Out-Law Guide 6 min. read
26 Apr 2021, 10:25 am
Small and medium-sized enterprises (SMEs) should consider branding issues before launching a new product or service.
We are publishing our guide on what that means in practice to coincide with World IP Day on 26 April 2021, which this year is focused on the role of IP rights in enabling SMEs to become stronger and more competitive businesses.
Part of the product development process will involve choosing a brand name. Once you have a shortlist, it is essential to carry out 'clearance searches'. This means checking whether a third party has already registered any of your proposed brand names, or something similar to them, as a trade mark for a product similar to yours. If they have, then launching your product under that brand could mean you are infringing the registered trade mark. Legal proceedings could be launched against you, and if they are successful you could be prevented from using the brand name and required to pay financial compensation to the trade mark owner. You may also be liable for your legal costs and a substantial proportion of the legal costs of the trade mark owner too. Clearance searches help to minimise this risk.
Clearance searches should be carried out as early as possible in the development process and before any substantial sums of money are spent on the branding and launch of the product. It is not uncommon to see SMEs stopped in their tracks shortly after launch by a third party asserting conflicting trade mark rights. This is not only frustrating but usually results in wasted launch costs and delays until a new, clear brand is chosen.
Arguably, the benefits of carrying out clearance searches far outweigh the search costs. Depending on the number of target markets, searches in respect of one brand typically cost between £500 and £1,500, excluding VAT, and take between one and five days to complete.
When you have established that your chosen brand name is clear to use, you should apply to register the name as a trade mark. The benefit of a registered trade mark is that you will, in certain circumstances, be able to prevent third parties from using the same or a confusingly similar mark for goods or services which are the same or similar to yours, effectively giving you exclusive rights to use the brand.
The mark is registered for classes of goods or services. Many countries operate on a first to file basis which means that if two businesses were to apply to register the same mark at the same time then the application submitted first would proceed and the later application would be rejected. You should not delay, therefore, in applying to register your brand.
Registered trade marks can provide protection indefinitely, although a mark must be renewed every 10 years. Trade mark protection should be obtained in every target market. Typically, a UK registered trade mark can be obtained within four months and costs from £600, excluding VAT. An EU trade mark (EUTM) will provide protection in every EU member state. It can take around five months to obtain a EUTM and will cost from £1,600, excluding VAT.
Some legal advisers, including Pinsent Masons, provide a full trade mark prosecution service and are skilled in undertaking clearance searches and providing strategic advice on the scope of registered trade mark protection. It is recommended that you seek advice at both the clearance search and application stages to ensure that your brand is properly protected.
Once you have trade mark protection in place, or at least in train, you can go ahead and launch your product. At this stage, you should implement another limb of your brand protection strategy. This is to put in place monitoring to alert you should a third party try to register a trade mark the same as or similar to yours.
The Intellectual Property Offices in the UK and EU, which deal with trade mark applications, will only prevent an application proceeding to registration on certain formal grounds which focus more on the name or logo in question, and will not inform trade mark owners if someone applies to register a conflicting mark. This makes monitoring essential. You will be notified in sufficient time to take action to oppose the application, if appropriate, and this protects your brand by protecting the exclusive rights you have in it. Your legal adviser will be able to assist with putting this monitoring in place.
It is also possible to monitor uses and misuses of your brand online enabling you, if appropriate, to enforce your registered trade mark rights against potential infringers. This is important to minimise damage to your brand and financial loss.
In most cases, enforcement action does not mean issuing legal proceedings immediately. There is a wide spectrum of enforcement action and it will be important to discuss with your legal adviser likely costs, proportionality, the urgency of the matter and any possible risk to your registered trade mark protection from counterclaims of invalidity before any action is taken.
Monitoring for instances of infringement is an ongoing process rather than a 'one-off' spot check. You will need to partner with a trusted provider of monitoring software. Costs can vary. Although this type of monitoring is not essential, without it there is an undesirable gap in your brand protection armour.
It is important to use the results of the monitoring to take steps to enforce your trade mark rights. Over time, you will develop a reputation as a business that protects the exclusivity of its brand. The benefit is that potential infringers will tend to steer clear of your brand meaning that, in the longer term, enforcement action is needed less frequently. Also, use the ® symbol next to your brand to deter infringers by alerting them to your registered trade mark rights. You should only use the ® symbol for registered trade marks otherwise you could be committing a criminal offence. For unregistered brands, use ‘TM’ instead.
As your business grows your portfolio of registered trade marks will also grow as new products and services are developed and launched. Management of your portfolio is vital to ensure you have the trade mark protection you need and that costs are not wasted. You should work with your legal adviser to periodically review your portfolio. Your portfolio should mirror your current and future business strategy. Consider how your brand has evolved and whether new trade mark applications are needed. If some trade marks are no longer core to your business then consider saving costs by allowing them to lapse.
Also consider if you are putting your trade mark registrations to genuine use. Trade mark rights are granted on a 'use it or lose it' basis. A five year period of non-use could result in loss of your trade mark registration. This is a particular concern for 'older' trade marks that may no longer be in active use for products on the market. If you want to retain such a mark, then you will need to devise a strategy to ensure some genuine use is made of it. There are various ways in which this can be done; your legal adviser will be able to help you put the strategy together. Ensure you document all trade mark use.
It is important to renew trade mark registrations on time, or they will lapse and protection will be lost. Competitors can then scoop up your lost brand. Portfolio management software is available to minimise the human hours usually spent on this administrative task. The software usually provides a bird’s eye view of your complete trade mark portfolio, enabling clarity of decision making around renewals, forecast budgeting, and ease of reporting to the board.
Spreadsheets are a thing of the past, particularly for large portfolios or those likely to grow. The risk of error from spreadsheet portfolio management is high, and although portfolio management software does incur cost this is likely to be substantially outweighed by the costs of seeking to recover trade mark rights lost through human error. Your legal adviser will be able to discuss locating a trusted platform provider with you.
Pinsent Masons has developed a brand protection platform, Alteria, which allows businesses to monitor a brand online and enables takedown requests to be made to global online marketplaces and social media platforms at the click of a button.