Intellectual property rights, Part 3: trademarks, collective marks and geographical indications
S.K. Matlani is an entrepreneur based in the State of Madhya Pradesh in India. In 1985, Matlani set up a small company to manufacture mosquito repellent mats, selling them under the trademark JET. JET repellent mats proved to be successful in the market and Matlani was soon competing neck-to-neck with the largest competitor.
Export Marketing & Management
It’s all in the mark
In 1995, one of India’s large industrial groups was looking for options for entering the mosquito repellent market and entered into negotiations with Matlani to buy the JET trademark. After lengthy negotiations, Matlani agreed to sell the JET trademark for a reported total of approximately USD 6,500,000. The factories and remaining tangible assets remained his and he closed them down shortly after. Clearly, the only thing the conglomerate was interested in was the trademark. The JET trademark had over the years achieved an enviable reputation, gaining the trust of many consumers. The large conglomerate did not need the factory or the tangible assets: what it needed to get a foothold on the market for mosquito repellents was the trademark 1). This is true for many companies worldwide. A trademark embodies the reputation and image of a product and is the direct link between the company and its clients. A client that is satisfied with a given product is likely to come back for more products bearing the same trademark. As a company, a trademark enables you to differentiate your goods and services from those of competitors. It is also an incentive to invest in developing a quality product. A trademark appreciated by consumers is extremely valuable, and, as was the case with JET, may be your company´s most precious asset. ´The right trademark´ This is why the selection and adequate management of a trademark in the marketplace has become such a key issue for companies, particularly exporters operating in distant markets. If you´re entering an export market, having ´the right trademark´ is crucial to attracting consumers. But having the right trademark can mean many things. Here are three key factors: 1 From a commercial point of view a trademark should be easy to read, write and remember for consumers. It should not have a negative connotation in relevant foreign languages, too. 2 From a legal standpoint, your trademark must meet the necessary requirements for registration. In particular, it must be distinctive. For instance, you cannot use the generic name of the product and the trademark may not be considered descriptive, deceptive or contrary to public order or morality and should not be an official state emblem or flag (for more information on legal requirements for registering a trademark go to ttp://www.wipo.int/sme/en/documents/guides/ making_mark.html). If your trademark fails to meet these requirements, it may not be registered, which means that in general you´ll be powerless to stop other companies from using it. 3 Your trademark may not be identical or confusingly similar to that of another company and many national trademark offices will check this while examining the trademark prior to its registration. To check whether this is the case, you can
By Esteban Burrone, WIPO
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conduct trademark searches in foreign countries. Some national trademark offices have an online trademark database for this purpose. For a more exhaustive investigation of possible similarities to other marks, it is generally advisable to hire a trademark expert. Registration Having the right trademark, like having a good car or a nice house, is worth little without the necessary papers to prove your company´s ownership. To make sure you have exclusive rights over a trademark in a foreign market, you must apply for registration with the national (or regional) trademark office, pay the applicable fees and obtain a certificate of registration. By registering the trademark, your company acquires exclusive rights to stop or prevent others from using the same or a confusingly similar trademark for identical or similar goods and services. Note that the exclusivity applies to identical or similar goods and services and not to any goods or service. This means that if you´ve registered a trademark for a given class of goods and services – say class 15 of the International Classification of Goods and Services, which is for musical instruments – another
How to register There are essentially three ways of registering a trademark abroad. 1 You can go directly to a national trademark office and file your trademark application in the relevant language. You will need to pay the national fees, and, in many countries, to hire a local trademark agent. 2 Use a regional system for the protection of trademarks. For registering Community Trademarks in the European Union you can go to the regional Office for the Harmonisation of the Internal Market (OHIM). It is based in Alicante, Spain. The Community Trademark provides exclusive rights in the 25 EU member countries. 3 Companies based in member countries of the Madrid System for the International Registration of Marks can avail themselves of this system to significantly reduce costs and limit formalities for trademark registration in foreign countries. Under the Madrid system, you can submit a single application form in one language, paying one set of fees for protection in up to 78 member countries. You don´t have to appoint a local lawyer to handle the registration unless your
Having the right trademark is nothing without the necessary papers to prove your company’s ownership
