GLOBAL SIGNIFICANCE OF TRADEMARKS FOR STARTUPS

Introduction

Trademarking a company’s name and logo is a fundamental part of any startup business’s strategy for making its products and services distinct and obvious from those of competitors, with the aim of preventing competitors from stealing or duplicating their brand. It is very critical for a startup firm to register its trademark as soon as possible. With the use of a trademark, a certain brand is given guarantee.

A business can possess many brands. Similarly, a business might hold several trademarks to protect its brand. It doesn’t matter how many trademarks are anticipated to protect a brand; it all depends on the brand’s components. When a brand interacts with customers, it must be protected, and this is where a trademark is required.

Trademark law prohibits an outsider from using a trademark that is substantially similar to the startup’s trademark. The closeness of the trademark, the items or administrations, and the appropriation channels all play a role in perplexing similarity. Descriptive terms, such as Apple for an Apple-based operating system, are difficult to protect. Indeed, some terms are not protected by trademark law: the general terminology for a type of product cannot be used as a trademark because it is required by all market participants.

 Trademark Prominence

When a brand is used to collaborate with customers, it must be protected and Trademark provides this assurance. The brand requires assurance that no other person or organization may use a similar trademark and that the customer does not become confused between the original and replicated goods as a result of the similar trademark. Nowadays, business trademark of a brand is regarded extremely seriously, since the trademark they employ may be crucial in attracting customers.

For example, if a firm uses a catchy brand name, color, or phrase, it should give more thought to the purchasers, who will most likely want to test the goods. In the future, trademarks will play a significant role in commerce. Customers often assess the nature of a product based on the trademark of the business; therefore it is critical for startups to have an attractive and fascinating trademark of their company.

Global issues related to Trademark

A trademark is not a worldwide mark; rather, it is a state-by-state, nation-by-nation mark. A trademark, on the other hand, is not applicable for universal impact in the same way that copyright is. Even international trademark accords do not function in a clear manner. We can register trademarks worldwide using the Madrid system, but you must first file for a registration in your own country.

Trademarks are protected by a variety of laws. For example, the United States is a ‘First in Use’ state, which means that whomever uses a trademark first in the United States has priority, regardless of whether the trademark is registered or not. In contrast, China is a ‘First to File’ nation, which means that regardless of whether your trademark has been used or not, if it is not registered, it does not have any priority; this differs by country. The trademark is also known in Bangladesh as ‘First to Use’ and ‘First to File,’ depending on the scenario and specific requirements. It must demonstrate specific proof that it was utilized first during trademark infringement in the event of First to Use.

Trademark priority and usage

TM– Trademark, Registered Trademark and Service Mark (SM) are the most common trademarks. Companies that have their trademarks registered will almost always utilize the ® Registered trademark. However, firms that use TM do not necessarily indicate that their trademark is unregistered; it can be registered or unregistered and the sign’s use is entirely dependent on the company’s wishes. In addition, SM is used when a trademark application has been filed but is still pending with the registration; in this case, a firm utilizes SM as their trademark until their trademark is registered.

Priorities for trademarks are generally determined by two factors. They are as follows:

1. First in Use- Whether the trademark is registered or not, the trademark that has been used first has higher priority in some nations. For example, the United States was the first to utilize this country. Even if your trademark is registered in the United States but has not been used, if another business with a similar trademark has been using the product, the company that has been using the product takes precedence over the other company, notwithstanding the company’s registered trademark.
2. First to File- In nations where the first to file rule applies, the firm that files for a trademark first receives priority over the company that uses the trademark first. China, for example, is the first to register this sort of country.

In India, trademarks that are registered initially have a higher priority. However, the Trademark Rules of 1999[i] give precedence to the trademark that has been used first.

