The 5 biggest trade mark mistakes businesses make

6th October, 2015

Trademark mistakes

Trade marks are a subject of mystery to many businesses. However, with thousands of new businesses (and new brands) popping up every year, it is crucial for you to understand the purpose and importance of trade marks.

A trade mark is a legal term used to refer to a brand of a business. A trade mark usually consists of a name or logo (or a combination of the two), and it acts to distinguish the goods or services of one trader from another.

Every business will have at least one trade mark — usually the name of their business. Much of the goodwill or value of a business is bound up in its trade mark. Every positive thing that a business does goes towards enhancing the value of its trade mark, so they should be taken seriously.

READ: When do you need a trade mark, patent or copyright?

The following are five common mistakes that businesses tend to make with regards to trade marks:

1. “A registered trade mark is just a piece of paper”

One could say the same about an insurance policy. A trade mark is a form of intellectual property that provides strong legal rights. In one sense it acts as a type of insurance that helps protect what is often the most valuable asset of a business.

2. “I don’t need a trade mark – I already registered my business name!”

Every business will likely have registered a business name. However, there are fundamental differences between a registered business name, or company name, and a trade mark.

Usually, registering a business name is an obligation. The purpose is to identify a person who is operating a business under a name other than their own. The law proscribes penalties when a business name is not registered.

However, a business name gives no enforceable legal rights. This means that it does not allow a business to stop others using the same name or similar names. In order to have enforceable legal rights, registration of a trade mark is crucial. While it is sometimes possible to enforce an ‘unregistered’ trade mark, this can be very difficult and is usually much more expensive.

3. “I checked the Trade Marks Office database, and my new brand isn’t registered!”

Many businesses starting out will often choose a catchy new brand name. In the excitement and chaos of starting a new business, many people will neglect their branding due diligence. Most won’t conduct any trade mark research, and others will only do a very brief ‘exact word’ check of the Trade Marks Office database.

This can be a fatal mistake. To infringe rights in an earlier trade mark, it is not necessary to use the same trade mark as someone else for exactly the same product. Infringement can also occur by use of a ‘confusingly similar’ trade mark, for goods or services that are similar to those covered by an existing trade mark registration. An exact word search is therefore just the initial starting point. Professional clearance searchers take this into account and seek to find potential legal risks that would not seem obvious to the ordinary business owner.

4. “I called the Trade Marks Office, and they said my new brand name is fine”

Government agencies such as the Trade Marks Office cannot provide legal advice. Often, information given by the Trade Marks Office, although very helpful, is misinterpreted by business owners. If a business owner believes that the Trade Marks Office has given them the all-clear to use a trade mark, they are mistaken. The only way to get advice on what you should or shouldn’t do with a trade mark is to talk to a professional advisor.

5. “I filed the application myself to save money”

Beware of false economies. For most businesses, it will only be necessary to ever register one or two trade marks, which can be renewed every ten years for a reasonable cost. In many cases, the cost for engaging a professional advisor to register a trade mark for a ten year period is less than $2,000. This equates to less than $200 a year, which is much cheaper than most insurance policies.

However, many businesses seek to avoid professional fees by filing the application themselves. This can lead to a number of errors. For example, a person might not nominate the correct goods or services that the trade mark relates to. Alternatively, a person might file the application in the wrong name. In some instances, errors such as these can lead to invalidity of a trade mark or loss of rights to a later filed trade mark. The cost of fixing the problem can be enormous.

Do it once, and do it properly.

READ: 5 tips for proactively protecting your business identity