What are the benefits of a registered trademark?
- The most important benefit is that it gives the trade mark proprietor the exclusive right to use the mark in the territory in which it is registered. The owner of a registered trade mark is therefore entitled to prevent a third party from using an identical mark or using a similar mark in circumstances where confusion is likely to arise.
- Other benefits are that it is easier and less expensive to protect a registered mark (as opposed to an unregistered one) against infringement.
- It acts as a deterrent to potential infringers.
- Licensees, franchisees are more likely to be attracted if the business has a registered trademark.
- Allows the abbreviation ® to be used thereby clearly demonstrating ownership of a brand.
- A registered trade mark can also provide the owner thereof with a defence to a trade mark infringement action.
- A registered trademark gives you an exclusive monopoly to the name for 10 years, which can be renewed at 10 year intervals if required.
- A registered trademark is an asset and adds value to a business.
- Trademark registration ensues that your trademark or brand cannot be hijacked or stolen by manufacturers, licensees, distributors, agents, or ex-employees.
- Trademark rights can be extended internationally.
What can happen if I do not register a trademark?
The commercial and financial consequences in failing to obtain a trademark registration can be extremely damaging to a company. Here are merely a few possibilities:
- Use of a trade mark may end up infringing a third parties right which could mean litigation, re-branding or even withdrawal from the market. This can be an expensive exercise as it could mean the re-packaging goods, changing stationary and redesigning letterheads, websites etc. In fact any goodwill that you may have accumulated in the name through use etc would have to be forfeited, which could be very damaging
- Very little protection (and absolutely none if there is no reputation) is given to an unregistered trade mark as one has to rely on common law rights (as opposed to statutory rights) to prevent another entity trading under or using an identical or similar name. Even if there is a reputation the legal requirements are notoriously difficult and very expensive to prove. As a result few passing off actions are successfully instituted. The reality is that for most small to medium sized businesses there will be no protection.
- If someone registers your name as a trade mark (before you do) the worst case scenario is that the third party could prevent you using your name altogether (depending on the circumstances). They could certainly prevent you using it outside the area in which you have a reputation (e.g. if you trade in London you will not be able to trade in Manchester, for instance, under the same name (unless you are able to prove that your reputation extends to Manchester).
- Failure to obtain a trade mark registration could severely hamper an owner’s ability to grow the business and expand into other regions. This is particularly important from a franchising or licensing perspective but is equally important in circumstances where a business expands into other regions or territories due to organic growth or acquisition.
- A trademark registration is an intangible asset that adds value to a business. Failure to register a trade mark could have negative implications on the value of a business in the event of a business sale (unregistered marks are often “deal killers” when negotiating with third parties).
- Your unregistered trademark could be stolen by a competitor, distributor or manufacturer. I have recently been dealing with a matter where the licensed manufacturer of a product intentionally and deliberately registered the trademark of the product he was contracted to manufacture.
Does an unregistered trademark give me any rights or protection?
If you have an unregistered trademark you will have to rely on your common law rights (and not statutory rights as is the case with a registered trademark) to prevent a third party from using an identical or confusingly similar mark. This remedy is known as an action for passing off. In order to succeed in a passing off action you need to prove the following:
- You have goodwill and a reputation
- Your opponent has made a misrepresentation in the course of trade
- You have suffered consequential damage
The above requirements are notoriously difficult and can be extremely expensive to prove. Consequently passing off actions are generally far more costly to litigate than trademark infringement actions. Furthermore, and more importantly, if you do not have a reputation (as is the case with many small to medium sized companies) you cannot succeed in an action for passing off. In other words no reputation means no protection.
What happens if a 3rd party registers my business/product name as a trademark before I was able to do so?
Although the answer will depend on the facts and circumstances of each individual case, the commercial and financial consequences to you or your business could be extremely damaging. For example, depending on the extent of your use of the mark, the 3rd party may even be able to prevent you from even using the trademark altogether.
He could certainly prevent you from using it in areas outside those in which you have acquired a reputation (i.e. severely limiting your ability to expand the business and operate in extended geographic locations). Furthermore you will not be able to stop the 3rd party from using the trademark in areas outside of those in which you have a reputation in the mark. You will also incur significant legal costs in trying to solve the problem (assuming it can be overcome!).
