A great reputation is good but a good name is better.
Everybody knows that the bakery 3rd down from the corner of Baker and Beef Streets is the best in town for pies but it would be better if everybody knew that you should get your pies from the LOG HUT bakery, they're the best.
Which baker's shop would you rather own or perhaps more importantly which one would you rather buy, the one with the great reputation or the one with the great reputation and a great name. Looking through the eyes of a purchaser helps to focus your attention on the transferrable assets of the enterprise. The stark comparison in this example is between a pie shop with goodwill associated with a registered trade mark, or an unpretentious pie shop simply called "Bakery" that has a good baker.
It's simply about value adding.
The same considerations apply to all enterprises big and small whether selling pies, clothing, machinery or any other goods or services. Reflect on your own brand loyalty when shopping, do you have a favourite pie? perhaps Holden v Ford or BMW v Lexus (not Toyota Lexus you may note, once again courtesy of Shakespeare, "What's in a name"), and can that goodwill be easily transferred? These are questions which will be considered in an asset evaluation of an enterprise.
Brand, Trade Mark, Sign & Goodwill
A trade mark, commonly referred to as a brand and referred to as a sign in the Trade Marks Act, is a word, logo, device or display which when used in the course of trade indicates a connection between goods or services offered and the supplier of the goods. That connection in the purchasers' minds which instils brand loyalty is goodwill, worth countless billions of dollars worldwide, and it is inseparably linked to trade marks.
Why should I register?
Unregistered trade marks can be defended against unauthorised use but only if they have established a reputation over time linked to the person claiming rights and then only with difficulty. Registration of a trade mark endows many advantages on the owner and generally will be expected in a "due diligence" check before purchase of a business, as registration creates certainty as to the rights to be transferred. Uncertainty will most likely devalue your business.
More importantly, the Trade Marks Act affords the owner of a registered trade mark a monopoly to use their mark on goods/services specified in the registration throughout Australia, even though use of the mark may have been limited. Importantly, that monopoly extends to use of a substantially identical or deceptively similar marks.
In addition the use of a registered trade mark provides a defence against infringement of another registered trade mark. This is a major advantage of registration as an infringement action against you may prove costly in legal fees and may result in an order to destroy your branded goods or advertising materials etc. As well such an action may result in loss of any goodwill you may have accrued to that time, that goodwill may well pass to the other party.
To achieve the advantages of registration, a trade mark must be capable of distinguishing your goods/services from the goods/services of other persons. Thus at the outset selection of the trade mark will influence its ultimate worth to the trader. Select an unregisterable mark such as a geographical name and you may end up promoting the trade generally and not just your business.
Worse still you may end up without transferable trade mark rights to offer a purchaser when it's time to sell up or be able to provide a guarantee that they will be entitled to continue using the mark.
Business Names v Trade Marks
A business name registration, like a company name or a domain name, does not confer on the owner the right to use their business name as a trade mark. It is simply a requirement for operating a business, identifying the principals of the business.
If the business name is applied to goods or is being used to indicate services, it is most likely being used as a trade mark and such use could infringe a registered trade mark. In that event you could become embroiled in costly Court action for trade mark infringement.
That possibility should obviously be avoided and that risk minimized and to do so it is important to give proper consideration to choosing and using new trade marks.
The letter from the Queensland Government congratulating new Business Name registrants provides the following at paragraphs 3 and 4:
"Please note, registration of a business name does not give you the exclusive rights to use the name or any word contained in the name, and does not confer any proprietary interest in a name. The Business Names Act 1962 does not protect a person's business name. Rights to a name exist under common law and are not established by this Act.
If you wish to protect your business name from being copied by a competitor, you should also register it as a trade mark. Registration of a trade mark gives the owner the legal right to exclusively use or control the use of the trade mark in relation the goods and/or services for which the trade mark is registered."
Adopting a New Trade Mark?
In order to adopt a trade mark with the maximum potential for value adding to your business while seeking to avoid infringement of another's rights, I suggest the following considerations be made:-
1. if possible choose either an invented word, and that does not include a miss-spelt word, or a word (or words) which does not directly describe a characteristic or the quality of the goods/services and avoid descriptive words;
2. conduct searches before commencing use of the trade mark to ensure that the mark is available for registration by you and that its use by you is unlikely to infringe an existing registration;
3. apply to register the trade mark.
In relation to the above, if you chose a geographical name such as Kingaroy for peanuts your marketing efforts will only promote the region, as geographical names are notionally available to all traders for accurately describing their goods/services. ie. a product of Kingaroy.
