Why do we need to keep trademarks in the US?
By Jim GeraghtyThe United States has spent more than $6 billion since its first trademark registration in 1875 to help protect its identity, according to the American Institute of Certified Public Accountants.
But the cost of maintaining the trademarks has grown rapidly in recent years, with many firms charging huge fees to maintain the right to protect the name.
The cost of trademark renewal and licensing is a key reason why Americans may be reluctant to register their own trademarks.
“Our industry is going through a crisis,” Marketers for Public Accuracy (MPFA) founder David Leopold told Business Insider.
“If you think about it, if you look at the amount of money that companies are spending to protect their brands and the costs of doing that, that’s a huge amount of work.”
Leopold pointed to a recent report that found that in 2015, companies spent $6.8 billion to defend themselves against a lawsuit.
A new report from the National Institute for Justice estimates that over the past 20 years, US companies spent nearly $2.6 billion on legal fees and fees for trademarks in just three years, from 2011 to 2017.
The problem is not limited to the United States.
The UK has spent an estimated $4.8 million to protect its trademark in recent decades, while Italy, France, and Germany have spent millions each year.
“There are several countries that have spent huge amounts of money to defend their trademark,” Bertram Hildreth, a trademark attorney at the law firm of DLA Piper, told Business Week.
“It’s a very expensive and time consuming process.
You’d think the US would have a much more streamlined system of trademark law.””
It’s been quite a challenge for the trademark office to do anything about this problem,” he added.
“I would think that they would want to do it a lot sooner.”
According to the MPFA, more than half of the fees collected by the US government for trademarks are spent on protecting trademarks, such as registration fees, fees to license a trademark, and trademark expirations.
The cost of renewal fees has also risen dramatically over the years, rising from $1.1 billion in 2006 to $2 billion in 2020.
And the cost for trademark expirs, which expire on the last day of the year, has also been increasing.
MPFA also found that the cost to keep a trademark in the United Kingdom rose from $6 million in 2008 to $16 million in 2019.
According to its research, in the last decade, the average cost of keeping a trademark has increased from $50,000 to $200,000, with the average expiration date of a trademark rising from six years to 20 years.
In addition to the cost associated with protecting a trademark that may have expired, many companies charge for registering trademarks that they may never use.
For example, one trademark holder that has sued several firms for using a trademark without its owner’s consent has spent hundreds of thousands of dollars in fees to protect a trademark from being used.
Hildreth noted that the costs are also rising because of increased competition from other industries.
“The number of companies that have moved into the food and beverage industry is quite substantial,” he said.
“We are seeing more and more companies that are using generic ingredients, and that’s creating competition.”
“I think it’s a problem because we’ve had to keep our trademarks in a very different country than we used to,” he continued.
“In a lot of cases, people don’t even realize they have a trademark.”
A recent survey of companies found that almost one in three firms have no idea that their trademarks are being used, and only 3% are aware of what trademark registration fees are.
But Hildroth said there is a solution.
“One of the things that we’ve tried to do in the past is set up a system for registering a new trademark and getting it registered and working with the agency so that if the trademark expires and we have to go back and renew it, we have a reasonable opportunity to do that,” he told BusinessWeek.
He also suggested that companies should use the system they’ve set up to register trademarks, rather than going through the registration process and waiting until the expiration date to do so.
As for what to do with expired trademarks, the MPAA suggested that the government should allow a temporary registration and let companies renew their trademarks at the end of the current term.
“That would allow us to have time to work out a better solution that works for all parties involved,” Hildest said.
One option for the government to help keep the trademark registrations in the hands of the public is to require that all trademarks be renewed, but that hasn’t worked in the current system.
Currently, the government requires the expiration of a mark to be a three-year process that lasts four years.