Business Advice

What are the risks of not registering your trade marks?

- December 20, 2023 3 MIN READ

 

It may come as a surprise to learn that trade mark registration is as important to small and medium-sized businesses as it is to large enterprises. Perhaps even more so at times. Trade mark expert Jacqui Pryor shares the reasons why…

Many entrepreneurs and small business owners fall into the trap of thinking that trade mark registration is the domain of sizeable companies because of their easier access to professional resources and their deep pockets.  The reality is that not registering – or delaying registration – of a trade mark carries real risks for businesses of all shapes and sizes and you can learn more about what those risks are in this article.

Why is trade mark registration important?

Essentially, trade mark registration protects certain types of your intellectual property.  Without it, you do not have good legal rights to your name or brand and may in fact, not even own your name or brand.  If you are using your business name, brand name or URL without an official trade mark registration, it is likely unprotected.

The only way that you can ensure that you have legal rights to the use of your business name or brand is by registering it as a trade mark.   This serves as proof of ownership and enables secure protection of what can be an extremely valuable asset.


Let’s unpack the risks of not registering your business name or brand as a trade mark.

1. You risk infringing on another trader’s registered trade mark

If another party believes you are infringing on their trade mark rights, they can demand you stop to your operations under the infringing brand.  Where infringing conduct occurs, the owner of a registered trade mark has every right to insist that you no longer use the relevant name, logo, strap line etc.  And remember, a trade mark isn’t limited to a word or group of words – it can be any sign that distinguishes goods and services from those of another business.  Colours, sounds and even smells are types of trade marks that can be registered.

If you don’t have permission from the registered owner of the trade mark to use it, they could quite easily insist that you stop any form of trade which involves the disputed trade mark.

2. You are largely powerless against another trader using your ‘unregistered’ trade mark

If you choose not to register a trade mark, a competitor can simply move into your space and begin trading using the same or very similar trade marks.  In some instances, it is possible to demonstrate that a business has established a substantial reputation and has built up enough goodwill to successfully defend against their use of the mark, but this is quite challenging and isn’t an option that businesses should pin their hopes on. Relying on a registered trade mark does not require any proof of reputation.


3. Your business can be at considerable financial risk

By the time you become aware that you have infringed on another party’s legal rights, you may already have invested considerable sums into setting up your business and marketing, branding, packaging and advertising your brand.  You may need to stop trading immediately as soon as you get official notice of infringement and the financial implications can be devastating.

Some businesses may not be able to recover from these financial losses.

4. You risk costly legal disputes

If there is ever any dispute over the use of a trade mark, a registered trade mark will serve as proof of ownership almost all of the time (presuming another party is not actually the common law owner by virtue of prior use).   If you are armed with secure legal protection over your trade mark, you minimise the risk of costly disputes.  On the other hand, trading using unregistered trade marks can put a business in a vulnerable position where expensive legal fees and possible litigation could financially cripple the business owner and shut down the enterprise.

5. You risk losing control over your assets

A trade mark can be a valuable asset and the more successful the business, the greater its value.  Why compromise that potential and lose control of it by not registering it?  Moreover, a registered trade mark can be bought, sold and licenced to a third party making it a financially rewarding asset.

Key takeways on the risks of not registering trade marks

A registered trade mark protects your intellectual property against infringements against you – and it protects you from infringing on another’s rights.   In addition to giving a business options for enforcement, a registered trade mark is a marketable asset which can turn out to be very lucrative for the trade mark owner.

Enlisting the assistance of an experienced trade marks attorney or lawyer is a smart move for businesses of all sizes as it’s the first line of defence in protecting valuable IP assets and limiting any potential liabilities.

Don’t risk your investment and don’t put yourself or the business at financial risk because of resistance or oversight in registering your trade marks.  The process is usually straightforward and the positives far outweigh the negatives.


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