Trade Mark Registration – Why it is
so important!
UK Trade Mark Registration – Why it is so important!
Few entrepreneurs and small business owners are aware
of the importance of protecting their trade mark (business/trade or product
name etc), which could eventually become one of their most valuable assets.
One of the main reasons for this is ignorance on their part with many
believing that a company or domain name registration gives them the right
to use the name and/or prevent others from using it. This ignorance or
lack of knowledge of small business owners was confirmed in a recent survey
(August 2005) conducted by the UK Patent and Trademark
Office which revealed that 80% of small and medium sized enterprises have
not registered the name of their business as a trademark. Company/domain
name registrations give the owner absolutely no rights to a name. The
best way to secure exclusive rights to a name is by registering it as
a trademark. The benefits associated with trademark registration are substantial
– the most obvious being the exclusivity aspect and the right to
prevent a third party from using an identical or confusingly similar name.
However, there are also numerous commercial advantages associated with
trademark registration. Firstly, trademark registrations can be used as
negotiating tools in business deals as they can greatly facilitate the
negotiation of licenses, franchises and the transfer of ownership. Secondly
registered trademarks are ‘quantifiable’ assets in their own
right thereby commanding a presence in a company’s balance sheet.
This in turn enhances the value of a business for potential investors,
lenders, purchasers and public offerings. Thirdly a registered trademark
can serve as security for financial transactions thereby giving the trademark
proprietor more options and greater financial flexibility. However, and
more importantly, 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:
1. Use of a name 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;
2. Very little protection (and absolutely none if there is no reputation)
is given to an unregistered 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.
3. If someone registers your name as a trademark (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).
4. Failure to obtain a trademark 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.
5. A trademark registration is an intangible asset that adds value to
a business. Failure to register a trademark 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).
The above examples illustrate the commercial importance of protecting
a trademark. Failure to protect a trade mark exposes a company to unnecessary
risk and for the sake of a few hundred pounds (i.e. the cost of registration)
it really is not worth it.
Most small to medium sized companies tend to be reactive when seeking
trademark protection only taking action after problems have arisen. This
is a dangerous strategy which can result in their trademark rights being
severely curtailed (not to mention the significant and unnecessary legal
costs that will be incurred).
Be proactive – protect your trademark today!
For advice on how to trademark registration or on how to best protect
your trademark call us for a free informal discussion or email us with
your query.
|
