Tips of the trade (marks)

You've got your domain name, you've registered your company, so isn't getting a trade mark a waste of money? It's not so simple, says Carole Hailey

When you start a new business you may assume that you will automatically have the benefit of certain protections - the name of your business for example - however this is not always the case. In certain situations you can be forced to change the name of your business, which could prove disastrous if you have built up a successful brand which has value in the market in which you operate your business.

On the other hand, certain businesses rely very little on the name by which they are known and in such situations, it is not necessarily particularly important to obtain trade marks to protect the name of your business, good or services.

What are trade marks?

In their simplest form, trade marks are the words, logos and other markers (such as jingles) which distinguish your business from your competitors and create brand identity. Trade marks can be unregistered (meaning that you are relying only on the fact that you use a particular word or logo to claim that it is a trade mark) or registered, which gives you significantly greater protection in your mark.

Registration of a trade mark permits you to use the ® symbol next to the mark, which denotes a registered trade mark. Without registration you are only permitted to use a (tm) symbol, which denotes that you are using a word as an unregistered trade mark.

A common misconception is that the act of registering a company or partnership at Companies House, or obtaining a domain name for your website, gives you an absolute “right” to use that name. Unfortunately, as often is the case, the law is rather more complex than that. In effect, a registered trade mark will often “trump” a company name or a domain name.

As the owner of a registered trade mark, you effectively have a monopoly right to use that name for the “Class” of goods or services and in the territory which you have registered it. There are many different classes, broadly divided along industry lines. For example if you have a registered trade mark in the United Kingdom in Class 25, then you have the right to use that registered name in the United Kingdom for clothing, footwear or headgear – and have the legal right to prevent other businesses using that name on those type of goods, or for their business name, or on the internet.

The implications of using someone else’s registered trade mark can be punitive including an account of the profits made by the business using the infringing mark. Possibly the most infamous trade mark dispute was between Apple Computers (of the ubiquitous iTunes, iPod and iPhone fame) and Apple Corps (the Beatles-founded record label) – and as the dispute rumbled on, on both sides of the Atlantic for almost 30 years, it is probably the best demonstration of the truism that lawyers are the biggest winners.

Should every business register trade marks?

Well, if you are planning to build a business with brand value, you should seriously consider obtaining a trade mark. Consider how potentially ruinous it could be to develop a brand that becomes known amongst your customers if you then are forced to stop using the name. Similarly, you would be well advised to have the strongest rights possible to prevent other people piggy-backing on your growing success by using a confusingly similar name to try and poach your customers.

Trade marks are territorial, meaning that you have to register on a country-by-country basis. If you are planning global domination with your new business, you should really consider obtaining trade marks in all your anticipated major markets, however, don’t forget to check the both the meaning of your trade marks in other languages. Probably the most notorious example of the failure to do this was Ford whose launch of the “Pinto” flopped in Brazil as in Brazilian Portuguese slang it means “small penis”.

A mark must be distinctive and not descriptive for the goods and services that you offer, for example if you provide window cleaning services, you would be unlikely to be able to obtain a trade mark for “Window Cleaners Extraordinaire”.

The best possible trade marks are nonsensical names. Not only is it more likely that no-one else has beaten you to an earlier registration of the name, it is also more likely you’ll be able to get a .com or .co.uk domain name. And be wary of using animal names – it’s a well trod path and you’ll find that it is an extremely crowded space on the trade mark registry if you want to launch your new product called “Panther” or “Tiger” or some other big cat name!

The Legal Facts

Once registered as the owner of a trade mark for a word or a logo, you have a monopoly over the use of that mark for the classes of goods within the territories for which it is registered. The monopoly can be maintained indefinitely (subject to periodic renewals) as long as the trade mark can be used to distinguish the goods in question.

A trade mark is a business asset through which you can build brand awareness and goodwill and can be exploited through licensing, sale or by using it as security to raise finance from a lender. Potential purchasers of your business will always look favourably on registered trade marks forming part of your asset register.

In the UK the fees for obtaining a trade mark for three classes of goods and services are around £700 (including professional fees and registration charges). For a European Community mark (a single registration covering the EU) for three classes of goods and services you should budget around £1,500 and if you are looking for worldwide coverage in all the major territories then you’ll be looking at thousands more.

Carole Hailey is a partner at Waterfront Solicitors