So, you haven’t registered your trade mark. However, if you use your name or trade mark in business, and build up a large customer base, you can claim that you have rights as a result of that use. These rights can be used to prevent other businesses trading with the same name, by relying on what we call “passing off”.
You must show that you have goodwill
To prove passing off, you must show that you have goodwill in your business, and that another business has made a misrepresentation to consumers that resulted – or could result – in damage to your goodwill.
But there are difficulties in relying on passing off alone. Here we summarise why counting solely on enforcing your rights through passing off, is a bad idea.
Passing off – difficult to prove, expensive and time consuming
With a registered trade mark, it’s easy to point to a registration certificate as evidence of your rights. It’s not so simple to prove the different elements of passing off.
For example, to evidence goodwill, it’s necessary to demonstrate your trading history, which can be customer lists, invoices, geographic area of trading and previous advertisements over the years. This means time lost to your business while you find all the information, and time taken by your lawyer in putting such a complex case together.
We had a client who had been in business for ten years, but not registered their trade mark. Another company registered a similar name as a trade mark and began trading in the same area. Our client started to lose business, as his customers were confused. He tried advertising more, but it sent more business to the other company. Our client was in a good position to meet the requisite elements of a passing off action. However, the time required and the associated costs of taking action were too steep. After much soul searching our client took the difficult decision to rebrand but this time made sure to register the new trade marks.
Registered trade mark rights much stronger
The rights you get through trade mark registration are much stronger and broader than those you gain through use. A registered trade mark gives you a legal monopoly. No one else can use the same or similar trade mark for the goods and services which you have registered, in the territory that you have registered it. A registered trade mark can last forever, if renewed every ten years when it falls due, and if you keep the mark in use so that it cannot be challenged on this basis.
To quote the well known entrepreneur and ex Dragon’s Den candidate Shaun Pulfrey, founder of Tangle Teezer, “register as much as possible as soon as possible”.
No exclusivity in your name
But passing off does not give you a monopoly in your name. You can only stop someone using the same name, if you can prove that their activity has damaged your goodwill. You cannot necessarily stop another business in a different location. Coexistence in different parts of the country may have not been problematic thirty years ago. Whereas now your customers will use search engines to find you, and just as easily find your similarly named competitors.
What should I do next?
Get all of your trade marks registered, as early as possible. In the long run, it will save you time and stress, as well as enhancing the value of your business should you ever wish to sell it.
Free Guide: Everything A Business Owner Needs To Know About Trade Marks
The guide will explain to you in detail the essentials of trade mark protection including:-
- Choosing a distinctive brand name – why a good choice will resonate with your customers and reduce your advertising and marketing spend.
- The importance of avoiding the descriptive/ generic trade mark trap.
- The importance of pre-filing searches – done the correct way – to avoid future legal action against you and the risk of having to rebrand.
- Strategy on when to time your application.
- Realising the value of your trade mark – why your trade mark is considered an asset on your balance sheet.
- The importance of maintaining and enforcing your registered trade mark rights once your mark is registered.
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