As the Government of India has been very supportive by providing various reliefs for MSMEs and with the recent “Make in India” drive, giving a promising outlook, it thus, makes trademarks as the most important IP asset for MSMEs as they now stand a chance to make their mark even more extensively and literally. While MSMEs, in my experience, do understand trademarks, but their understanding on ‘brand’ and the importance of protecting it with trademarks and converting it into an easily transferrable asset is often lacking.
Understanding the connection between brand and trademark
Brands have evolved and have become more subjective. The names and logos are just a fraction of what a brand is and merely serves as a business card. The intricate part of a brand comprises several elements namely image, character, identity, personality, essence, culture and reputation. This is by an MSME’s brand, through which their products can be easily identified and consequently, provide their business with an unchallenged competitive advantage in the market.
Trademark is basically registering a brand name, so that now it is possible to have the legal rights to stop someone else from using the same or similar brand as the one that has been registered. Trademark serves as defence mechanism to protect an MSME’s brand from loss of reputation, retaining a good trustworthy relationship with your existing and potential customers. A trademarked brand has the potential to increase in value as an intangible asset to use as collateral to obtain financing from legitimate financial institutions.
It is not possible to put a value on someone else’s emotions that they feel with a brand, but what can be done is to protect the brand, and ultimately the consumer/client, by activating the legal rights that comes with trademark registration. The MSMEs must remember that trademark protects their customers/clients from using a duplicate of your products/services, and in such a paradigm, it becomes all the more important that customer oriented MSMEs, either in B2B or in B2C situations, empower their customers to identify their duplicates.
A pragmatic approach to trademarks for MSMEs
The MSMEs in India, in my experience, rely on common law tort of passing off to protect their brand name (in a court), products’ name, logos and any other visible sign that allows their customers/clients to identify them in a marketplace. This approach, in simpler terms, is basically, the quintessential Indian approach of taking ad hoc measures, instead of coming up with long term advance planning, and this too is again led by the myopic cost saving measures.
Yet, every cost saving measure of today, especially in IPRs, may snowball into a potentially expensive proposition in future. The MSMEs must look at registering or “Trademarking” their brand names and logos as a cost saving measure [keeping in view a potential infringement in future] and to ensure a much affordable instrument of enforcement in a court of law. In absence of a registered trademark, the aggrieved party cannot launch an infringement suit but can only launch a lawsuit under common law tort of passing off, and proving the prior usage/goodwill/brand[prior to that claimed by the infringer] of the name(s) to a court of law, and then obtaining an injunction against the infringer.
Such a tedious enforcement process could be cut short simply by producing a trademark registration certification to the infringer, who is very likely to not contest a bona fide trademark registration certificate, in a court of law. Further, a registered trademark allows the trademark owner to institute infringement proceedings. Besides that, trademark registration in India is inexpensive for MSMEs, with the government scrapping off half the price of their trademark application fee for registered MSMEs.
Trademark as trade-able assets
Trademarks are trade-able assets, that is, like other assets of an MSME, the trademark can be sold, licensed or purchased as per needs to/from another MSME or MNC. It is also quite possible for an MSME to sell their entire business [customers and tangibles] while retaining control of their brand names/logos [that is, trademarks], and then licence that trademarks to several manufacturers.
When and where to register trademarks?
Over a life cycle of a product, the product may take several names in view of several factors. It is advised to register your brand names/trademarks/logos/trade-dress etc. once you are ready to market the product, and before its launch, as the name is less likely to change at this stage and it may have already gone through a lot of internal reviews and considerations. All trademarks registrations are territorial, that is, a trademark registered in India is enforceable in India alone. If an MSME is inclined to sell their products abroad, it is highly recommended that they also register their trademarks in each of the potential countries. These international filings can be affected either directly or via Madrid Protocol that significantly reduces duration and costs of filing and obtaining trademark registrations in several countries.
As Indian MSMEs expand wings, and as Indian market opens up for foreign competition, which is much more aggressive in obtaining and enforcing trademarks, it will do a world of good to Indian MSMEs to prepare well for securing and enforcing their own trademarks, and registering them will just be the first step, and inexpensive one at that.