Trade marks are everywhere in the modern commercial world, but their nature and use are not always widely understood. Despite this, it is often recognised that a business’ brand is an invaluable asset, and that this brand is best protected by way of registering it as a trade mark. Registration not only grants the registered owner a right to use the brand in respect of goods and services for which it is protected, but also gives the owner a basis to assert a statutory right in the fact of unauthorised use. For this reason, it is vital to carry out proper due diligence when considering whether to make use of a new brand. However, before these matters may be properly appreciated, it is first important to define the nature of a trade mark.
What is a trade mark?
According to the Trade Marks Act 1995 (Cth), the principal source of the law relating to this area, a trade mark is ‘a sign used … to distinguish goods or services dealt with or provided in the course of trade by a person from goods or services so dealt with or provided by any other person’. In turn, ‘sign’ is broadly defined, and means that a trade mark could be an image, shape, scent, word or sound.
From this, it is clear that the key feature of a trade mark is that it distinguishes the goods or services supplied by its owner from those supplied by others. In this sense, both the Federal Court and the High Court of Australia have referred to a trade mark as a ‘badge of origin’,¹ because a trade mark’s function is to inform a consumer about the identity of the entity providing the relevant goods or services.
However, as a badge of origin, a trade mark does not merely distinguish goods or services, but is also a vehicle by which its owner may use the business’ commercial reputation to represent the quality and desirability of those goods or services. Commercially, this makes a trade mark a valuable marketing tool, but one which may be open to abuse by third parties with potentially disastrous results for a business owner.
A ‘badge of origin’ does not need to be registered in order to distinguish the goods or services provided by its owner. Unregistered trade marks may receive equivalent legal protection under the common law. However, in order for such protection to be recognised, its user must first go through the laborious task of proving ownership by prior use. This task can be conveniently avoided by registration, which forms prima facie evidence that the registered owner is entitled to that trade mark protection.
The importance of trade mark registration
Registration of a trade name as a trade mark, as well as any other logos used by a brand owner in marketing material and day-to-day commercial dealings, is a relatively simple and cost effective way for a business to protect its brand and commercial reputation. Registration also provides a level of certainty regarding the rights of the trade mark holder, and permits the brand owner to publically display its rights by use of the ‘®’ symbol next to that registered trade mark. However, these are not the only important advantages that may be gained from registration.
The first principal advantage to be gained from registering a trade mark is that once a mark is registered, the Registrar will not allow another entity to register one which is identical, or deceptively similar in the same or similar class of goods or services. Subject to any disputes over ownership, this restriction prevents other parties from attempting to subvert an owner’s rights to display its badge of origin.
The second principal advantage of registration is that it provides clear evidence that the holder of the registration is the owner of the mark. Accordingly, if another entity uses a trade mark that is arguably identical or deceptively similar to a registered mark, without the registered owner’s permission, then it will generally be liable for infringing the registered owner’s rights. So long as infringement can be proved, a trade mark owner will not only be able to apply to the court for an order restraining the infringing use of the trade mark, but may also be entitled to compensation for damage suffered as a result of the conduct. Accordingly, the public statement of trade mark ownership made upon its registration empowers its owner to take action quickly and effectively in order to protect the owner’s commercial interests.
Additionally, a public statement of ownership is made not only by a business’ public use of the ‘®’ symbol next to its registered trade mark, but also by the fact that its ownership is recorded on the Australian register of trade marks by IP Australia, which is itself a public record. This tool allows other business owners to check whether they may be inadvertently (or perhaps deliberately) using an identical or deceptively similar trade mark to distinguish its own goods or services.
The importance of conducting due diligence
Ownership of trade marks and infringement disputes can often be predicted and avoided by conducting proper due diligence before using a new trade mark. Due diligence should be conducted by searching the Australian trade marks register database and conducting market research, before you launch a brand into the market.
If a search turns up identical or potentially confusing similar trade marks, you should seek legal advice about whether use of your business’ intended mark would constitute infringement. On the basis of that advice, you will be in a better position to properly determine whether to proceed with your proposed trade mark and better weigh the commercial risk to your business.
Your business’ branding is one of its most important assets, and the value of protecting it by way of a trade mark registration should not be underestimated. As a ‘badge of origin’ for goods or services provided by your business to consumers, trade marks protect your branding by giving you legal ownership rights, allowing you to bring claims against other parties which use an identical or confusingly similar trade mark to promote themselves or what is commonly known as the common law tort of passing off. It is important to remember that the statutory right afforded by way of trade mark protection can be a double‑edged sword. While trade mark rights can be used to protect your brand, other businesses will also use it to protect their brands. Due diligence should always be conducted before using a new brand in order to ensure that you will not be infringing the rights of others.
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¹ Coca Cola Co v All-Fect Distributors Ltd (1999) 96 FCR 107 at 115; E & J Gallo Winery v Lion Nathan Australia Pty Ltd (2010) 241 CLR 144 at  and .