Trademark registration is an investment. By registering your trademark you create legal rights that would not otherwise exist. Although trademarks are about excluding others from using a similar trademark, they also make sure that after your trademark is registered, nobody can later create rights that cause problems for you. In that sense, they also create the “freedom to operate” space for your trademark.
Trademark registration is not mandatory. It is possible to use a trademark without registering it. However, because the use of a mark generally does not create any rights (or at best only limited rights), there is always a risk that another company registers a similar trademark and can stop you from using your brand. The question of who has used the mark first is often not relevant. The relevant question is who has submitted the trademark application first.
Here are some examples of what could happen if you use a trademark that infringes on another company’s trademark rights:
- Complete rebranding
- Damages for infringement
- Litigation cost
- Seizure and recall of your products and marketing materials
- Having your brand owned by somebody else
- Having to change the country of manufacturing
- Having to stop selling or marketing to a particular country
Even if you don’t infringe others’ trademark rights, here are some consequences that might happen if you use your trademark without protecting it:
- Not being able to stop others from infringing your rights
- Not finding good partners
- Not finding good investors
- Not being able to expand to new markets or having to operate with a different brand in different countries
Trademark registration is a foundation for building a valuable asset. If you don’t protect your trademark, all investments made towards promoting your brand are constantly vulnerable to being lost (e.g. if you are forced to rebrand). To keep your continuing investment safe, it is important to register the trademark. The longer you use your trademark and invest in promoting it without registering it, the higher the loss if something goes wrong.
The good news is that money can often make problems disappear. For example, Apple was too slow to protect its iPad trademark in China. Instead, a Chinese company Proview Technology registered it first. The issue was settled by Apple paying 60 million USD to Proview. Most startups don’t have that kind of money to pay for failing to register a trademark on time. Similarly, Burger King was too slow to register their trademark in Australia, and have since then had to operate with the Hungry Jack’s brand instead. Having to use different brands in different countries is expensive. Burger King has managed it well, but a startup company does not have the resources to build many brands simultaneously.
Register as early as you can
The cost of registering a trademark is minuscule compared to the risks involved in not registering it or doing it too late. Also, the risk of running into problems increases significantly when expanding outside of your home country.