Abandonment of trademarks

If a trademark hasn’t been used in a specific amount of time, its deemed abandoned. The time it takes for a trademark to be abandoned varies by country. As an example:–

• If no response or reply to the assessment report is received within one month of the report’s publication, the application will be considered surrendered, according to Indian Trademark Rule 38(5)[ii].
• In the United Kingdom, a trademark is deemed abandoned if it has not been used for five years and there has been no objection.
• In the United States, a trademark is deemed abandoned if it has not been used for three years.

The dangers of losing trademark rights

For copyright and patents, there is a set period of time during which the copyright or patent is valid. For example, a copyright lasts for 70 years plus the life of the owner, whereas a patent lasts for 20 years. However, if a trademark is in use, it might endure indefinitely. A trademark can be lost for three main reasons. The following are the reasons:

• Abandonment and non-use.
• If a trademark gets too generic.
• If a trademark is found to be misleading.

If you do not use a trademark for a specific amount of time, it may be deemed abandoned. This is why it is critical to maintain a trademark in use in order for it to remain forever. Trademarks must be unique, but they must not be misleading; otherwise, the company’s trademark rights may be lost.

Before utilizing a trademark, it is necessary to file a trademark application

You don’t have to delay until you’ve started using your proposed mark to file a trademark application. In the United States, a trademark application can be documented in both of two ways. You can apply for a trademark based on the fact that you are now using it in your business or that you intend to use it in the future.

While you can start the cycle based on Intent to Use, once your mark is approved, you must demonstrate use of the mark in order for it to proceed to registration.

You may, however, be reliant on the Registrar’s request to use the trademark. Three years from the date of registration is the earliest that such a request can be made.

The significance of registering a trademark

Trademarks should be registered as soon as possible once the startup is formed. Trademarks are not like copyright, where you are instantly covered by copyright law in most nations the moment you produce something new. You must pay a registration fee and submit some paperwork to the government in order to register a trademark. In most countries, if you do not apply for a trademark, you do not have any rights to your trademark; the United States is an exception. Non-registered trademarks in India are also given priority under the Trademark Law of 1999[iii]. In most countries, such as China, however, if your trademark is not registered, you have no rights to it. A trademark is registered with retrospective effect from the day on which the trademark application is submitted in Bangladesh, according to Section 20(c)[iv] of the Trademarks Act 2009[v], indicating that trademark registration is important in Bangladesh as well.

As a result, trademark registration is critical for the trademark’s security. Additionally, trademark registration is required for both worldwide and internet businesses. For doing international commerce, there is a Madrid system. However, under the Madrid system, you must first register your trademark in your home country before filing for registration under the Madrid system, which will make your brand internationally useful.

As a result, trademark registration is critical for ensuring the protection of one’s trademark. In most countries, a registered trademark takes precedence even when filing a lawsuit.

Limitations apply to trademark decisions

You may discover that you won’t be able to register a mark that is already being used by someone else for the same or similar items or services. However, when you consider your trademark, you should keep in mind some of the additional barriers to registration. A few words, a combination of words, or images will not be registrable in any circumstance, regardless of their accessibility.

In Canada, for example, you won’t be able to register a trademark that includes a person’s or family’s name, a term used in a different dialect, or a phrase or image that closely resembles a prohibited mark. Another mark you won’t be able to record is one that is clearly demonstrative. A clearly distinguishable mark shows a feature of the goods or services with which it will be used. For example, you are unlikely to be able to register the word “cold” as a brand name for use with Cold Coffee. This restriction was put in place to ensure that various brokers can advertise their products and services without fear of being sued for trademark infringement.

A mark must be non-descriptive, in the sense that it is misleading to the broad public, in order to be registrable. If you’re selling little bottles of coconut water, for example, you probably won’t be able to register “Milk Shots.”

Your trademark application will be examined when you deliver it to ensure that it meets the requirements for a registered trademark in that ward. If it is determined that you do not consent, the analyst will issue a report to that effect, and the registration of your mark will be contingent on your ability to overcome the inspector’s concerns.

Case studies:-

Crocs Inc USA v. Bata India Ltd and Ors.