company will probably be able to use an identical or similar trademark to sell food products or car engines without infringing on your rights (for more information on this matter go to http://www.wipo.int/classifications/nice/en/). A Cuban example The story of Cuban textile company Alba Confecciones illustrates the importance of registration. In 2001, the company inquired at the trademark office about the procedures for protecting the name of the company, which had been used as a trademark for some of its textile products for the previous six years. The company was surprised to find out that it had no exclusive rights, as the trademark had not been registered 2). Not only that, but a foreign company had registered the trademark Alba in Cuba under class 25 of the International Classification of Goods and Services, which relates to clothing, footwear and headgear. This situation presented a serious problem. Eventually, Alba Confecciones was lucky: it discovered that the foreign company had not been using the trademark for three years or more, which under Cuban law makes it possible to cancel a registration. Having learned a lesson, the company is now looking into registering its other trademarks nationally as well as in its main export markets 3). It is not just SMEs that run into trouble for not registering their trademarks. Countless companies have run into trouble after neglecting registration in a foreign market. In what is probably one of the most famous cases, a large sportswear multinational found that its trademark had been registered by a different company in Spain and could not use the mark in its advertising campaigns during Spain´s 1992 Summer Olympics. The risk is two-fold: firstly you run the risk of losing sales to competitors and potentially tarnishing your trademark´s reputation. Secondly, you may be accused of infringing on the trademark rights of others, thus compromising your entire marketing strategy in a given market. trademark application is refused in a given country and you wish to respond to the decision. Another advantage of this system is that you can make changes to registration details, such as an address, and renew the trademark with a single procedure rather than submitting multiple forms for the trademark offices of different countries. The cost savings achieved in this way can be significant. For more information on the Madrid system and a list of Member States go to: http://www.wipo.int/madrid/en/.
CBI News Bulletin 2006
Collective marks While trademarks are key elements of the marketing strategy of any company, small companies may have difficulty gaining recognition for their mark given strong competition from other producers. The solution in such cases may be to join hands with other producers and use a collective mark. This option may be particularly interesting if you´re seeking to export to highly competitive markets. Anybody living in or near Peru who has tasted the chirimoya fruit, a tropical fruit that grows in the Andean region, knows that the chirimoya from the Cumbe Valley is very special. Local villagers realised they could exploit the distinctive reputation of the Cumbe fruit by registering the Chirimoya Cumbe as a collective mark. They gave it a characteristic logo and all producers agreed to abide by a set of internal regulations. The collective mark proved a doorway to success: producers were able to use it to promote their product in the main wholesale markets in the capital and beyond, thus strengthening the product´s reputation. The collective mark registration is owned by the village of Santo Toribio de Cumbe 4). Collective marks can be a very powerful legal instrument for groups of producers, business associations and cooperatives in any sector. They enable small businesses to benefit from the collective reputation of a product and from economies of scale. Collective marks are often used to promote products characteristic of a particular region. In such cases, the creation of a collective mark not only helps producers to market the product
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domestically and internationally, but also provides a framework for cooperation between local producers. Part of the success of collective marks, in fact, is the development of product standards and a common strategy 5). It is important to note that the Madrid System described above may also be used to register collective marks abroad. Geographical indications Geographical indications are another powerful tool for producers. Depending on national legislation, they are also known as appellations of origin. A geographical indication can be granted to a product whose reputation, quality or other characteristics can essentially be attributed to its geographic origin. Geographical indications are usually applied to agricultural products whose characteristics are determined by specific local climatic or soil conditions. Famous examples include the Mexican drink Tequila and India´s Darjeeling Tea, which currently gives employment to over 50,000 people in India 6). The Chirimoya Cumbe, currently registered as a collective mark, is also likely to acquire a geographical indication in the course of 2006. Many other products from developing countries may qualify and numerous countries are making efforts to register geographical indications in order to promote the economic development of regions, communities or provinces. For a further introduction to trademarks for SMEs go to http://www.wipo.int/sme/en/documents/guides/making_mark.html.
FOOTNOTES: 1 For a full case study go to: http://www.wipo.int/sme/en/case_ studies/jet_mosquito.htm. 2 Cuban legislation, like that of many other countries worldwide, requires a trademark to be registered under the national trademark law for obtaining trademark rights in its territory. 3 For a full case study go to http://www.wipo.int/sme/en/case_ studies/alba_confecciones.htm. 4 For a full case study go to http://www.wipo.int/sme/en/case_ studies/chirimoya.htm. 5 Most trademark offices require applicants for collective marks to submit a copy of their internal regulations. 6 For a full case study go to http://www.wipo.int/sme/en/case_ studies/darjeeling_tea.htm.
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