Understanding TradeMark and it’s Value

What is Trademark?

TRADEMARKS are a unique category of Intellectual Property Rights, which primarily serve as a tool to identify and distinguish the source of origin. They answer the questions, who manufacturer these goods or who offers these services? Trade Marks create a bond of trust and commercial relationship between the producer and consumer of goods/services over a period of time known as GOODWILL. Therefore, they are of great value in trade and business.

Why it is Important to Choose a Trademark?

Choosing a trade mark is critical because like personal names they are for life, and represent the experience, impression, and trust they create with the consumer. It must be unique, honest, and characterised with the ability to identify the producer/ service provider. Prior search by an expert is recommended to avoid adoption of a mark which is identical or similar to that one any other entity with respect to the proposed goods/ services.

Importance of Trademark Registration:

TRADEMARK REGISTRATION is highly advisable to establish prima-facie proprietorship and exclusive right of use. An application for trade mark registration may be preferred at the appropriate Trade Marks Office in India. It takes approximately 6-8 months to register a mark in case no opposition is encountered. Upon registration a trade marks may be renewed in perpetuity every 10 years.

Trade mark right accorded upon registration is territorial in nature. Today, globalisation and e-commerce promote international trade. Therefore, International Trade Marks Rights may be secured by business entities by filing applications under the Madrid protocol which has 101 members covering 117 countries.

Using a Trademark  & Trademark Licensing:

Trade Marks may be used by the proprietor himself or by another entity by way of permitted use. Trade Marks Licensing is the most common method of generating financial income by permitting another entity to use the trade mark. The permitted user effectually fills in the shoes of the proprietor as far as the consumer is concerned. Therefore, utmost care should be taken while choosing a licensed user. Registration of “Registered Users Agreement” is mandatory to protect the interest of the consumer and proprietor of the mark. Such an agreement usually enumerates the term of permitted use, geographical area of operation, quality measure, royalty etc. They help to avoid dilution of rights in the mark and may be used for raising funds from financial institutions based on the projected sales of the goods/ services.

Valuation of Trademark:

Trade Marks are perpetual asset, which exists as long as it is renewed. Now widely accepted as a perpetual asset capable of generating income it is represented in the financial statements, and may also be capitalised in the event of merger and acquisitions, winding up, etc.

Trademark Proprietor – Owner of a Trademark:

Change in proprietorship of a trade mark is natural and may take effect either by way of assignment or by operation of law. The word assignment here in simple terms refers to sale of a trade mark. Recordal of change in proprietorship and other particulars of the proprietor are mandatory.

 Well known trademark:

Availability of goods and services throughout the world especially over the internet has led to increase in the customer base. Popularity of a mark has transcended geographical barriers. Some trademarks have achieved such tremendous trust with the consumers that the marks have become synonym to the goods or services. Example: XEROX is a trade mark. But because the product was so innovative and of good quality that it has become synonym with the verb photocopy. This example is on one extreme of the popularity spectrum of a mark, which renders dilution of the mark. Therefore, care should be taken to retain the distinctive identity of a popular mark. This may be achieved by filing an application for inclusion of a mark in the list of “WELL KNOWN TRADEMARKS”.

Trade Mark Portfolio Management:

A growing business experiences diversification with which new goods / services are offered to consumers. It is advisable to have different trademark filings and registration for different business verticals. This helps to maintain a degree of autonomy and identity of a mark. Over a period of time an entity creates a cluster of trade marks. At this point it is critical and advisable to undertake Trade Mark Portfolio Management to optimise income generation, document, maintain and defend trademarks assets. Documentation of all official records is critical and forms evidence in various proceedings.

Trade renewal – trademark opposition – trademark litigation – trade mark infringement:

A conscious effort is required to maintain and protect a registered trademark. This involves:

  1.      Renewals: periodic renewals of marks.
  2.      Opposition: periodically scrutinising Trade Marks Journal (published by the Indian Trade Marks Office) to oppose applications for marks which are identical and similar.
  3.      Litigation: monitoring the market to check unauthorised use and initiating appropriate for infringement or passing off.  

Registration of a trade mark accords statutory relief to the registered proprietor to seek temporary and permanent injunction against a third party for unauthorised use of a registered trade mark and claim damages. Such legal action (litigation) may be initiated at the place of business of the Plaintiff and based on the production of relevant Registration documents, without any further requirement to establish proprietorship.  The same benefit is not available in case the mark is not registered.