According to Cathryn Warburton, Principal at Acacia Law, small businesses are at increasing risk from people whose job it is to register trade marks so they can cash in when they sue for trademark infringement. She terms them “trademark trolls”.
“This really is a money making venture for these trolls,” Cathryn said. “They have no interest in building a business using the name trade marked; all they want is the money that comes from either selling the trade mark back or suing for breach of the trade mark.”
Cathryn said these opportunists have the capacity to ruin a small business overnight. “The worst case scenario of a costly court battle could be avoided if the business registered their trade mark before they started their business,” she said.
Canstar caught up with Cathryn to find out more about the practice – and about what small business owners should do to prevent themselves becoming a target.
Q: When is the right time for business owners to look into trademarking their name: when they first launch, or when they are still in the planning stages?
A: It is best to register your brand / business name as a trade mark before you launch your business. There are two reasons for this:
- It prevents you from infringing someone else’s prior registered trade mark (having your own trade mark registration is the only complete defence to trade mark infringement).
- It ensures that competitors / trade mark trolls do not try and register your trade mark (often with the view to selling it back to you at a substantially inflated price).
Also, most businesses will want to secure their name as a domain name, and may want to invest in shop signage, business cards etc using that name. All that expense will be wasted if it turns out the name is infringing an existing trade mark.
Q: Do you think there is perhaps some misunderstanding out there among business owners, who may assume that because their business is registered their name is protected?
A: Yes! We come across this all the time. Countless clients have said to us that they “already have the name registered” … what they mean is as a business name and they are horrified to find out that using that business name might infringe a registered trade mark.
Q: Is it worthwhile for owners to register two or three different business names?
A: Not really, because it becomes a bit of a lottery … all (or none) of those business names might be registered as trade marks. Also, business names can be very personal to the owner and it can take a lot of time and effort to come up with what the business owner considers to be the “right” name.
Asking them to come up with two or three can be an overwhelming process for them. We generally recommend that they select the name they like and let us do a trade mark search to make sure it is available to be registered as a trade mark. If not, there is no point in registering it as a business name. If they strike out on their first option, then we can search for a second name as a trade mark for them. We generally recommend that they check to see whether the trade mark is available first, then get us to file the trade mark application, and then file their business name.
The other problem with encouraging businesses to register multiple business names in the hopes of striking one that is not already a trade mark registration, is that not all names can be registered as trade marks. A trade mark registration gives the trade mark owner a monopoly in the particular name … for that reason, the name cannot be “directly descriptive” of the goods or services offered by the business. For example, the name “Apple” for computers is a brilliant trade mark, because no one else would want to use (or register) that name as a trade mark (other than to trade off Apple Inc.’s reputation).
So the mere fact that the chosen name is not registered as a trade mark, is not the only factor that business owners need to take into consideration. They also need to consider whether the name is one that can be protected by way of trade mark registration (if not, others with similar names might pop up and the business might lose customers who are confused as to exactly which business they are dealing with).
Q: What about website names? Should business owners register those as well?
A: Domain names are very cheap to register (often around $30 to $100 per year, depending on the name). One mistake that people sometimes make (and my own brother made this mistake by not talking to me first) is to search to see if the domain name is available, and then intend to register it later.
The problem is that there are automated computer programmes out there that track user’s searches. Very often these programmes will result in the domain name being registered by someone else, who then tries to sell it back to you. In my brother’s case, he came back about an hour after doing the initial domain name search to find, not only had someone else registered his preferred domain name, but they were offering to sell it back to him for $15,000.
I advise my clients to register a domain name as soon as they have selected a name that they are happy with so that they do not lose out on it.
Q: How can business owners best go about doing these things?
A: Some business owners do the whole process themselves. However, we tend to have a good proportion of our clients come to us after trying to secure trade mark protection themselves and having problems with the process or not getting the right coverage, or attempting to register their trade mark in a format that does not give them the strongest protection.
We always advise business owners to get advice from an experienced trade mark agent or trade mark attorney. These professionals will generally have professional indemnity insurance to protect clients against errors or missed deadlines. They will also know the most common and costly trade mark errors to avoid. They will also be able to provide information and advice on an overall brand protection strategy (eg. Should the company logo also be registered as a trade mark, should the words and logo be registered together, should variations of the name be registered, should the trade mark be registered in fancy text or plain, should it contain colours or be in black and white, what goods/services should it cover, take into account international considerations . If the name is to be registered overseas does it have an unfortunate meaning, (such as the recent client wanting to register a trade mark in Singapore for goods aimed at tween girls, only to discover that the English name they wanted trade marked translates directly as “titties” in the local language).
We recommend the following process:
- Talk to a trade mark agent about the proposed business name. Is it one that would be registerable as a trade mark (assuming no one else already has it registered). For example, surnames that are in frequent use can be difficult to monopolise as a trade mark. Getting early advice about whether a business name will make a strong trade mark can save a lot of trouble and expense down the track.
- Check to see if an appropriate domain name is available, if so register it immediately. We recommend this step second, as domain name registration is so cheap and easy.
- Do a trade mark search to make sure that the name will not infringe any existing trade marks. If conducted by a trade mark agent, this search will generally include a search of registered Business Names and Company names. If the client intends to trade overseas. then trade mark searches should ideally be conducted overseas as well.
- If the name is clear then file trade mark application/s as soon as possible (trade marks are generally registered in the name of the first to file). At the same time, file a business name application.
- File overseas applications within 6 months of the Australian filing in order to claim the Australian filing date under the Paris Convention (remembering that the person with the earliest filing date generally gets the trade mark registration)
Most business owners do not have $100k+ it would take to remove the troll as the owner of the trade mark on the Trade Marks Register. The only way to arm a business against these trolls is to register the trade mark, before the trade mark troll gets their application filed (preferably before the business even starts trading).
Cathryn Warburton founded Acacia Law in 2003. She has a passion for helping clients protect and enforce their intellectual property. You can find out more about Acacia Law here.