Making your mark: Brand management issues for the cosmetics industry

By Emily Holmes and Gino Maurelli

- Last updated on GMT

Emily Holmes, intellectual property attorney, Brownstein Hyatt Farber Schreck
Emily Holmes, intellectual property attorney, Brownstein Hyatt Farber Schreck

Related tags Trademark Brand

Because  brand identity is so important for beauty and personal care companies while the market continues to be more crowded, it becomes even more important to establish a differentiated, strong brand and diligently protect it.

This guests article, by experts in the area of brand protection for the industry, considers some of the potential pitfalls and the strategies to employ in an effort to avoid them.

Establishing a Strong Brand

Potential trademarks are commonly classified on a sliding scale from so-called arbitrary or fanciful trademarks (the most protectable trademarks) to generic terms (terms that are not protectable as trademarks).

An arbitrary or fanciful mark, such as Urban Decay, bears no relationship to the goods or services sold under the trademark. Suggestive marks, such as Coppertone for sunscreen, are also strong. Such trademarks suggest, but do not explicitly describe, the goods or services sold under the trademark.

If possible, a company should select an arbitrary or suggestive trademark. Such trademarks provide more value in the marketplace and are easier to enforce against third parties.

Assessing Infringement Risk and Registrability

Once a trademark has been selected, you should conduct trademark clearance to ensure that the selected trademark is available for use for your particular category.

A trademark attorney can help you assess the infringement risk associated with adopting the mark. Engaging in such a search will protect the brand owner from increased damages for willful or reckless infringement, and help them avoid an expensive and detrimental rebrand in response to an infringement claim down the road.

Protecting and Enforcing Your Brand

Trademark Registrations

It is always advisable to file U.S. federal trademark applications for a brand’s core trademarks to secure presumptive nationwide rights in such trademarks. A company should file trademark applications as early as possible since the filing date is significant for purposes of determining whether the applicant or a third party should be granted a trademark registration for the same or similar trademarks.

Furthermore, it’s also important to consider filing trademark applications for a brand’s core trademarks in foreign jurisdictions where the brand already has, or intends in the near term to have, a significant presence. Additionally, applications should be considered in jurisdictions where trademark squatting (third-party filing for well-known trademarks) or counterfeiting is common such as in China, Korea, Brazil, Russia, Turkey, Taiwan and India.

Monitoring the Marketplace

Once you begin using a mark in a particular jurisdiction, a trademark owner must enforce its rights in its trademark or risk the weakening of its trademark over time.

For this reason, the owner should employ trademark watch services to identify newly filed federal trademark applications and tools such as Google alerts to identify new common law trademarks.

Unauthorized Resellers

Beauty brands face a significant issue in unauthorized reselling of products. Most importantly, when products are sold by unauthorized resellers, the brand is not able to control the use of its trademarks, the claims made in connection with the sale of their products and the quality of its products in general.

Brands can bolster their protection against unauthorized sellers by adding a limited warranty to its online terms of use. Under relevant case law, goods that do not have the same warranty as they would if they were purchased from the true source of the goods are considered “counterfeit goods.”

Once a brand provides a limited warranty, unauthorized resellers are engaging in the sale of counterfeit goods. In addition, if your company engages in direct-to-consumer sales through your website, you should carefully monitor sales.

To the extent that you see large orders, it is possible (maybe even likely) that such purchases are being made for the purpose of unauthorized resale. Accordingly, it is also important that your terms of use specifically state that purchases for the purpose of resale are prohibited.

Counterfeit Products

Cosmetic and beauty brands face problems with counterfeit products as well. One of the best ways to combat counterfeiting is to register the brand’s core trademarks with U.S. Customs and Border Protection (“CBP”). Once trademarks are registered with CBP, CBP will automatically seize any products it believes are counterfeit or infringing, and contact the brand owner with further information regarding the suspect products.

A strong trademark can help a beauty brand stand out from its competitors and increase the value of the company in the eyes of potential investors or acquirers. Investing in protecting the brand now will help ensure your company’s future position in the rapidly expanding cosmetics industry.

Emily Holmes​ is an intellectual property attorney in the Denver office of Brownstein Hyatt Farber Schreck. Gino Maurelli​ is a corporate mergers and acquisitions attorney in the Denver office of Brownstein Hyatt Farber Schreck.

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