Crocs USA gathered evidence against shoe companies alleging infringement of their design no. 97685, which is valid until May 28, 2019. In an action for plan encroachment, the plaintiff was unsuccessful because the plans on which the claim was registered were determined to be neither fresh nor unique, and as a result, the Plaintiff pressed for an injunction on the grounds of passing off, which is a precedent-based activity. It was decided by an earlier decision of five adjudicator seats that a passing off claim may be sustained as long as the components of design are not used as an exchange mark, however a greater trade dress get up, presentation of the product through its packaging, and so on. A passing off has been ruled to be valid for components of trade dress and in a general outfit, other than registered plan and without regard to the registered design.

The Defendant contended that if the passing off of components of the design as a trademark is asserted, no passing off action exists. The passing off suit is not maintainable since the aggrieved party relied on the use of its registered plans as a shape exchange mark and no other features qualifying as trade dress that are not part of the registered design have been pleaded or pointed out. The court agreed with the Defendant that the offended party did not have the opportunity to exhibit any other features other than the design that is used as a trademark. As a result, the court provided an input that not only the enlisted configuration can’t be a trademark at the time of plan enrollment, but also from that moment forward. Likewise, the court ruled that an enlisted configuration cannot contain an exchange mark; regardless of whether there are features other than those enrolled as a plan that are alleged to be used as trademarks and for which goodwill has been obtained, it is only those additional highlights that can be secured as a trademark. When a copy of a registered design is made, an action for infringement under the Designs Act is the sole option.

Big-tree Entertainment Pvt Ltd v. D Sharma and Anr.

The Plaintiff filed a trademark infringement complaint in order to restrict the Defendant’s use of the trademark “BOOKMYEVENT” or the prefix “BOOKMY.” The court would not grant an order since the prefix “BOOKMY” is fairly common in the English language, and the improved visuals are also completely distinct, making it unlikely that buyers would be confused by the aforementioned trade names or marks. The court further stated that the plaintiff’s mark ‘BOOKMYSHOW’ had not achieved exclusivity.

Conclusion

Trademarks are unquestionably important in business. When doing business or thinking about launching a startup business, the first thing you should do is register the brand’s trademark for the sake of the trademark’s security and to preserve the product’s quality in the eyes of the consumers. If you intend to sell your products internationally in the future, you must first register your trademark in all of the countries where you intend to expand your business before any other firm may register the same trademark in those countries. Even if you expand your business later, you may have your trademark registered in the countries where you want to do business so that no one else can register the same trademark before you. Furthermore, a trademark is a vital component of every new firm in order to protect the brand and other components associated with it.

[i] Trade Marks Act 1999, Act no. 47 of dated 30th. December, 1999.

[ii] The Trade Marks Rules, 2002, Central Government Act,

[iii] Id at 1.

[iv] Trademark act, Section 20(c), 2009: Subject to the provisions of section 15, if the application has been opposed and the decision in opposition has been taken in favour of the applicant.

[v] The Trade Marks Act, 2009, Act No. 19 of 2009.

References

1. Chris Heer, 5 Things Startups Need To Know About Trademarks, https://startup.unitelvoice.com/trademarks
2. Vijay Pal Dalmia, Trademarks Law In India – Everything You Must Know, (Dec. 18, 2017), https://www.mondaq.com/india/trademark/656418/trademarks-law-in-india–everything-you-must-know.
3. Prachi Darji, Importance of trademark for start-ups, (Jul. 25, 2018), https://www.myadvo.in/blog/importance-of-trademark-for-start-ups.
4. Yash Khurmi, Importance of Trademark Registration in India, (Jul. 10, 2021), https://www.e-startupindia.com/learn/importance-of-trademark-registration-in-india/.
5. Kahini Jhaveri, Know How Trademark Registration Can Impact Your Business, (Mar. 18, 2019), https://www.legalwiz.in/blog/reasons-why-trademark-registration-online-is-best-for-your-business.