There are always exceptions such as where a connection between a geographical name and the goods/services is unlikely, such as SAHARA for mushrooms.
More generally, if a word selected for a trade mark is likely to be used by other traders when describing the origin, nature or quality of their goods/services, then it is incapable of distinguishing your goods from theirs and is thus inherently unregisterable.
Invented words, such as GOOGLE clearly avoid this exclusion as do words which are not apt descriptors such as LOG HUT as a brand for pies but which may nevertheless infer some sort of desirable quality, these types of marks make good first choices.
Applications and immediate benefits
The trade Marks register is divided into 45 classes of goods/services according to an International classification. This can be viewed at http://xeno.ipaustralia.gov.au/tmgoods.htm
Each application must nominate the particular class or classes in which it is intended to trade specifying the relevant goods/services or using the listed goods/services included in the class heading.
One of the reasons for early application for trade mark registration is that your intention to adopt the mark is published be being placed on a searchable database whereby it will be located in subsequent searches by other parties seeking to ascertain the availability of a similar mark.
Your filed application will also prevent the registration of a subsequently filed mark by another party which is the same as, substantially identical or deceptively similar to your mark as your earlier application will be cited against a later filed application as a bar to registration by the Trade Marks Office.
After you have adopted the mark it is important over time to indicate, by the use of ® if registered and by TM if not, (it is an offence to incorrectly indicate a mark is registered with severe penalties specified), to reinforce your claim to exclusive rights to the mark. Correct usage of the mark will also preserve or enhance its value.
In this respect it may be desirable to use the mark in association with the descriptive name of the product, not as the name of the product. The reason for this is that if the mark, through use, becomes the common descriptor of the goods/services the mark may become generic and liable to expungment. For example, use.... ESKY ice chest ... not just ....ESKY...
Although in practice this is not a major consideration for most traders commencing use of a new trade mark and there may be overriding reasons for using a mark descriptively. A notification somewhere on a label advising that the mark is a registered trade mark of so and so will reinforce the brand recognition. After years of successful sales, this consideration would most likely be highlighted in an audit of a firms trade mark usage. This is a consideration of loss of trade mark rights through overwhelming reputation.
At the other end of the spectrum, a registered trade mark which is not used may be removed upon request from another party wanting rights to the mark or wanting the registered trade mark removed as an obstacle to registration of their trade mark.
The Trade Marks Act also provides for registration of defensive marks, where a mark has become so famous that use by others on different goods would cause confusion, as well as collective marks for associations and certification marks such as the Australian Made brand certifying goods/services as having a particular quality.
A brief overview and costs
Trading reputations and goodwill are bound up in trade marks. Trade mark registrations may remain in force indefinitely and afford their owners the right to use their registered mark in respect of the goods/services specified and to authorise other persons to use the mark for those goods/services whereby additional goodwill accrues to the owner. Franchise operations are based on this right. Further these rights may be enforced against unauthorised use of substantially identical or deceptively similar marks used on goods/services of the same description or closely related services or goods.
Trade mark applications are examined after about three months whereupon a fifteen month period is provided to overcome any objection raised. The registration process, including examination prior to official acceptance may require a series of exchanges between the Trade Marks Office and the client before a Certificate of Registration is obtained and further costs will be incurred in this process.
If an accepted application is opposed by a third party on grounds specified in the Trade Marks Act, the registration will be delayed, prevented or restricted. If no opposition is lodged and the registration fee timely paid, the application proceeds to registration for a renewable period of ten years. This registration process can be concluded in under twelve months if no opposition is filed.
This period is of course much too long for a trader who wants to start promoting a product or service and thus a thorough availability search should be conducted before commencing use of a new trade mark. The " Headstart " filing offered by the Trade Marks Office (IP Australia) provides a very quick official view of the likelyhood of success. However I would recommend a thorough search in available databases, preferably by a specialist searching firm, before adopting a mark for immediate use.
For detailed information regarding trade marks I recommend viewing www.ipaustralia.gov.au, the Official Trade Marks Office site.
The charges indicated below are for the major predictable costs and are inclusive of official fees and GST and are provided on the basis of Tax Invoice paid prior to filing specified action.
Filing application to register a trade mark (using official pick list of goods), $560
For each extra class (using official pick list of goods), $370
For each extra mark, $370
Filing series of marks application (using official pick list of goods), $790
Addition filing costs if pick list not used (varies with time to settle list of goods), $100+
Receiving, diarising and reporting, $175
Receiving reporting notice of Acceptance, $175
Additional costs will be incurred obtaining citations, considering report, and responding. These costs differ from case to case.
Receiving, diarising and reporting, $495