Trade marks are an essential part of intellectual property protection strategy, yet many business owners and entrepreneurs know little about what trade marks are and how they work. Even people who think they know often get it wrong.
What is a trade mark and why do you need one?
A trade mark is a letter, number, word, phrase, logo, picture, aspect of packaging, sound, smell or shape which is identified with your goods and services, supplied by you.
You can see that these are all aspects of your brand.
Having a trade mark means you can start your business on a solid foundation. It means you have the legal rights to that brand name, design or logo - depending on what type of trade mark registration you apply for.
The trade mark also turns your brand into a valuable asset. It becomes something you can sell, assign or license as you grow.
Mistaken beliefs by business owners about brand protection and Trade Marks
Here are the top seven mistaken beliefs held by business owners and entrepreneurs:
Registering a business name automatically gives me legal rights to the brand name
This is the number one mistaken belief people make when starting a business – because it’s counter-intuitive for the general public. When you register a company with the Australian Securities and Investments Commission (ASIC), it doesn't actually give you the rights to use that name as a brand in the marketplace.
ASIC only registers company names and trading names. IP Australia, which administers intellectual property rights, is a totally separate government body. It issues trade marks, patents, registered designs and plant breeder’s rights in Australia.
ASIC doesn’t allow similar business names so I’ll be able to get a trade mark easily
Sadly, this is wrong too. Company names can be very similar. Look at the table below for an example. All these similar company names and trading names are ASIC-approved for companies operating in the building development industry:
Company name and Trading Names (published on ASIC website) Postcode
ACE CONSTRUCT PTY LTD NSW 2137
ACE CONSTRUCTIONS PTY LTD VIC 3037
ACE CONSTRUCTION AUST PTY LTD QLD 4217
ACE CONSTRUCTION (WA) WA 6231
ACE CONSTRUCTIONS NSW PTY LTD NSW 2155
ACE DEVELOPMENT & CONSTRUCTION QLD 4218
ACE CONSTRUCTION NSW 2428
ACE CONSTRUCTIONS NSW 2455
ACE - CONSTRUCTIONS & EXCAVATIONS PTY LTD NSW 2212
ACE CONSTRUCTION AND CARPENTRY PTY LTD NSW 2199
ACE DRILLING & CONSTRUCTION VIC 3083
Trade marks, on the other hand, can’t be similar. The whole purpose of a trade mark is to avoid confusion. Trade marks are about protecting a brand and preventing confusion between two traders in the marketplace.
Checking business name availability is easy. Checking trade mark availability isn’t. It takes many different types of searches in various databases to ensure that the brand is unique and also not currently registered as a trade mark. This is important as when you launch a product or service into the marketplace, you don’t want to unknowingly infringe on a registered trade mark.
The trade mark process can take up to eight months. A common mistake is to do only one search on IP Australia’s trade mark register – for an exact match.
The full process includes many more checks:
the trade mark registry
company names
domain names
Google searches
Plus, for every search, you have to consider close variants as well as exact matches!
If I have the website or I’m doing sales, then I have legal rights to the brand name
Many people think having a domain name give them the legal rights to a brand name. It doesn't! Neither does having sales history, even if you’ve been around for a couple of months, a couple of years or more.
In one notable court case, Nestlé (Société des Produits Nestlé SA) took entrepreneur James Christian, owner of “A-Sashi” vitamins brand to court for trade mark infringement on 20 December 2013. Nestlé own a range of trade marks for the brand “Musashi”, for dietary supplements in particular. James started selling A-Sashi branded vitamins online in January 2013 and Nestlé argued there was confusion in the market. Nestlé won the case.
The owner of A-Sashi had been operating for three years, from before the start of the court case up to the final decision where he was found infringing on Nestlé trade marks. Yet that history of sales did not matter one bit. He had no trade mark for A-Sashi and therefore no legal rights to be able to use this brand. He spent all his money fighting Nestlé, but the court ruled he had to change his name, deregister his domain name and company name/trading name. Effectively, he lost his business – all because he didn’t check whether his chosen brand name was able to be trade marked at the beginning.
Once you register a trade mark, the authorities will enforce your rights
I often say having a trade mark is like getting married. You have a piece of paper which states the legal position – but ultimately, it’s up to you to make it work.
