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Financial brand protection: it is about the money
date: 2019-03-05 Samiko Sun Read by:

Financial companies must balance what is distinctive and recognisable in a brand with what is descriptive and easy to understand. Moreover, defensive registrations can provide greater protection against brand damage.

Financial companies need to start paying attention to the brand-related issues that they face. They must identify whether their brands are distinctive enough for the public to recognise and then take steps to prevent them being diluted or becoming merely descriptive or generic terms. A financial company that is confused about brand protection should consider the following questions:

  • Does your financial company see ‘U Pay’ and ‘A Pay’ as payment-service brands or descriptions that indicate payment methods?

  • Has your financial company been cheated by a phishing or copycat site, which has sought to mislead users about the company’s official websites?

Trademark perspective

Distinctiveness

The house trademarks of most banks are the bank names, most of which are descriptive and contain only the national or geographical name and the term ‘bank’. This kind of pure word mark can be registered for financial and finance-related services in Class 36 on the grounds that it is the bank’s name. However, such an application may be rejected if the scope of protection expands to include other goods or services that are unrelated to financial services, because the descriptive word mark contains no other distinctive elements. Therefore, to keep the traditional bank name while simultaneously obtaining broader protection for other house marks, it is advisable to add distinctive elements, such as a logo or abbreviation of the bank name.

Some banks have beautiful and distinctive names (house marks) but use more common words or generic terms to name and brand their financial services. They use this familiar and generic terminology to clearly express information regarding their services directly to the client in a way that is easy to understand. What some banks forget is that such terminology may be so familiar that it is likely to already be in use by other banks or financial companies, meaning that it cannot be registered or used elsewhere. There is no rule stating that financial services must have only straightforward brands. In fact, something special, easy to remember and straightforward may be easier to register.

Protection

After determining the brands that are suitable for protection, the next issue to consider is the scope of protection for each type of mark.

According to the Chinese Classification of Goods and Services, financial-related services should be registered in Class 36 (“insurance; financial affairs; monetary affairs; real estate affairs”), which includes nine subclasses: insurance; banking; gem evaluation; real estate affairs; brokerage; guarantee; charitable contribution; trustee management; and lending against security.

Therefore, Class 36 is key to the protection of a financial services brand. However, the question arises: is it sufficient to file in Class 36 only? The answer is definitely not. Any other goods and services that have a close connection with financial services should also be covered.

For example, with the rapid development of the Internet, almost all financial services are now provided not only in a physical location, but also online. Most brands have official websites and apps to facilitate their services, enabling users to conduct transactions or check information at any time through these online tools. In this case, goods in Class 9 (eg, “computer software applications, downloadable; downloadable software applications for mobile phones”) should also be protected. Although the financial services provided online should still be classified in Class 36 (eg, “electronic banking provided via a global computer network (Internet banking)”), registration in Class 9 is also important.

As the Chinese Trademark Office (CTMO) is inclined to follow the Chinese classification system, goods or services that fall under different classes are rarely considered to be actively similar, unless this is specifically proven. Moreover, each class is divided into subclasses and the goods or services of a different subclass will not be considered similar either. As such, it is common for two or more identical or highly similar marks to co-exist within one class, provided that they designate goods or services in different subclasses.

Therefore, defensive applications are advisable in China, as they provide broader, better protection – often saving a significant amount of time and money. With defensive registrations in place, brand owners can avoid the hassle of constantly filing opposition actions against approved marks, as the CTMO will not approve similar marks in the first place. The more popular that your brand becomes, the more likely it is that squatters will try to register a similar mark (in any class or subclass that the mark has not been registered or applied for registration). As such, owners of popular brands can find themselves having to file multiple opposition actions. Even for those with well-known trademark status, it will still cost time and money to submit evidence in every case. Moreover, as the well-known determination is made on a case-by-case basis, there is also the risk that the CTMO or Trademark Review and Adjudication Board will not recognise the well-known status of a trademark, despite having done so in the past.

To expand a trademark portfolio in a cost-effective way, brands owners should divide the trademarks into tiers based on their importance to the brand. All trademarks can be roughly divided into the following three tiers:

  • tier A – house marks and key marks of the main business;

  • tier B – marks for other products and services connected with the main business; and

  • tier C – marks for all other products and services connected to the business.

The protection level for each tier is quite different, diminishing in scope from tier A to C. Applying the appropriate protection to each type of mark can make trademark management much clearer. For banks with other related financial companies, it may be necessary to centralise the management of the trademark portfolio.

Tier A should include the most important trademarks; namely, the house marks (in both English and Chinese) and the key marks of the main business. This will prevent other parties from registering or using the house marks in relation to any goods or services the marketplace. Applications for tier A marks should cover all 45 classes or as many classes as possible.

Tier B should include trademarks that have been used for some time and that have gained a certain reputation, which makes them appealing to trademark squatters. For these marks, it is a good idea to file trademark applications that cover all the relevant classes, even if the marks will not be used in relation to the goods or services in those classes. The goal is to prevent squatters from registering similar marks in relation to goods or services relating to the scope of your business.

Tier C should include trademarks for other businesses and new brands. Because these marks will face relatively low risk from trademark squatters, brands owners may choose to file applications only in the classes in which they use or intend to use their mark. If the brand becomes more central, the mark can be moved to a higher tier.

Although there is a high risk that defensive registrations which are not used will be cancelled if another party files a non-use cancellation after the mark has been registered for more than three years, the owner will still be buying at least three years’ protection from trademark squatters. If a party later files a non-use cancellation action against a non-used mark, a new filing for the same mark in relation to the same goods or services could be considered to continue this defensive protection.

Non-use cancellation

Financial-service brands have an advantage when it comes to defending against a non-use cancellation, as it may take a long time to get a business licence from the government before starting a business legally. This preparation period may be a justifiable reason for a non-use cancellation action. A justifiable reason for non-use of a trademark is necessary and may include:

  • an extraordinary event beyond the client’s control;

  • a government restriction; or

  • bankruptcy.

In the event of claiming ‘government restriction’ as the justifiable reason, the trademark owner must still submit evidence proving that the restriction in question happened or whether, due to government policy, more time is required to see the mark put to use.

Domain names

Phishing sites cause direct damage to banks and financial companies. They usually use a similar domain name and webpage to confuse consumers and trick them into giving money. Phishing can damage a bank’s reputation and goodwill long before criminal law is employed to penalise the perpetrators. Trademark owners should therefore act proactively to prevent copycats.

It is vital that trademark owners properly protect their domain names. Domain names can be registered, provided that they are not identical to existing domain names. Trademark owners should consider registering common variations of a domain name, as a defence against brand damage is never wasted.

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