Intellectual property (IP) is often one of the uncounted assets of business, and like all business assets, IP needs to be cultivated to get the most value from it. Trade marks are an important part of IP. So what are they, why do we have them and how can you register your trade mark?
Part of the challenge of managing a business’ IP, so it makes a positive contribution to the company’s balance sheet, is working out what you actually have. For example, what is a ‘trade mark’? Is it the same as a brand or a product? What about the slogan? Does that constitute IP?
The short answer is “it could be”. In fact, some quite out-of-left-field stuff can be defined as trade marks (such as pink cement trucks).
Let’s step back to first principles. Why do we have trade marks in the first place? In a nutshell, to prevent others from using your brand or product name and image. It’s important to note here that IP rules are all about protection, that is, stopping someone else, rather than pro-action – “can I use this safely myself?”
The name of your business, both in terms of its ability to attract customers and its deeper representation of what your business stands for, is a vital element of your business’s success or otherwise. Unfortunately too many business owners find out, often to their substantial cost, the ‘just perfect’ trade mark they’ve dreamt up for their business has already been dreamt up and registered by someone else.
Here’s where it is absolutely critical to have comprehensive trade mark searches done, before committing resources to supporting and promoting your ‘just perfect’ brand image. Sure, it’s disappointing if you’re unable to register a trade mark. But it can be potentially disastrous for your business if you end up in an expensive legal wrangle with another organisation that can prove prior ownership of the IP.
As any reputable trade mark attorney will tell you, a trade mark is not a ‘set-and-forget’ guarantee that no-one will be able to use your good name and reputation to boost their own reputation and sales. This is because the type of trade mark registration most commonly used sets ‘use by’ dates and the law takes a ‘use it, protect it or lose it’ attitude to holding registration.
A common misconception is that business name registration or company name registration will spill over and give some form of de facto trade mark protection. Not so. Just because you register a business name doesn’t mean someone else can’t use it. In fact, if you check the business name registration lists with the NSW Office of Fair Trading right now, you’ll find 60 listings of businesses registered with ‘Blue Sky’ in their names -and that’s just in NSW.
“So what?” I hear you say. “My business is different from all the others with the same name. I’m a photographer (or an accountant, or a cleaning service or whatever). People looking for my services won’t mix me up with a bakery or a removal business or a real estate agency.”
Perhaps not, if they’re looking for your specific service. But what if, by using the name of an organisation that is well known and has a good reputation, another business is able to attract customers. Without actually saying “we are part of Organisation XYZ”, by having XYZ in their registered business name some customers may think “I trust Organisation XYZ to deliver the quality I want. XYZ services could be a part of the organisation, so I’ll give them a go.”
Does it matter? If Organisation XYZ is not actually losing sales to the business riding on its coat tails, where’s the harm? In reality, it could matter quite substantially, by threatening the reputation of the organisation if the other business doesn’t live up to its customer’s expectations. As a number of household name companies have found, if there is any threat to reputation the organisation may well be caught up in the fallout, with customers moving away to less controversial suppliers.
What can be done to avoid this situation?
Here’s where the less commonly used ‘defensive registration’ may come into play. Let’s say you’ve registered a trade mark for the goods or services you supply, clothing for instance. Your trade mark is sufficiently well known, to the point where if someone else used it for other goods or services, say jewellery or handbags, it would be deceptive or cause confusion in the market. In these types of cases you can apply for defensive registration. This type of registration is designed to prevent people cashing in on other people’s brands and is not subject to the non-use provisions. So even if you may have no intention of producing and selling jewellery or handbags, a defensive registration of your trade mark will allow you to stop others from taking commercial advantage of your success.
Registering a trade mark is likely to make sense in the following circumstances:
• You want to stop anyone else from using it.
According to common law, the person who uses a trade mark first is the owner, unless someone applied to register it beforehand. So it’s either ‘first to apply’ or ‘first to use’, whichever comes first. Let’s say you haven’t used the trade mark yet, but have plans to use it in the foreseeable future. If you delay and don’t use it and someone comes along in the meantime and registers it, you’ve lost the trade mark. By applying to register you can buy yourself time while making your plans, effectively ‘reserving’ the trade mark for future use. But don’t wait too long. You should be using it in a commercially realistic time frame.
• You want to expand into other states
So, you’re trading in NSW right now, but your business plan has you expanding into all other states in the future. The law will only give you protection ‘where your reputation lies’, meaning where the trade mark is
used, in this example, NSW. The courts aren’t interested in helping you stop someone in another state. But, since trade mark registration is Australia-wide, it keeps the whole country open to you as a potential
market for at least a few years.
• You plan to license or franchise the brand
Licensing and franchising is all about maintaining control, so registration of your trade mark is virtually essential, to give you the statutory right to control the brand. Without that right, it can become very difficult to keep your licensees or franchisees toeing your line.
• Your company owns the IP and related companies use it with your permission
Trade mark registration is essential in this model because of the common law requirement that a trade mark has to be used before it even exists and it is owned by whoever uses it. So the idea of one entity owning the trade mark and another entity using it makes no sense at all under the general law. But under the Trade Marks legislation, providing the mark is registered, it makes perfect sense and is commonly used. For example, a parent company may have several subsidiaries operating in different markets or industries but under the same brand.
TM or ®? What’s the difference?
The TM symbol can be used next to a mark – logo, name, brand, product, image – at any time, whether the mark is registered or not. For example, if you were keen to flag to others that you are prepared to protect your patch, while waiting for trade mark registration, adding the TM could add weight.
Only registered trade marks are permitted to use the ® symbol. Its role is to demonstrate clearly you have registered the mark and have the right to use it. You need to remember that registration doesn’t give you a lifetime guarantee that no one will try to use your trade mark. Rather, in practical terms, it gives you the right to protect your mark by prosecuting others for infringing it.
Let’s not forget the ‘how’ of trade marks. Just as a market garden needs attention to remain productive, a trade mark portfolio also needs regular attention, weeding out the weak marks and cultivating the strong, productive ones.
You could DIY – undertake the vital prior searches, develop your mark, apply for registration, monitor registrations that may pose threats to your mark, ensure renewal deadlines are met, vigorously prosecute
infringements.
Or, taking the gardening analogy a bit further, you could choose to appoint a qualified horticulturalist – a specialist trade mark attorney – to help you get the most from your investment in IP, make sure you don’t
miss the important things. This could potentially save you money by making sure your IP garden is well-tended and protected from threats, plus your specialist trade mark attorney can also act as an IP sounding board to help you make strategic decisions.
Whichever route you choose to take, the three main points to remember with trade marks are:
1. Prior searching is essential;
2. Trade mark registrations have ‘use by’ dates;
3. Active protection of your mark is a must.
Wayne Willis is a partner with F B Rice & Co | Patent & Trade Mark Attorneys, and specialises in working with Australian businesses to develop and implement strategic plans for protecting their trade marks domestically and overseas www.fbrice.com.au
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