As a business person, it's challenging to decide what issues are of critical importance now and which can be tackled later.
Intellectual property or IP protection is precisely one of those issues. You may rightly feel that your ideas, designs or products are the lifeblood of your business and that you need to protect them from copycats and unfair competitors. You may be worried that failing to provide legal protection to your brand and products right from the very beginning may have disastrous consequences for your company. But there's the rub...
Small businesses simply don’t have the same financial and legal resources big companies do. As a new entrepreneur, you know this all too well. You may also know that IP protection can be very costly. So, you’re faced with yet another tough choice.
Should you focus your attention and resources on developing your business first and tackle any IP-related legal issues later on, or should you invest in legal protection for your brand or products right from the start?
Admittedly, this is tough question with no straightforward answer. That’s why in this article, we will offer an overview of factors you may need to take into consideration when deciding whether your business needs some form of IP protection. In doing so, we will look at one of the most popular legal tools to offer such protection - registered trademarks. First, we will briefly discuss what trademarks are and how you can obtain one. Then, we will discuss some of the important considerations you need to make when deciding whether to register a trademark or not.
What Is a Trademark?
A trademark is probably most readily associated with a company’s name or logo but in reality, its scope can be much broader. In most general terms, any feature of a person’s or a company’s business operations that distinguishes them from others can be considered a trademark. Therefore, a trademark can include a word or combination of words, letters, sounds, and designs that makes one company, brand or product stand out from others. Current trademark law in Canada recognizes three basic kinds of trademarks:
- An ordinary mark - as mentioned, this kind of trademark can be made up of letters, words, sounds or designs.
- A certification mark - rather than distinguishing a certain company or product, it serves to show that services or goods are in compliance with a certain pre-defined standard. The “Fair Trade” logo and certification is one well-known example of this kind of trademark.
- A distinguishing guise - refers to a style of presentation of a product or service and can include its shape or packaging design. The triangular shape of Toblerone chocolates is an example of a distinguishing guise trademark.
What Protection Does a Registered Trademark Offer?
By registering a trademark, you obtain exclusive rights to its use. Currently, in Canada, such rights are given for 15 years with the possibility of renewing the trademark after this period.
With a registered trademark, you are able to enforce your intellectual property rights and start legal proceedings for trademark violations. A registered trademark is valid all across the country. In addition, a trademark previously registered in Canada can be used as proof that you were the first one to use a certain name, logo, design, etc., which may help you claim priority over other companies or individuals internationally.
What You Need to Consider Before Registering a Trademark
A trademark registration may provide your business with important legal protections and a competitive edge. However, before deciding whether your small business or new startup needs a trademark right away, consider the following important factors:
Scope of Your Business
First, consider the scope of your business operations. Do you operate locally, on a national level, or internationally? Do you plan on expanding? When do you project the expansion is likely to take place? You should keep in mind that even if you have ambitious plans for expansion, a trademark registered in Canada doesn’t automatically protect your brand abroad.
Also, if you want to operate on a national level one day, you should also make sure that your trademark is truly unique. You can do that by performing a search in the Canadian Intellectual Property Office (CIPO) trademark database here. If it turns out that someone previously registered a very similar trademark, your trademark application will likely be rejected.
On the other hand, if you only plan to operate locally at first, you may decide that the rights and protections that common law offers to unregistered trademarks are sufficient for the time being. Under common law, if you use a trademark for a certain period of time, you automatically obtain ownership rights to it. However, you should remember that such rights are limited geographically to the area where the trademark has been used - that is, to your local market. In addition, if someone sues your company for using the trademark, you will have to prove the ownership - or that you were the first entity to use the trademark - in court.
A trademark registration can be costly especially from the perspective of a new business with a tight budget. Basic registration costs amount to $250 if you apply for a trademark online and $300 if you file the application with the trademarks office. This fee is non-refundable even if it CIPO denies your application. However, if your trademark is approved, you will have to pay an additional $200 for a registration certificate. Bear in mind that all these costs are only the required government fees. If you’d like to use the services of a professional trademark agent, who specializes in trademarks and trademark registrations, additional fees will apply. All inclusive, the initial search and filing process can cost around $1,200 including the disbursements.
If you take into consideration the expenses related to registering a trademark, you should be able to see that it can be viewed as a cost-benefit decision of sorts. Yes, a trademark offers important legal protections. But does your business have the necessary funds to afford these protections at the moment? In addition, are the protections critical for your business right now or would you rather spend the funds on other important business needs? Thinking about these questions, as well as on other important considerations mentioned in this article, will help you carefully weigh the benefits of a trademark registration against its costs and potential drawbacks. This, in turn, will allow you to make a decision that will ultimately benefit your company the most.