An article in the National Law Review is painful to read – especially for fans of Tesla, the electric car company that hopes to change the way we drive with its electric cars. “An Expensive Reminder to Secure Trademark Rights Prior to Foreign Expansion” tells the story of a Chinese businessman who registered the Tesla trademark in China in 2006. When Tesla entered the Chinese market, the businessman sued Tesla for more than $3.8 million for trademark infringement, and is insisting that Tesla stop all sales and marketing activities there until the dispute is settled.
There are plenty of businesses that don’t have their trademarks properly registered here in the U.S. There are also quite a few marketing directors who have a poor understanding of how trademarks work, and little understanding of how, when, and where they should be used. Neglecting to register and use trademarks appropriately can cause you big problems down the road.
If you own a company, or if you’re responsible for trademarks at a company, take some time to learn how trademarks work here in the U.S. Begin with the United States Patent and Trademark Office website to get information on trademarks. It’s a really good idea to spend an hour or so reading and understanding U.S. trademark guidelines so that you can know how to give direction to an attorney (you’ll probably need one if you’ve got a few trademarks, or anything complicated to deal with) and to your staff once you begin using the trademark.
Already have U.S. trademarks? Make sure you’re using them properly in all your promotional materials – and yes, it’s a bit tricky. The USPTO publishes a series of FAQs about trademark usage.
Global trademark registration
If there’s any chance your product can go global, or even expand into other countries in a region, you should also consider filing for trademark protections globally. The World Intellectual Property Organization located in Switzerland manages the Madrid System. This system allows you to apply to seek trademark protection in any country that has signed the Madrid Protocol. Applying does not necessarily mean your trademark will be registered, but it is a good way to start the registration process in more than 90 countries.
If you’re worried about getting into a situation like the one Tesla faces, then you should work with a very respectable intellectual property law firm that is known to represent trademark and other IP issues in your industry. The American Intellectual Property Law Association and the National Bar Association are two organizations to look to for a recommendation.
When coverage isn’t there
Intellectual property suits like the one Tesla faces are the worst-case scenario, but even a small suit in a single foreign country can cost you a lot of time, effort, and money. It’s also a very unhappy surprise to find out you’re infringing on another trademark as you are poised to go to market with a new product.
Work with your team to develop a policy surrounding trademarks at your company:
- Conduct an inventory of current trademarks registered by your company
- Look at how those trademarks are being used and managed by your legal and marketing teams
- Ask your legal team to look for any holes in your current trademark strategy and get up to date as soon as possible
- Work with your executive team – legal, marketing, and product development for example – to institute a process for identifying when a new trademark might be needed and a series of steps to follow to get trademarks researched and registered
To cover all the bases, take a look at your insurance policies to see what kind of coverage you’d have if you were in domestic or foreign markets without the correct trademark protection. Will your coverage help you in global markets? Will it cover costs for getting the trademark expedited, as well as any lawsuits, work stoppage, and market issues you’ll face? Also, find out what the deductibles are on these policies and make some good judgments about how much you could afford to lose in a situation like Tesla’s.
Insurance policies that cover everything in this scenario may be difficult to find on the open market. If we can help you understand how a captive insurance policy might help, please contact us.