©2017. Published in Landslide, Vol. 10, No. 2, November/December 2017, by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association or the copyright holder.
Navigating through the different trademark and copyright legal issues can be daunting, and can vary from business to business. At a minimum, however, any business, no matter what its purpose, will encounter trademark and copyright obstacles. This article will summarize legal considerations in brand management from an in-house counsel’s perspective, using the world’s leading manufacturer and marketer of home appliances, Whirlpool Corporation, as an example.
Diversity of the Whirlpool Brands: Products, Consumers, Regions
Whirlpool Corporation’s many brands are highly recognizable to consumers throughout the world. While the WHIRLPOOL brand carries the company namesake, the famous KITCHENAID and MAYTAG brands are sought-after household names and are frequently incorporated into popular culture. The AMANA and JENN-AIR brands offer consumers diverse options in a competitive marketplace. Whirlpool’s on-campus innovation incubator, WLabs, has launched several products, including the ZERA food recycler and VESSI fermentor and dispenser. Finally, consumer products, including AFFRESH cleaners and EVERYDROP filtration products, as well as GLADIATOR home and garage storage products, place Whirlpool Corporation across many segments of the consumer market.
Protection in Global Markets
Globally, Whirlpool Corporation markets regionally specialized brands on nearly every continent, in addition to its primary brands. With its acquisition of the Italian domestic appliance manufacturing company Indesit in 2014, Whirlpool is now the largest player in the EMEA (Europe, Middle East, and Africa) markets, offering brands such as INDESIT, HOTPOINT, and ARISTON. Further, Whirlpool markets a number of popular brands across Latin America under the BRASTEMP and CONSUL brands, and DIQUA in Asian markets.1
Because Whirlpool Corporation’s brands are sold in nearly every country in the world, finding the best balance of protection for our trademarks (proactively and defensively) within the constraints of a lean budget is often more akin to cooking with what’s in the refrigerator than baking brownies from the box. More specifically, while there are foundational rules that are generally followed, creativity and flexibility are necessary to adapt in the evolving marketplace, especially online. A multifaceted approach spanning traditional and nontraditional trademarks, domain names, licensing, and design patents is therefore required to effectively build brands and manage clearance, acquisition, maintenance, and enforcement of the global portfolio.
Issues Faced by In-House Trademark Counsel
In-house trademark teams, and in-house legal departments generally, all typically face a similar overarching issue: in-house legal departments are viewed as cost centers rather than revenue generators and thus are subject to a high level of cost scrutiny. This tension is furthered because quantifying—in monetary terms—the value of proactive risk mitigation for our business partners can be difficult and, at times, appear imprecise. While it can be relatively predictable to provide clients with the cost of filing and prosecuting a trademark application through to registration, predicting the likelihood of a conflict occurring or the true impact of such a conflict to business results can present challenges. This is especially true at Whirlpool, a traditional manufacturing company. As Whirlpool’s focus has shifted to more directly marketing its own products and driving brand equity and recognition from within rather than relying heavily on third-party messaging, there is seemingly endless opportunity to put in place standardized processes for bringing products to market under any one of our many brands. In the context of the current digital landscape, which allows brands to engage with consumers at many points during pre and post-purchase and across a gamut of channels, the legal challenges are amplified because the law is murky, at best.
Managing the Issues for Building and Maintaining the Brand
The success of Whirlpool’s global portfolio management relies heavily on consistency and the ability to see the (global) forest through the (country) trees. For example, let’s assume that Whirlpool has filed a trademark application in a jurisdiction in Southeast Asia for coverage for countertop appliances (stand mixers, coffee makers, toasters, food processors) under its KitchenAid brand. Let’s further assume that the trademark office refuses registration of the application based on a third-party prior-registered mark covering major appliances (refrigerators, ovens, cooktops, dishwashers), which the trademark office has deemed similar in sight and sound to KitchenAid. In this example, Whirlpool would not make the argument to the national trademark office (or in litigation, etc.) that Whirlpool’s application is distinguishable from the cited registration because countertop appliances are goods unrelated to the major home appliances covered by the cited registration. The primary reason for this is because Whirlpool sells both classes of goods (e.g., KitchenAid countertop appliances and Whirlpool refrigerators) and thus enforces against parties offering either class of goods under marks confusingly similar to a Whirlpool Corporation mark. Because information is so readily available for many key jurisdictions (whether through online databases or counsel in local jurisdictions), it is inevitable that Whirlpool would find such an argument cited against its own enforcement efforts.
