The Montana iP Trademark Blog

A trademark is potentially one of the most valuable assets a business can own since it is the principal means by which a company identifies itself, or its products and services to its customers and differentiates itself from its competitors. A trademark is also the cornerstone in building the goodwill and reputation in a brand.

Most countries around the world provide a formal system of legal protection for trademarks by means of a registration process, which allows trademark owners to register their marks relatively inexpensively. It is therefore surprising how many businesses underestimate or overlook the importance of registering their trademarks in spite of the value of these assets to their businesses.

Here are eight reasons why brand owners should seriously consider registering their trademarks if they have not already done so:

1. Territorial Coverage
Registered trademarks usually provide coverage on a national or regional basis (e.g. UK, France, Australia, Benelux etc) or, in the case of a Community Trademark, a single registration gives trademark protection for the entire European Union. In contrast, rights to unregistered trademarks relate to the business goodwill arising from the use of a mark and, as a result, generally extend only to the particular locality where goods or services have been marketed or sold under the mark.

Trademark registration will therefore help to ensure that another trader does not open a competing business under the same, or a confusingly similar name elsewhere in the same territory before you have had the chance to expand the national or regional scope of your own operations.

2. Presumption of Ownership
By registering a trademark, there is a legal presumption that the registered owner is entitled to the exclusive use of that mark in respect of the goods and services for which it is registered, and that the trademark is valid. This exclusivity not only provides a solid base for the registered owner to confidently grow and maintain the position of its trademark and brand in the marketplace but also provides the legal means to help prevent competitors from using a conflicting mark in the same territory.

3. Brand Security
In most countries, rights to a trademark do not automatically arise merely by starting to use the mark, and rights are determined on a “first to file” rather than a “first to use” basis. Consequently, if you have started trading under an unregistered trademark and another party subsequently obtains a registration for it, that other party could try to use its registration to prevent your use of the mark. If successful, you would then be left with the considerable expense of having to undertake a rebranding exercise and would be obliged to replace all products, documents and inventory containing the original name. Apart from the expense, such an exercise might also lose you customers to your competitors.

4. Secure legal rights to a trademark before it is used
Provided there is a genuine intention to use a trademark, in most countries a registration for a mark can be obtained before it is used. This is useful where a business wishes to secure rights to a name during the preparation for a brand launch and helps manage the risk of any investment it makes in the launch and roll-out of its product or service under that new name. Conducting searches of existing trademarks will also help to ensure that there are no conflicting third party trademark rights.

5. Visible Deterrent
The existence of a trademark registration on an official, public register and, where appropriate, the use of the registered trademark ® symbol in conjunction with the mark, acts as a ‘warning notice’ to other traders of your trademark rights and can help deter potential infringers. The ® symbol may only be used where a mark has been registered and in many countries it is a criminal offence to falsely represent that a trademark has been registered.

6. Sanctions against counterfeiters and illegal imports
Many countries have provisions in their intellectual property legislation which not only include criminal sanctions targeted at counterfeiters of goods bearing registered trademarks but also have provisions for registered trademark owners to notify customs authorities to seize imported goods or packaging bearing marks which infringe their registered trademark rights.

7. Transferability
The existence of a trademark registration provides a potential purchaser of your business or brand assets with greater certainty and security over the trademarks it wishes to buy. Since the goodwill of a business is often closely associated with, or directly linked to its principal trademarks, the registration of those marks will provide a degree of assurance to the purchaser that the rights are secure (see item 2 above) and that their future usage of such trademarks is not in jeopardy. Without a registration, the value of a mark, or the price a purchaser is willing to pay for it, may be reduced to take account of the potential uncertainty and risk surrounding the mark (for example: the fact that the validity or ownership of the mark may be challenged or that a third party may seek to register the mark itself).

8. Registration of a company name or domain name containing your brand name or trading name is NOT a substitute for trademark registration
Ownership of a company name registration or domain name registration does NOT of itself establish an exclusive right to use that name as a trademark for your goods and services. On the other hand, ownership of a trademark registration can be used to prevent other traders from registering a company name which contains your trademark if in so doing they are infringing your trademark rights. Similarly, when dealing with a cybersquatter who may have registered your trademark as a domain name, proof of ownership of a trademark is an essential requisite in dispute proceedings. A trademark registration is the simplest means for establishing such ownership.

Finally, a few words about 'passing-off'
In the UK, it is the common law right of passing off which is the principal means by which owners of unregistered trademarks enforce their rights against other traders. The law of passing off protects the goodwill associated with a mark, rather than the mark itself. However, in an action for passing off, the user of the mark has to provide evidence of its entitlement to, and ownership of, the mark and that it has acquired a reputation and goodwill in that mark. This evidentiary burden has to be satisfied each time an action is brought. No action for passing off exists where the mark has not been used, or where there has been insufficient use to establish sufficient goodwill in the mark. Furthermore, an action for passing off will only succeed if there is proof of actual or likely damage to the goodwill of the business concerned. Such requirements or conditions are not necessary in an infringement action involving a registered trademark.

Still not convinced?

Labels: passing off, trademark, trademark registration