Trademarks – what you need to know.
Business owners often learn about trademarks the hard (and expensive) way – by making costly mistakes. There is much ignorance and there are many misconceptions about the “legal” aspects of branding.
Here, learn how you as a business owner can adopt and manage a new brand – safely and inexpensively.
Look before you leap – trademark searching
It is common for a business to engage a branding consultant to identify an appealing name that reflects the nature, the aim or the philosophy of the business. It also common to engage an accountant to advise on the appropriate business structure and then to register the chosen company name or business name. This is sensible.
However, the critical question that is often not asked at this early stage is, “Is this name available for use?” or, put another way, “Might it infringe on the rights of some other person?”
This question should be addressed in the very early stages and well before any substantial investment in, or commitment to, a new name is made.
If a new name (e.g. VULOO) is chosen as the desired brand of a new ice cream product but another person has legal rights in a similar name (e.g. VULU for similar products) then the use of the desired name (VULOO) is likely to infringe those rights – meaning that the name (VULOO) cannot safely be used.
“There are important and very significant differences between a registered business name and a registered trademark.”
Also, it is possible that a company name or business name may be registered (e.g. VULOO) but the use of that name will infringe a trademark registration of some other person (e.g. for VULU). This incongruous outcome is the result of the different registration systems in Australia for trademarks and for company/business names.
So, it is important that availability searches be done of both the register of trademarks (maintained by IP Australia) and the company name and business name records of the Australian Securities and Investments Commission (ASIC) before adopting a new brand.
Registration as a business name or trademark?
There are important and very significant differences, in purpose and effect, between a registered business name and a registered trademark. These differences need to be understood.
Business name registrations are governed by the Business Names Registration Act 2011. Any business which trades under a name that is different from the name of the person or company conducting the business must register that name as a business name. Failure to do so is a statutory offence and significant penalties can be imposed.
Therefore, most businesses will need to register as business names the names under which they trade. A business name registration is a statutory requirement. It does not, however, provide any legal rights and, therefore, it is not possible to rely upon a business name registration to attempt to stop a competitor from using a similar name (which is where a trademark registration is effective).
It is not necessary to register as a trademark the name under which one trades, and many businesses have not registered their names as trademarks. Indeed, some trading names – such as those that are highly descriptive of the business or that comprise common surnames or geographical terms – may not be registrable.
Some legally enforceable rights can be developed, over time, in an unregistered trademark (as a result of extensive use and acquired reputation) but the strength and geographical extent of these rights are uncertain and the enforcement of them is expensive.
Trademark registrations are governed by the Trade Marks Act 1995. A distinctive trademark (e.g. not being descriptive, a common surname or geographical name) which does not conflict with a similar trademark already registered for similar goods or services, will generally be registrable as a trademark. A trademark registration grants an Australia-wide, qualified monopoly in the trademark for a period of 10 years (which is infinitely renewable) and it confers significant legal rights. These legal rights are far more certain than the legal rights which may exist for an unregistered trademark and their enforcement can be much less expensive.
In summary, a business name registration is mandatory (for many businesses) but provides no legally enforceable rights, whereas a trademark registration is optional but provides strong legal rights.
Trademark registration – is it worth it?
Not every business will benefit from having its name registered as a trademark. For instance, your local seafood restaurant would be unlikely to benefit by having the name registered as a trademark (unless, perhaps, there were plans to create a chain of restaurants under this name).
However, any business with a profile that goes beyond its immediate area is likely to benefit from having its name registered as a trademark.
A trademark registration has many benefits – the main ones being:
- clear, strong and more easily enforceable statutory legal rights which exist Australia wide
- legal rights can be established without any use of the mark
- it acts as a deterrent to competitors from adopting the same or a similar mark
- increased value of the business (when being sold or floated).
So, in most cases, there are significant benefits in having the name (and any logo) of a business registered as a trademark.
Filing date – get in early
Once a brand has been chosen, it is important to seek registration of the brand as soon as possible – both as a trademark and, if necessary, as a business name. This will minimise the risk of being “beaten” by an earlier application for a similar brand by another person.
The symbols ® and ™
The symbol ™ simply means “trademark”. So any time a name, brand, logo etc. is being used as a trademark, this symbol may be used and this is the case whether the trademark is registered or unregistered.
The symbol ® means “registered trademark”. This symbol may only be used once a trademark has proceeded to registration. It is an offence to use this symbol in respect of an unregistered trademark.
Important copyright note
Many brands incorporate logos or stylised forms of words – generally created by graphic designers retained by a business. Copyright would exist in most of these created works and it is important that the business owns the relevant copyright. However, this is often not the case.
Due to certain provisions of the Australian Copyright Act (1968), the owner of a copyright work (such as a logo) is generally the person who creates the work (e.g. the graphic designer) – not the business owner paying for the work to be created. The business owner merely has an implied licence to use the work. However, the scope of this implied licence is uncertain and may not extend beyond Australia or, even, in relation to subsequent ranges of products or services provided by the business.
So, when retaining a designer to create any logo or similar artwork, it is important to ensure that the relevant copyright is assigned from the designer. It is prudent to have this done before the designer is paid for the work.
Being aware of the important legal aspects of branding is important for avoiding expensive mistakes and ensuring your brand is as strong as you want your business to be.
Philip Macken, principal, Brand Haven Legal
This story first appeared in issue 25 of the Inside Small Business quarterly magazine.
