One Federal Court decision clarifies what is considered as “authorised use” of a trade mark wherein the trade mark user is not the trade mark owner but a subsidiary of the owner’s company.
Benefits of trade mark registration
Trade mark registration provides important advantages over unregistered trade marks.
Intellectual property ownership
A registered trade mark grants the owner exclusive rights to use the trade mark as a badge of origin of the goods and services in respect of which the trade mark is registered. A trade mark is a form of personal property with a corresponding value. As the relevant product or service grows in recognition, so does the value of your trade mark.
Leveraging your registered trade mark
Trade marks are logos, words or other signs associated with branding a business or its products or services. One benefit of trade mark registration is that it allows, like any tangible property, for trade mark ownership to be assigned.
Buying and selling trade marks
A trade mark can be bought or sold through transfer of business ownership. The ownership of a trade mark can be transferred in the event of sale of a business as part of the inventory. The party to whom the trade mark will be transferred is called the assignee, and the ownership of the registered trade mark is transferred to the assignee by a trade mark assignment agreement.
The conditions under which the registered trade mark is purchased dictate the terms and obligations included in the assignment agreement. In the case that the assignee will not use the trade mark directly, a supplementary agreement is needed to ensure that the trade mark will not be subjected to non-use disputes or removal.
Importantly, the transfer should be reflected on the trade marks registry, otherwise, the assignee may not be able to claim the benefits of trade mark ownership, such as initiating legal action against infringing parties.
Licensing trade marks
Trade marks can also be licensed by a legal agreement that gives a third party the right to use the trade mark. For the licensor, licensing agreements can provide access to new and broader markets, distribution of workload and responsibilities, and partnerships. The licensee, in turn, is able to benefit from the goodwill and reputation that the trade mark has already gained in the market. For example, Subway, which is one of the world’s largest single-brand restaurant chain franchises licenses its trade-mark to its franchisees.
Typically, as per the terms of a license agreement, the licensee must ensure that the quality of the goods or services associated with the trade mark remains unchanged and up-to-standard.
Valuing trade marks
Several aspects should be considered in determining the value of a trade mark. A base consideration is the cost of applying for the trade mark and successfully registering it. The most important consideration is the investment made in establishing the brand. Market research can show how much others would be willing to pay for comparable products. The impact of the use of the trade mark in increasing sales is also a consideration.
A registered Australian trade mark is enforceable throughout Australia. The trade mark owner is advantageously positioned to stop another party from unauthorised use of the trade mark in relation to the goods and services in respect of which the trade mark is registered. Registration means that the owner of the trade mark does not have to provide proof of business reputation of the owner or deception by the infringing party. In addition, the trade mark owner can have the Australian Customs Service issue a seizure notice to the infringing party. Enforcement of trade mark rights can be carried out in the Federal Circuit Court or the Federal Court.
In Australia, registration means that the trade mark can be marked ®, meaning registered, as opposed to ™, which is used to indicate that the trade mark is claimed but not necessarily registered. The ® label can also be effective as a deterrent to other parties who may be considering using a similar trade mark.
Registered trade marks
As defined by Section 17 of the Trade Marks Act,
a trade-mark is a sign used, or intended to be used, to distinguish goods or services dealt with or provided in the course of trade by a person from goods or services so dealt with or provided by any other person.
A trade mark is a sign consisting of text, logo, slogan, color, sound, movement, other elements or a combination of any of those that is used to trace back a product or a service to its source. To obtain a registered trade mark, the owner has to lodge an application to the trade mark office of the pertinent jurisdiction; after a certain examination period, the trade mark is accepted and published in the official trade mark registry for the public, heralding a period during which any third party can oppose the registration. If the said opposition was proven to be without merit, then the trade mark would proceed to registration. Upon registration, a registered trade mark is retroactively enforced to its priority date and renewable every 10 years with the payment of the appropriate fees. In Australia, the enforcement of registered trade marks is governed by the Trade Marks Act 1995.
Unregistered trade mark
An unregistered trade mark, also known as common law trade mark, is similarly a brand made up of the same elements as in the above definition. This mark is also used to trace back the goods and services to its source; however, this type of mark is not provided any statutory protection by the Trade Marks Act 1995. Instead, the avenues of relief for common law trade marks are strongly reliant on the reputation developed by the mark through consistent use, as well as proof of fraudulent conduct on the part of the offending party. An unregistered trade mark can be enforced through the common law tort of “passing off” and deceptive conduct as stated in the Australian Consumer Law. To enforce an unregistered trade mark, three things need to be established:
- That the trade mark has acquired considerable reputation in the market;
- That the offending party deliberately sought to mislead customers regarding the origin of their goods or services
- That the owner of the unregistered mark has sustained damages and losses because of the action of the offending party.
TM vs ®
The sign ™ is affixed to show the market that a particular trade mark has been claimed. Any trade mark owner can use the ™ sign, whether they applied for trade mark registration or not. In itself, the ™ sign offers no protection, but it may act as a deterrent for parties who may consider filing a registration for a similar trade mark because the sign may imply a pending trade mark application. When the trade mark is registered, the sign ® is affixed to the trade mark, indicating that trade mark protection is in force. The use of ® on unregistered trade marks is illegal.