What Are Trademarks and Why Is It Important To Protect Them?

What is a trademark?

A trademark is often referred to as a brand or a brand name and is used by businesses as an identification sign to distinguish their goods or services from those of their competitors. A trademark is defined in the Trademarks Act 2002 as “any sign capable of being represented graphically and distinguishing the goods of one person from those of another…” and can be a name, picture, signature, colour, word, shape, sound, smell or any combination of these so long as it is distinctive.

Why should my business register its trademarks?

Many businesses have distinctive brands or signs but for whatever reason do not take the effort to protect their right to the exclusive use of that name or sign. The reason for this may be that some in the business community believe that by incorporating a company under a particular name or registering a domain name they have exclusive rights to use that name and the ability to prevent others from doing so. This is untrue.

Registration of a company name or domain name does not of itself allow the owner of the registered name to take action if a competitor starts using the same or a similar name. The ability of a business to prevent someone else from using a similar or even identical company name or domain name is largely dependent on the reputation and goodwill connected to the name, that is, how well known it is, and whether the name is a registered trademark. The business’s reputation in the market place determines the extent to which the business will be able to enforce their rights under the Fair Trading Act 1986 or a common law action in passing off. However, these actions are often complex, can result in costly legal bills and require the plaintiff to precisely identify and prove the damage suffered as a result of the other trader’s conduct.

Additionally, if you operate locally as opposed to nationally and have a strong local reputation, other businesses may be able to establish themselves in a different area of the country using your brand name. As you do not have a reputation in that area of the country, and common law rights such as passing off rely heavily on nationwide reputation, you will be powerless to stop the new business using your brand name.

The best protection is obtained by registering the brand as a trademark under the Trade Marks Act 2002.

What are the advantages of registering trademarks?

If you register your brand name as a trademark you will receive a statutory right to protection of that name throughout the whole country regardless of your reputation. This right can be evidenced by the use of ® to indicate to consumers and other traders the trademark is registered. Trademarks are valuable business assets in that they can be sold or licensed. If a competitor starts to use the same or a similar name, trademark registration gives the owner of the trademark a quicker, easier and cheaper way to prevent that competitor from using that name than relying on the Fair Trading Act 1986 or an action in passing off.

Why register non-traditional trademarks?

We suggest you consider registering non-traditional trademarks such as smells, sounds and colours as well as traditional trademarks such as words or images. To date, registration of colours has proved to be difficult due to their inherent low level of distinctiveness. The colour must be capable of distinguishing one person’s goods from those of another and must not be a colour which other traders might ordinarily use for their goods or services. However, through use, consumers may come to regard the colour as indicating a particular traders goods or services and the colour may then acquire the required distinctiveness.

Examples of sound marks currently registered in New Zealand are Sunlight Detergent’s “squeak” produced by the “friction of thumb or forefinger on dishware”, and the Warehouse jingle. Registration of smell marks has also proved difficult due to the graphical representation requirement. However, experience overseas has shown that registration of smell marks is highly sought after in the pharmaceutical and fast moving consumer goods industries to provide a competitive advantage over other traders. An example of a smell mark is the “smell of fresh cut grass” for tennis balls.

Where to?

As branding strategies are becoming increasingly international, businesses with a strong local reputation must take action to register their trademarks to protect their rights in a brand name. Ideally registration should be done when a business is set up so that further expansion is not restricted. When setting up a new business, do not assume that just because a company name or domain name is available it can be used. It may infringe against a trademark which may later prevent the new business’s ongoing operation. We advise clients do some prior research when establishing a company before they invest large amounts of time and money on initial branding.

Fortune Manning has experience in registering and researching trademarks for a range of industries from organic waste collectors to print management consultants and property investment advisers. For more information on whether your business’s brand name, logo, or even smell could be registered as a trademark or how to register a trademark please contact Fortune Manning’s Commercial Team.