If you find someone infringing your trade mark, it’s your decision whether to sue them or not. You may not have the funds for a court case and therefore you may decide not to pursue prosecution
However, consider the reverse situation. It’s not so much about suing others, it’s more about making sure you have continuous use of your brand. A recent example is ‘meta’, ‘metaverse’, or the infinity symbol for various services such as software. Facebook have staked a claim to all those – but if you’ve already got a trade mark which incorporates those elements, they can’t stop you using it. You might even get lucky and receive an offer from them to buy your trade mark!
So when you’re small, it’s more about protection. When you grow to mid-size or bigger, that’s the time to start enforcing your trade mark, and stop the small guys from popping up.
I can register a descriptive trade mark
What do we mean by a ‘descriptive’ trade mark? It means something which describes what your business does. Consider a property development company with ‘Development’ in the business name. That’s descriptive.
For example:
Sydney Construction & Development – too descriptive to be able to trade mark
Greater Melbourne Residential Development- again too descriptive to be trade marked
Why would you want a descriptive trade mark anyway? Your trade mark is meant to help you stand out. It makes more sense to have something unique. One of the ways I add value as an IP Attorney is to guide clients to come up with great brands that are likely to be trade markable. It helps that I worked in marketing for over twenty years prior to becoming a trade mark expert. The client benefits from my unique skillset, as my advice to them takes into consideration both marketing and the trade markability of a brand name.
I can copy a famous company as long as I make it a bit different
Remember the purpose of a trade mark is to prevent confusion in the marketplace. Choosing a name very close to a brand which is already famous just doesn’t work.
An Australian example here is Stylekea. Kylie Hughes, in the Gold Coast, thought up this name for her business selling ‘peel and stick’ panels to change the look of IKEA furniture. No surprise, she got a ‘cease and desist’ letter from the Swedish furniture giant IKEA. She has since changed her company name to Lux Hax and has trade marked her new brand to ensure she is protected!
I only need an Australian trade mark
This one’s true – if you want to operate in Australia only.
If you want to expand overseas in the future, plan for that now! You will need to apply in each country you wish to expand into as the trade mark registration is required per country. There is no such thing as a global trade mark registration.
Here is another reason for taking the time to think of a brand name that no-one has used before. You don’t want to create multiple brand names for the same product for different countries.
So it’s always a good idea to think about your long term plans at the very beginning, and to do some international trade mark investigation. A Trade Mark expert can help here.
When should I think about brand protection?
Brand protection is essential to consider when starting a new business.
With the rise in popularity of e-commerce and social media, it has become more critical to consider trade marking your brand prior to or at the start of your business. We’ve seen many companies start a business or launch a product or service, then have to re-brand as they had unknowingly infringed on a registered trade marked brand.
So, when should I register a trade mark?
Here are some of the scenarios when you could register a trade mark:
Starting a business. Ideally, you want to register a trade mark when you start your business.
Established for a year or more. If you don’t have the funds at the start of your business, you may look at trade marking two or three years down the track. Just make sure you choose a unique brand name to start with!
Reputation is established. As your brand reputation grows, you have more to lose and you will want to trade mark for the protection of your brand. You don’t want to receive a ‘cease and desist letter’ from someone who noticed your brand and trade marked it before you did.
Selling your business. Trade mark protection is especially important if you’re trying to expand or to sell the business.
Franchising. And if you’re thinking of franchising, a trade mark is essential!
One scenario we often see with trade business owners, is that an apprentice or long-time employee decides to go out on their own after qualifying. If you don’t have trade mark registration protection, a smart apprentice can technically start a business with a similar name so as to capitalise on your reputation in the marketplace. With no trade mark, you still have some options under common law for ‘passing off’ – but the outcome is less certain. You have to prove your reputation and you have to prove damages – whereas with a trade mark, you can just get them to stop by taking them to court. Remember, a trade mark gives you the legal right to the brand.
Consider commercial issues in enforcement
For most small businesses, legal action is expensive and time-consuming. It often doesn’t make commercial sense. You could go up against the giants and win – but you might lose your business in the meantime.
So for trade marks, just as for other legal areas like terms and conditions, the aim is to have a strong foundation so that you can avoid legal action. Most importantly, by having a registered trade mark, you can ensure that you won’t be sued!