The availability of global information is also a benefit. Whirlpool uses the strength of its global portfolio—and its trademark “wins” in various jurisdictions around the world—to support its registration and enforcement efforts. It is not uncommon to provide as evidence the breadth of Whirlpool’s coverage for a specific brand globally (e.g., WHIRLPOOL or KITCHENAID) to support a prosecution or enforcement matter. Further, leveraging the global portfolio in dispute or coexistence negotiations brings significant and persuasive value.
Effective global portfolio management also requires commitment to the “long game.” For example, Whirlpool’s Chinese registration for its WHIRLPOOL mark (“Hui Er Pu”) recently earned the “well-known mark” designation in China. As other global trademark counsel can likely attest, this is not a small feat. Registered in China in 1994, Whirlpool’s “Hui Er Pu” mark served as the basis of over 215 dispute actions (oppositions, cancellations, etc.) over 16 years. Finally, in May 2017, Whirlpool achieved “well-known” status for its mark through a successful opposition action. The “well-known mark” designation should result in a higher success rate in disputes moving forward and will allow Whirlpool to expand its zone of protection around its mark in China, an important market for its business. In short, never underestimate the value of patience and commitment to the long game—in Whirlpool’s case, over the tenure of several in-house attorneys and legal specialists.
As the above two scenarios indicate, building a global portfolio requires the efforts of many people, both internal and external. The issues that arise for in-house counsel responsible for trademarks (the “trademark team”) are similar, regardless of the chosen staffing model. While some companies may retain small in-house trademark teams (perhaps comprising a team of one!) that rely on outside counsel for trademark clearance, prosecution, maintenance, enforcement, and overall portfolio management, Whirlpool follows an alternative model. Globally, we have in-house attorneys in every region that counsel the local brand marketing and commercial business teams, conduct local clearance searches, and work with outside counsel to manage the regional portfolios owned by Whirlpool’s regional corporate entities. Only a portion of the regional attorneys’ time, however, is dedicated to trademark and copyright issues. At Whirlpool’s Global Headquarters, the trademark team consists of a mix of attorneys, legal specialists, and an administrative assistant, and acts as a “center of excellence” for Whirlpool’s global trademark and copyright practice. This team supports the portfolio globally and features a breadth of experience.
Trademark Clearance and Maintenance
One primary cost-savings benefit to retaining an experienced internal team is that we conduct nearly all US and Canadian clearance searches (knock-outs, full searches, and full availability opinions) in-house. All new filings, prosecution of trademark applications (e.g., office action responses, statements of use), and maintenance of existing registrations (Section 8/15 declarations, renewals, assignments, etc.) are similarly handled in-house. The exception to this practice is if the internal trademark team does not have the time availability to handle a matter, such as a detailed office action response. On these occasions, the work would be sent to outside counsel. If we intend to use the mark around the world, global knock-outs are also conducted in-house via use of a third-party database. Comprehensive clearance searches outside the United States and Canada are conducted by local counsel on a jurisdiction-by-jurisdiction basis dependent primarily on budget and importance of the jurisdiction to the overall business strategy.
The trademark team also works closely with the brand marketing organization to stay abreast of new products and features and branded promotions and campaigns, and provides guidance accordingly. In addition to the cost-savings benefits, the result of this model is that the trademark team has visibility into the earliest stages of planning and is a critical partner in building a brand from the ground up.
Counseling the Business
The close business partnership with the brand organization becomes increasingly important when determining whether a mark warrants federal protection, will only be used at common law, or will not be treated or protected as a mark at all. Considerations that arise in these discussions include the inherent distinctiveness of the mark, clearance search results, if the mark is a primary (major brands) or secondary (feature names or taglines) mark, whether the mark will be used on products, for how long the brand intends to use the mark (e.g., is it a one-time campaign or a new product line that will remain in the marketplace for several years), the intended geographic scope of use, and the intended manner of use of the mark in messaging.
