Trade marks have always got me in a bit of a tizzy. Should I get one? Why do I need to? Is it worth it? There's a tonne of information out there, but we needed to speak to a professional to help us get our head around what it's all about. Claudia Mihai, from Paris Smith LLP, gives us the lowdown on the real value of registering your business as a trade mark, in the hope it will clear up the fuzz and answer some of the questions small business owners are faced with...
People interact with brands and trade marks on a daily basis without actually realising how these impact on their decisions as consumers.
"We have become so brand conscious that most battles between competing products are primarily won by the products carrying a stronger trade mark."
Yet some traders remain oblivious to this vital element of their business. Trade marks can become one of the most valuable assets a trader can own, if developed properly through advertising.
So, what is a trade mark?
As the name actually suggests, it is an indication of the trade origin of goods or services from a particular supplier. It can take the form of a word, letter, numeral, sign or shape of packaging provided that any such signs remain capable of distinguishing certain goods and services from those of other suppliers.
Apart from being a mark of origin, trade marks also become a mark of quality. Reputable suppliers aim to provide goods or services of satisfactory quality so that, in time, customers begin to regard their mark as one of guaranteed quality. As the reputation of a trade mark increases, it becomes a measure of the value of the supplier as a whole and this calls for protection.
And why register it?
It is worth mentioning that registering a trade mark is not compulsory, but highly advisable. By using a mark a trader acquires automatic rights under common law. If these rights are not registered but are infringed the only protection the trader can rely on is the common law action of passing off. To succeed in bringing such claim, the trader must prove that it owns the reputation in the mark and that the mark was used without its consent and this is likely to cause damage to the brand. Due to these stringent evidential requirements, protecting new unregistered marks may be impossible if the marks have not attracted sufficient reputation to support a passing off action.
This is why registration is key! Once a trade mark is registered, there is no need to prove reputation in the mark. The process of registration guarantees a presumption of validity, thus placing the trader in a stronger position in the event of a dispute. Registration gives the proprietor a right to sue others for trade mark infringement if they use a similar or identical mark in connection with similar or identical goods or services without his consent. These actions are quicker, cheaper and less uncertain than passing off actions.
"The registered proprietor of the trade mark has an exclusive right to use the mark for the goods and services for which it is registered."
The trader can place the symbol ® next to the trade mark to make people aware that the mark is protected. It is a criminal offence to falsely represent an unregistered trade mark as registered by using the registration symbol.
In addition to having an exclusive right of use, the proprietor also has the option to authorise or licence others to use its trade mark. Licencing the trade mark to third parties could help the trader expand its operations into other markets which would otherwise be inaccessible.
Another important aspect to remember is that trade marks are transferable assets which can be commercially exploited. They can be a powerful negation tool in the sale of a business, for example, or can be used as security when taking out a loan.
A supplier can opt to apply for registration even before a product is launched. All applications for registration and trade marks which are already registered are available on public record and this can be searched before an application is made. Building up rights in a mark through use and leaving it unregistered can pose a major risk to traders. Prior use of a mark will not protect it against being stolen and registered by other traders.
Trade marks can be registered against one or more classes of goods and services available on the trade mark register. The initial period of registration is ten years and any registration can be extended for subsequent ten year periods provided the mark remains compliant with the statutory conditions, thus making the registration indefinite. The flexibility of the register creates an opportunity for suppliers to reflect on their business plans long term and include in their registration all the classes they intend to trade in within the next five to ten years. It should be noted that if trading does not start in all classes within five years of registration, the trade mark can be revoked from the classes that remain unused.
Trade marks are protected from infringement only in the countries or territories in which they are registered. Ambitious traders who intent to expand their business to the EU can currently apply for an EU wide trade mark (which includes the UK). The rules around EU trademarks will most likely be subject to change due to the impending effect of Brexit but the actual impact is not yet known.
"Regardless of the size of the business, it is of utmost importance for traders to understand that by registering their trademark they not only protect their brand but also their business."
If you are considering taking steps to register your mark and you require further information, then seeking advice from a specialist is highly recommended. The corporate and commercial team at Paris Smith can offer assistance in this respect or help you explore other ways of protecting your business and assets.
About the Author:
Claudia Mihai is a Winchester based solicitor working in the company and commercial department at Paris Smith LLP. Acting for both individuals and companies, Claudia advises on a wide range of corporate and commercial matters. To get in touch with Claudia, you can email her on: firstname.lastname@example.org