Potential (in fact possible) risks for a business who disregards trademarks

Potential (in fact possible) risks for a business who disregards trademarks

Times are... the way they are. Looking around, one may easily notice a lot of effort, of concern, and diligence, but not too much wealth – excluding well known & very publicly debated exceptions – not enough welfare which logically should follow what was said earlier, i.e. effort, concern, diligence.

During such times, any businessman watchfully checks spending and, even more watchfully, checks investments. Consequently, filing & registering a trademark is, unfortunately, still considered one of these risky „initiatives”. Some say it is just another spending, but still do it, just because someone is “pushing” them. Others consider this hardly as an investment, but they are not entirely convinced. And finally we have those who know the power provided by a registered trademark on any market and thus, follow in full confidence and responsibility this path.

Unfortunately, in too many occasions, more often lately, owning a trademark was proved to be useful only as a consequence of all kind of business conflicts. Conflicts generated as a result of bad faith actions (mildly said) of individuals or even companies. This topic is not a new one, and it was dissected long enough to not talk or develop it further.

Let us go back to the source. I mean that moment in time, when after countless doubts, unrest, and discussions (sometimes with professionals, which is more un-restful and expensive), an idea of business is born. This occurs only for the reason and in the name of profit, which is good. And let’s not forget that any profit is foreseen to become the result of the interaction between the new entrepreneur and one or more targeted group of customers in a specific segment of the market.

These groups of customers have also needs. They need to easily and constantly identify their new products/services provider – we should call them goods/services – and in order to ensure this, the entrepreneurs need at least a minimal tool, which is registering “The Company” as a fulfillment of this first primary need.

And when this action is completed by registering the company logo at the entitled authority in each country, it gets even better.

From now on, we start spending bigger money! A sum was already invested in starting-up the company, but the story does not end here. Everything done to build-up a business translates into money. Money is also needed to make potential clients aware of the new business. To ensure quality and performance also needs spending/investing money.

It is just natural for anybody to ask: can all this investments be somehow protected? And yes there is an affirmative answer to this question: the trademark!

In fact, what is it all about?

Simplifying things (not too much though) we could say that all starts by naming. As a child is given a name at his birth, thus a business gets a name to be known by the customers, even if it is just the name of registration as a company at a public authority. From the moment of the official “baptism” all is done under this name, promotion is done for this name to be known, and luckily, customers start looking for this same name because they are happy with the quality/price ratio.

Under this name profit starts growing and this is the exact moment when the name enters under the scrutiny of other “entrepreneurs” – better said competitors, to stay ”politically correct”.

Why that? Obviously because the hard job was already done! The customer/consumer knows the name already. They got used with a high quality of the goods/services offered under this name. All these “competitors” have to do is to place on the markets any quantity of goods/services having this same name and the sales & profit will come automatically.

Now is the moment when trouble starts for our “originating” company. Bluntly said, now start the loss. On the market we see now not only our company’s goods/services, but also the ones of the “competitors”, but all under the same name.

And things are just getting worse!

The “competitor”, looking for quick and fat profit at no expenses, launches on the market goods/services of a lower quality, under the same name (of course). What is the result? The trust of the customers is shaken and the overall sales rate for our legitimate company decreases.

A minimal analysis of the roots of this disaster leads to the obvious conclusion: all of it is due to the abusive, fraudulent, bad faith usage of the initial name, launched officially by our “original” company, but not properly protected. How can this company stop this? They have to be able to legally forbid the “competitors” to use their rightful name.

Can our company do that? All the potential ownership rights related to owning the name are the key to these problems.

We are still speaking of problems because in this scenario, they are here, and they are many and serious! Below are listed only a few, the most important:

·      The name of the company is registered at the entitled authority in each country. For the sake of clarity, here is an example: Our company registered at that authority the commercial name: “The Example Company” together with a rather complex logo containing the noun “Example” accompanied by other graphical elements. Depending of national laws, in some countries there can be constraints. In Romania for instance, according to the Law no. 26/1990 regarding the Register of Commerce, art. 43, the use of the word “Example” in the name of our company was done similar to the wording of the logo, but not identical. In the same time, the usage of the word “Example” was done by the “competitors’ in a similar but not identical way. Under these circumstances, which vary from country to country, but still have to be analyzed, the so called exclusivity foreseen by the laws regarding commercial name and logo might not be of much use.

·         Not much help provides the hypothesis that our company - “The Example Company” – owns an internet domain, as “www.example.com”. This is not an exclusive right which could allow forbidding the usage of the name “Example”.

·         And it does not help at all, unfortunately, that the name “The Example Company” legitimately used by our company has a high level of awareness for the customers/consumers situated, usually, in a limited geographical/administrative territory. Because this awareness does not expand at least at a national level in a given country.

The only guaranteed result in this scenario are loses.  

The scenario above can be avoided only if the name of our company - “Example” - is registered as a trademark! But timing is again important.

The best time to protect a trademark is “yesterday”, because today when I need to use it, it has to be ready for that. A good time to do this would be before an intensive promotion campaign of the goods/services provided by our company. This moment is the most suitable because in many countries, at least in the EU, the protection offered by Laws provides to the owners of registered trademarks the exclusive right to use the trademark whilst the unauthorized use of the same trademarks is considered fraud of counterfeiting. In Romania, this type of fraud, according to the Law no. 84/1998, can be punished by penal fine or prison from 3 month to 2 years.

Thus, by Law, a trademark represents an industrial property right which is in fact a tool, even a very effective weapon both for attack and for defense.

It can be used as an attack weapon because it represents an excellent marketing and promotion tool for increasing the market where the company (or individual) owning the trademark operates and as a defensive one because the acquired rights allow the owner to legally forbid/block the usage of an identical or similar trademark for identical goods and services or similar ones on the same market we were discussing about.

Time for the final and important conclusions:

·   First of all, it has to be understood very clearly that a registered trademark is for the owner, a solid guarantee of the investments made for promoting goods and/or services and for continuously increasing their quality.

·   Secondly, one or more registered trademarks represent also a guarantee of a certain degree of control of the said market, which is not something to be treated lightly.

·   Thirdly, but by no means lastly because the advantages of owning one or more registered trademark are far more numerous, this may led not only to a direct higher profit for a company or individual but also to a better visibility and image in the markets, and to increase the overall value of that business.

It is important to learn that in these times, a business has to be sustained by a solid portfolio of industrial property rights, and that the rights offered by registered trademarks are probably the most important and fit for business of them all. And mind yourself, I mean any kind of business.

I really wonder if this situation is different somewhere? 

I would like very much to know... from you!