International distribution
Many companies are trading internationally and cooperate with several national distributors for the distribution of their products. Needless to say, it is important to have all agreements with distributors recorded in writing. A well formulated distribution agreement will not only prevent discussions about for example financial agreements and delivery of products, but can also prevent discussions about trademark registrations, if such agreement includes agreements regarding the use of intellectual property rights, like trademarks.
Trademark registrations
A trademark registration is required to protect the name or logo of a product (or service). You can find tips and tricks for trademark registrations in one of our previous blogs. When trading internationally it is important not to only register your trademark in your own territory but also in territories to which you export products or where your distributors are active.
Without filing a trademark in a certain territory you will not be able to claim trademark protection there. Furthermore, if you have not made any arrangements regarding IP registrations in distribution agreements, a distributor may file a trademark in its own name and try to continue using the trademark for other products even after the distribution relationship has ended. This may interfere with your own business, for example if you wish to continue the export of the product with a new distributor. Not all is lost however, trademark registrations can be declared void when they have been registered in bad faith.
Bad faith
A trademark registration may be declared void when registered in bad faith. In general, there are two situations to prove that a trademark registration was done in bad faith;
- The trademark application was done while the applicant knows or should have known that a third party has, within the last three years, used a similar or identical sign in the Benelux area or EU for similar goods or services in good faith and in a normal manner; or
- The trademark application was done while the applicant knows from its direct relationship with a third party that this party has, within the last three years, used a similar or identical sign for similar goods or services in good faith and in a normal manner outside the Benelux or EU area.
What to do?
We advise to make sure your contracts not only include financial agreements or agreements regarding the delivery of products but also include agreements about the use and registration of trademarks or other IP rights. You can agree on having your distributor register a trademark, but then it is important to make arrangements for what happens after ending the distribution agreement. It would be better to stay in full control over the IP and trademark registrations and make sure to register your trademark in all relevant territories.
If your distributor still somehow managed to register your trademark and is even selling its own products under this trademark this will likely be considered a trademark registration in bad faith which may be challenged and declared void.
If you have any questions about distribution agreements or (bad faith) trademark registrations, please feel free to contact us at helen@thelegalgroup.nl.