In recent weeks, we have talked a little bit about intellectual property, and taken a closer look at copyright. Now, we are going to investigate another important form of intellectual property – Trade Marks.
What is a trade mark?
As we have discussed, there are three main types of intellectual property. Copyright protects an original artistic or literary work. Patents protect an invention or novel method of doing something. A trade mark protects your brand’s reputation, usually in relation to the names and logos used on goods and services.
Section 17 of the Trademarks Act 1995 (Cth) defines a “trade mark” as:
- a sign
- or intended to be used,
- to distinguish goods or services
- dealt with or provided in the course of trade by a person
- from goods or services so dealt with or provided by another person.
“Sign” is defined in s 6 of the Act as including any letter, word, name, signature, label, ticket, aspect of packaging, shape, colour, sound, scent or any combination of them.
The main function of a trade mark is to enable consumers to quickly distinguish your goods and services from those of your competitors.
I’m going to use Cadbury’s chocolate as an example (because who needs an excuse to spend time thinking about chocolate?) Cadbury UK Ltd have applied for 455 Australian Trade Marks, and have successfully registered 305.
Among these are:
- the purple colour of their packaging – Pantone 2685C (a colour is actually quite difficult to register, but it does mean they can prevent other chocolate manufacturers using a confusingly similar shade or purple, making their products more recognisable on the shelf),
- their catch-phrase – “GLASS AND A HALF” (phrases like this are not protected by copyright, but they can be protected as a trade mark),
- their business name – Cadbury (registering a business name with ASIC only gives you the right to trade using that name, it doesn’t give you any ownership rights. Exclusive ownership only comes with a registered trade mark), and
- many of their product names – Caramello, Flake, Crunchie and more (even if you are a sole trader building a brand around your personality, you may want to consider registering the name of your product, course, service or other offering).
What makes a good trade mark?
To be capable of forming a trade mark, the sign that you use to identify your business or product must be distinctive. This means it must be unique, and not substantially identical or deceptively similar to any other existing mark. You are also prohibited from registering a mark that is too risqué, references something illegal, or that is likely to deceive consumers into thinking your business is something that it is not.
A strong trade mark is creative and unusual. You can protect it effectively because it is so unique to you that you can easily notice if someone else uses it and have a clear argument for your right to ownership. The strongest marks are those that are arbitrary or fanciful.
Arbitrary means a word or image that is taken out of context. Think of Apple computers, Nike (name of the goddess of Victory) for sports gear, or Shell petrol.
Fanciful refers to a word, phrase or image that is made up or invented and has no intrinsic meaning. Think of Adidas, Starbucks, or Google. These are the best marks, because the only meaning associated with them is the one that you build through your business activities.
If you are not ready for an arbitrary or fanciful mark, at least consider a mark that is suggestive. These kind of marks hint at the product or service that you offer without falling into the trap of being descriptive.
Examples of suggestive trade marks include General Electric, Microsoft and Android.
A weak mark is generally a word or phrase that is descriptive or generic. It will be difficult and costly to enforce because others in the market place have every right to use it to describe the goods and services they offer, too. Descriptive marks will generally be rejected for registration unless they have acquired distinctiveness through a long history of use, or are presented in a unique graphical format. However, they remain more expensive to enforce due to the increased likelihood that others in your industry will want to use the same terms as your trade mark.
Some examples of descriptive trade marks that have featured in Australian court cases include the Kettle Chip Company, Chemist Warehouse and The Reject Shop.
Are you building an unregistered trade mark?
Registration of a trade mark is not mandatory. You may have seen names or logos displaying a ™ mark. This means that the business owner claims “common law” rights in an unregistered trade mark. In fact, if you have been using a name or logo consistently in your business, you may well have been building up your own unregistered trade mark – and you could certainly display the ™ sign after it. This symbol is internationally recognised, and while it does not guarantee that your mark is protected, it puts potential competitors on notice of your intention to defend it.
To enforce an unregistered trade mark in Australia, you would need to bring an action under the Australian Consumer Law, claiming that the person using your mark was “passing themselves off as you” and attempting to trade on the reputation that you have built in the marketplace. The Consumer Law also protects against misrepresentation and misleading and deceptive conduct, which can both be used where the infringement of your trade mark is creating (or potentially creating) confusion in the market place.
How is a registered trade mark different?
When you register a trade mark, you gain the right to display the symbol ® after your name or logo. Registration is only effective in the country where it is registered, but under the Madrid convention, a trade mark that has been registered in Australia can more easily be registered in other countries. The international registration can be quite expensive, however.
There are several advantages to registering your trade mark. A registered trade mark is much easier to enforce, as you have a legal right to exclusive ownership. This means that you are the only person allowed to use that mark to advertise or sell the goods and services that you selected during the registration process. If someone attempts to use your mark, you don’t have to prove your right to protect your reputation in the mark, as you do with an unregistered trade mark. You just have to show your certificate of registration to attract a range of legislative penalties.
(In the interests of complete disclosure, it is important to point out that even a registered trade mark can face problems if the other person was honestly using the mark before you registered it.)
Six reasons to register your trade mark
Legal issues aside, what are the business advantages of registering a trade mark, and how do you know when should you do it?
Registering your trade marks can be very useful:
- where you have a great slogan that is really catchy and you want to keep it for yourself. For example, an American lawyer has trademarked the phrase “Get all your legal ducks in a row”… This would be a tricky one to defend, as it is more descriptive than suggestive, but the mere fact that it has been registered has a deterrent effect.
- where you have invested a lot of time, effort and passion in building your brand, you are starting to get very well-known, and you feel the need to be protected against knock-offs and people pretending to be you, who might fool your audience into buying a cheaper, lower quality product from them.
- from a mindset perspective – just like getting a business bank account and contracts or client agreements in place, once you have reached a plateau of success, trademarking your business name and logo can help you “level up” mentally. By getting solid legal and financial foundations in place you have taken your work from a hobby to a business, now it might be time to progress your mindset from amateur to professional, and owning a registered trade mark can help with this.
- where you plan to build up a business that one day you can sell to someone else. Trademarks that have a significant trading history are an important intellectual property asset in the sale of a business.
- where you have a fantastic name that no-one has ever thought of, that is perfect to use in a competitive industry. You might want to consider trademarking it and selling it as an asset.
- in most cases, small business struggle to afford legal action to enforce a trade mark. However, having the name, logo or slogan trademarked gives you a much stronger position in negotiation or mediation if you do get into a dispute with a competitor. In hopeful news, the Federal Court has recently instituted a specialist intellectual property list, which is designed to simplify the enforcement process and reduce the costs and time involved for small businesses in defending their trade marks.
As a bonus reason, the more unique your name or logo is, the less likely you will ever have to defend it, but having registered it as a trade mark makes it more likely that people doing their own due diligence when choosing a business name will become aware of your rights and choose something else, so registration also provides some level of automatic deterrent.
How I can help
You know I am all in favour of DIY, and applying for a trade mark yourself is quite possible. However, there is a steep learning curve involved, and having a lawyer on hand can be helpful, as we have more experience with the comprehensive searching needed during the due diligence stage, we are familiar with the process and able to advise you of the options available to you if things go wrong, and because navigating the choice of classes can be quite confusing. If you would like help, my Due Diligence Consultation is the place to start.