The first and last considerations become especially relevant as the brand marketing teams develop and execute multichannel messaging around the product or feature. Counseling clients to understand that consistent, nondescriptive, and nondilutive use of their proposed marks is crucial to maintaining enforceable rights. In the current marketplace, however, brands are more than simply indicators of source or traditional beacons of consumer protection. In many ways, brands now both identify the origin of the product or service and lend identity to those who consume them, wear them, drive them, or equip their kitchen with them. The need to forge emotional attachments with consumers places great pressure on brands to be present at every consumer touchpoint: social, mobile, broadcast, web, print, etc. It results in brands using their trademarks in a manner many in trademark practice would have scoffed at even five years ago.
As is generally the case, the law lags behind how marks are actually used and interacted with in the marketplace. The recent high-profile Google trademark case, which ultimately resulted in a big win for Google (and marketing departments for big brands everywhere), has prompted our own internal discussions about how we can continue to evolve our guidance when handling the use and protection of our brands.2 How playful can we be with our marks? Is self-dilution truly the enemy of protection or will the overall strength and fame of our brands, built through decades of consistent use across product lines, ultimately prevail should a conflict arise? Or, is it only a matter of time until GOOGLE rides the escalator into genericide?3 In which case, was the stringent application of proper trademark use the correct approach all along?
Sometimes the question ultimately becomes: will improper trademark use in a specific instance result in messaging that engages consumers and converts sales? If so, then business imperatives will often prevail over trademark risk. Note that this is not the case for primary house brands, e.g., WHIRLPOOL or KITCHENAID, or the shape of the KitchenAid stand mixer, for which proper trademark use is diligently enforced.
In an effort to mitigate against both the misuse of our own marks and misuse of third-party materials, content reviews are conducted by both trademark law and marketing law teams prior to consumer-facing distribution. In addition, the trademark team conducts quarterly trademark and copyright training for new hires in the brand marketing organization and other periodic trainings for business groups as requested or necessary.
Counterfeits and Brand Protection
It is no secret that counterfeiting has now penetrated and disrupted even the most specialized markets. Frontier Economics’ January 2017 report, The Economic Costs of Counterfeiting and Piracy, estimates that the value of international and domestic trade in counterfeit and pirated goods in 2013 was between $710 billion and $917 billion.4 The recently updated IP Commission Report suggests that the annual cost to the US economy from intellectual property theft continues to exceed $225 billion and could even be as high as $600 billion.5 While several Whirlpool products are victims of counterfeit pirates, the most high-profile counterfeited products are the KitchenAid stand mixer’s array of popular attachments.
Building an effective brand protection strategy to battle counterfeit products requires cross-functional efforts and support of leadership, both of which are present at Whirlpool. Like many companies in consumer products and manufacturing, Whirlpool records its trademark registrations with customs and border protection offices around the world, which provides an initial line of defense to importation of infringing products. Further, Whirlpool utilizes design patent protection to protect its products from wholesale copying by counterfeiters and potentially increase its opportunity for damages. Whirlpool also works with federal agencies and achieves varying levels of success through obtaining consent judgments with sellers, filing takedown notices, and building relationships with online retailers. Many of these initiatives only stem the tide, however. Without the ability to track the counterfeit products to their source—and cut off the head of the proverbial snake—counterfeit products will continue to be produced, shipped, and sold around the world, possibly endangering consumers and jeopardizing brand equity.
But tracking counterfeit products to their source can be very difficult because counterfeiters are becoming increasingly sophisticated, including how they source product, execute logistics plans, route money through foreign banks, and operate under numerous aliases at nonexistent addresses.
Whirlpool also has a robust licensing program; licensing is an important component of Whirlpool’s global business. Of course, there are very special considerations when entering a license relationship. Strict vetting of licensees and continuous evaluation of product quality and safety demands a commitment to due diligence and ongoing benchmarking. Ensuring licensed products maintain the integrity of the respective brands, and are profitable, requires the dedicated work of an internal group of licensing professionals, input from the brand teams, and counseling from external and internal attorneys. The licensing team seeks out potential partnerships, manages the license relationships, and ensures that the quality of those licensed products align with the respective brand pillars and strategy. When done well, licensing allows a trademark owner to extend its brands into new geographic markets or product lines and expand the company’s blueprint.
Design Patent Protection
While Whirlpool (of course) disagrees, major home appliances are not products consumers have traditionally thought of as “sexy.” Up until fairly recently, the primary considerations for the vast number of consumers were: “how much do I want to spend on the big metal box and where do I install the big metal box?” As the industry, technological capabilities, and consumer tastes have evolved, however, design now has a prominent seat at the table. Because the company invests significant resources in marrying aesthetics with functionality, it is important for our legal teams to identify design elements that warrant protection—whether through design patents, copyright, or even trademarks—in order to give the company a competitive edge and reward its investment in design innovation.
