4 Trademark Mistakes Your Startup Must Avoid
Every business in the world is working hard for the attention of their audience, which will identify you by your brand name, slogan or logo. So it’s logical for all businesses to own their brand. Given how valuable brands of successful businesses grow to be, it’s not just logical, it’s imperative. Why else would VCs be so interested in an intellectual property audit? You may know how seriously Apple takes these matters. Yet, many start-ups delay trademark filing or vastly underthink it, which could lead to significant losses. If you’re building a business, think seriously about the ambition you have for your brand. When you’re ready to register your trademark – and you should do so sooner rather than later – the potential size of your brand will determine a lot. Here’s why, with examples of start-ups whose trademark missteps have affected their brand.
The start-up life is busy, we know. But not so busy that you can’t take the few hours it will take you to set in motion the registration process. While it will only be registered two years later (bureaucracy works, but slowly), you can start using the TM symbol within three days. Yet, many start-ups, including large ones, delay this, assuming it’s unimportant. But remember that if some other business trademarks the name, slogan or logo you thought was yours, you may have to bid it goodbye, depending on the strength of its claim to the name.
For example, if you have a car rental business in Bengaluru with plans to start services nationwide, and another business, selling t-shirts across India, trademarks your name before you do, your brand name may be locked into Bengaluru. You may wonder how likely it is that another company would come up with the same name. It probably is rare, but why take a chance when it costs just Rs. 6,000 to get a trademark?
The social network Pinterest, even after clearly becoming a global brand, filed for a trademark application in the US only in 2012, two years after began operations. By then, a relatively little-known media start-up named Premium Interest trademarked the name in all of Europe and Australia. Pinterest is trying to change this, by proving that they’ve been present in these locations, but even if it eventually works, all the effort would not have been needed if they’d just trademarked the name earlier. Given that they raised $225 million in early 2013 to expand globally, they obviously had plans to do so much before. If they can’t get the brand name, how will this affect their valuation, given they can’t use the brand name in Europe and Australia? So the takeaway is that businesses should protect what they’re building, particularly if it’s valuable, before another business can get in the way.
Using An Established Name
The very fact that you’re trademarking a name means that you are aware that a brand holds some value. So using an established brand name, even though the brand doesn’t operate in India, isn’t the smartest move. In China, this may even work in your favour (trademark squatting is a big business there, as the country rigorously follows a first-to-file system), but in India, as we follow the common law system, it won’t work. Take, for example, the case between the international clothing brand Zara and the restaurant Zara Tapas Bar in Chennai. The latter filed for a trademark in 2005, when Zara decided to oppose the application, and has continued to oppose it even after the restaurant declared that it would not confine itself to the restaurant business and use only the composite mark (the logo, with the text included, rather than the word). The courts have sided with the international brand, which has been able to show that it has had an existence in India since the mid-80s through contracts with exporters. Generally, if a brand can show that a word, logo or slogan was used in commerce in a given area before any other business, the courts will give it the right to use that trademark. So when picking a trademark, you must ensure that your not stepping on the toes of a big brand that can enter the Indian market.
Trying to avoid expenses while dreaming of building a big business is obviously not a good approach. If you want to build the business of your dreams, it’s going to cost you until it gives you the returns you always knew were there. Entrepreneurs should, therefore, be keen to register their brand name for all sectors (called classes, of which there are a total of 45) they plan on entering. The government treats this as a separate application, and, therefore, you need to pay Rs. 4,000 in fees for each one, but a single legal battle over a trademark would cost you multiple times what a trademark application will, leave alone the effort involved.
So let’s say you’re running an e-commerce business and soon believe that you will have your own brand of clothing that you will market via the website. If you plan on using the same brand name, which is likely, you’ll need to register your trademark under classes 24 and 25 (related to clothing and textiles), too.
[This is a guest Post by Hrishikesh Datar, CEO of vakilsearch.com, a leading provider of legal services, including trademark registration.]