasible, and equally beneficial for all the parties involved, but also an ideal situation which could be adopted in all market segments, and especially in the pharmaceutical area.
In summary
– Mergers, acquisitions and downsizing, have significantly contributed to an increasing number of multinational companies drastically reducing their trademark portfolio worldwide.
– Companies such as Unilever, Procter & Gamble and Nestlé announced their decisions to reduce their trademark portfolios in 2002. According to the Brazilian press, Procter & Gamble shrank to one-third the number of its local trademarks. In turn, Unilever announced that only 400 out of its 1,600 marks would be kept; while the others would become extinct or sold.
– Trademarks that are likely to be sold are those that are still alive in the market, or the discontinued brands that have potential to be revived. The failed trademarks and the ones that have been registered for more than a decade, but have never been used, are likely to be simply abandoned.
– Trademarks are valuable intangible assets which can be bought and sold independently of any other assets of the company. Furthermore, a registered trademark is a statutory monopoly in a name, device or in a combination of both, and even when ít is no longer of interest to its owner, it is still valuable and can be negotiated.