Design components for which we seek protection span the gamut: unique and distinctive doors for washers and dryers, sleek knobs or handles featured on refrigerators and ovens, or culinary attachments for the KitchenAid stand mixer. Reviewing the innovations closely with the product engineers, the patent team whittles the considerations into three primary buckets: what to file, when to file, and how to draft the claim. This analysis depends heavily on the launch timeline: if the claims are drafted too early in the process, we risk design changes that may render our design patents effectively useless, and if we draft the claims too late in the process, we risk public disclosure of the designs as we begin promoting our upcoming products to our trade partners.
Because of the affordability of design patent registrations, Whirlpool finds it worthwhile to layer design patent protection with other forms of intellectual property. Further, and as noted above, design patent registrations help to bolster Whirlpool’s enforcement efforts.
We are currently in the process of updating our two-decade-old global domain name policy in consideration of the evolving Internet space, the law surrounding it, and our corporate need for a more cohesive and consistent cross-regional approach. Many of the considerations made when evaluating proposed trademarks are also relevant when searching, clearing, acquiring, and defending domain names. Specifically, Whirlpool owns domain names for its primary house marks in many top-level domains around the world. Whirlpool also holds domains for common misspellings of the primary marks as well as for the generic goods for many of our categories (e.g., cooktop.com). Like many brand owners, we are still evaluating the true value of expending the resources necessary to acquire domains within the new generic top-level domain name extensions.
In light of the size of the portfolio, Whirlpool uses a third-party management and renewal service to ensure the domains are maintained in a timely manner. We are also working with the brand teams to determine if we can shed previously acquired, but now dated, domains from our portfolio (e.g., domain names acquired for a limited promotional campaign five years ago). Reviewing your domain name portfolio in a regular cadence can help to reduce management costs long term.
Concluding Tips for In-house Counsel and Outside Counsel
Managing a global trademark portfolio presents a myriad of issues (administratively, procedurally, and substantively) for both in-house and outside counsel to tackle. As in-house counsel, we rely on trusted outside counsel—who understand our industry and the objectives of Whirlpool’s business—to stay abreast of the most significant changes to the legal landscape and convey that information in a pragmatic manner. We then use that guidance to inform our internal approach and help our brands navigate the ever-evolving marketplace.
Some of the most salient learnings informing our current approach are:
- Take a holistic and global view of the portfolio to align filing and enforcement strategies with the goals of the business;
- Identify ways to leverage the strength of the global portfolio to achieve wins in local jurisdictions without jeopardizing that same strength globally;
- Build close relationships with the internal marketing and sales teams to ensure the trademark team is engaged early in the product-development and naming process;
- Place a priority on trademark and copyright training to those inside and outside the organization who work with the organization’s trademarks most frequently (marketing departments, advertising agencies, and design teams); and
- Seek opportunities to layer intellectual property protection to protect product innovation and design. n
2. See Elliott v. Google, Inc., No. 15-15809 (9th Cir. May 16, 2017), http://cdn.ca9.uscourts.gov/datastore/opinions/2017/05/16/15-15809.pdf (concluding that “verb use does not automatically constitute generic use”).
3. For those readers who are not entrenched in trademark geekery, “escalator” used to be a registered trademark for moving stairs. As everyday speech indicates, the mark has fallen into generic, common parlance.
4. The report (https://cms.iccwbo.org/content/uploads/sites/3/2017/02/ICC-BASCAP-Frontier-report-2016-Executive-Summary.pdf) expands upon the work done by the Organisation for Economic Co-operation and Development (OECD) and European Union Intellectual Property Office (EUIPO) to measure the extent of piracy and counterfeiting in international trade. See OECD & EUIPO, Trade in Counterfeit and Pirated Goods: Mapping the Economic Impact (2016), http://www.oecd.org/gov/risk/trade-in-counterfeit-and-pirated-goods-9789264252653-en.htm.
5. Nat’l Bureau of Asian Research, Update to the IP Commission Report: The Theft of American Intellectual Property: Reassessments of the Challenge and United States Policy (2017), http://www.ipcommission.org/report/IP_Commission_Report_Update_2017.pdf.