A company’s name, and the names it uses for its goods and/or services are some of, if not the most valuable business assets a company may own. Yet while businesses invest significantly in their brands/trade marks (ie the terms are effectively interchangeable) through creative agencies, packaging and marketing campaigns when rolling out new brands or conducting brand refreshes, many do not then protect these valuable intangible assets via trade mark registration. Instead, they are left with inferior legal rights in the form of unregistered trade marks (ie goodwill only).
There appear to be a variety of reasons why businesses do not register their brands (ie logos, names, slogans), which include cost, priorities, timing and sometimes a lack of understanding of the many benefits of registration. However, trade mark registration provides a business with significant commercial and legal advantages and a business owner should strongly consider registering some, if not all, of its key brands.
Unregistered rights accrue from the time a mark is first used in the market in relation to goods and/or services and increase the longer and more extensively a brand is used. Such rights are typically geographically limited to the place(s) where the brand owner uses its brand (ie the ‘brand footprint’) and limited in scope to the goods and/or services actually provided by the owner. These legal rights are enforceable in New Zealand under the Fair Trading Act 1986, and/or the tort of passing off,, however the time and cost in doing so is often very high and in general a lower likelihood of success.
By contrast, registered trade mark rights in New Zealand are governed by the Trade Marks Act 2002 and provide a brand owner with significant commercial and legal advantages over and above unregistered trade marks (ie stronger and more certain rights). The advantages of registration include:
1. Cost-benefit analysis
While there may be a cost involved in securing registration, the long-term benefit can significantly outweigh the cost, given registration provides the owner with an exclusive legal right that lasts for an initial period of 10 years.
2. Nationwide exclusivity from date of registration
A registered trade mark provides exclusive rights to a brand throughout New Zealand (compare this with unregistered rights, which may only provide limited geographical rights);
3. Broader protection
A registered trade mark protects a mark for the goods and/or services it is registered and for similar goods and services, even if the mark is not in use (ie much wider than unregistered trade mark rights, which are limited to the actual goods/services for which it is used);
4. Easier to enforce
Trade mark registration provides clear evidence of ownership and the extent of those rights, which allow the owner to bring an action for registered trade mark infringement where another party uses an identical or confusingly similar mark in connection with the same or similar goods/services. The enforcement of registered rights is typically easier, less expensive , more straightforward and with a higher likelihood of success as compared to relying on unregistered trade mark rights, which usually require a significant time and cost investment and strong supporting evidence to establish goodwill an owner has in its brand and ultimately success.
5. Deterrent value
A trade mark registration is searchable on the New Zealand Trade Mark Register at the Intellectual Property Office of New Zealand (IPONZ). An entity considering adopting a new brand can search the Register to determine whether their proposed mark is identical or confusingly similar to one registered at IPONZ and then assess the legal risk associated with using and/or applying to register that mark. Registration itself therefore often provides an effective deterrent to others using an identical or confusingly similar mark. By contrast, there are no publicly searchable registers for unregistered trade marks, which means two entities could end up with rights in the same mark for the same goods or services in different locations (eg in Auckland and in Christchurch). By the time the parties become aware of each other, it may be too late to effectively stop the other party’s use of your valuable brand.
6. Business asset
A registered trade mark provides the owner with a business asset that can be sold (either by itself or with the whole business), licensed (in return for fees) and used as security (to borrow money). Due to the certainty they provide, registered trade mark rights are inherently more valuable than unregistered trade marks and easier to value because it is much harder to effectively sell, assign, license or transfer unregistered rights in the absence of clear documentation detailing the extent of those rights in terms of geography, applicable goods and/or services, reputation, and so on. Put simply, businesses that have registered trade marks add significant value and enhance the balance sheet of the business and are more attractive propositions for potential buyers.
7. Potentially indefinite exclusive rights
Provided a registration is renewed every 10 years, it can remain on the Trade Mark Register indefinitely (subject to challenges for non-use and/or invalidity). This is particular to trade marks as other forms of registered intellectual property such as patents, copyright and registered designs have a limited lifespan. Unregistered trade mark rights only survive while they retain sufficient reputation in the marketplace. If the owner ceases use of its mark, their common legal rights will diminish, and eventually be extinguished.
For these reasons, it is prudent that any business protects its brands via trade mark registration. Ideally a business should register its brands before they are used, but there is no time limit on registration and they may be registered even if the brands have been used for a considerable period of time. In short, trade mark registration is an effective legal mechanism that should be adopted by all businesses.
This article was written for the NBR (October 2019).