Trademark Protection Strategies for SMEs
Oftentimes, we could see how Small and Medium Enterprises (“SME”) struggle with coming up with own trademark that is recognisable to the public compared to big brands like Nike or Adidas. Why is that so? How could SME step up their game to compete with the bigger brands and commercialise their own trademarks? In this article, we will discuss how SME could strategize and plan their brand protection locally and internationally.
1. Create a Registrable Trademark
Many times, SMEs do not realise that there are certain requirements to be fulfilled under the Malaysian Trademarks Act 2019 (“TMA”) in order to register a trademark and claim for exclusive rights, resulting in the trademark which they have spent countless effort in designing not registrable.
In order to create an eye-catchy and registrable trademark, it is advisable to factor in the following requirements under the TMA while designing a new trademark:-
(i) Not identical or similar to any earlier or well-known marks
Some may try to take advantage or ride on the reputation of an existing reputable trademark by making minor tweaks to it, a.k.a. change a little.
This is not advisable as may cause a trademark not registrable and may be refused by the Registry of Trademarks if it is found identical or similar to any earlier marks.
Therefore, please think twice! It’s always better to create a new trademark, instead of being “inspired” by others.
A trademark serves as an indication of the origin of goods and services. It will be refused registration if it is devoid of distinctive character.
Therefore, a trademark shall be capable of distinguishing its goods or services from others in the course of trade. For example, it is better to use an invented word or any word which is not commonly used within the industry.
(iii) Not Descriptive
One of the most common mistakes is that the trademark is too descriptive of its products and services.
To fulfil this requirement, it is always better to use a word that has no relevance to the products and services. For example, the word “Apple” can be used as trademark for selling computers and phones, but should not be used for selling apples.
2. Decide the Scope of Protection
Once a trademark is ready, the next step is to determine its scope of protection. Contrary to the common misconception, once a trademark is registered, it does not mean the name is entirely ours. The protection of a registered trademark is based on the classification and goods or services covered under the registration, which would determine the scope of protection of the mark.
There are 45 classes of goods and services for us to pick during the trademark registration. The more classes we choose to cover, the wider is the protection of the trademark. However, this would lead to higher costs too. Most of the time, SMEs would be constrained by budget. So, let’s start by covering the core business, which generates the most revenue or profits! So, choose the scope of protection according to priority! For example, a company, which operates in the food and beverages industry, like running a cafe. This company should register the trademark to cover their core business which is a “Cafe” under Class 43, then go on to cover “Coffee and Confectionery” under Class 30. In the event the company is expanding their business, they could cover “Retail Services” under Class 35 and if the company is providing barista training classes they could cover “Training” under Class 41 as well. We may work according to our budget and cash flow, and not necessary to register all 4 classes at one go. For example, we may choose to register Classes 43 and 30 first and then at a later stage, file applications for your trademark to be protected under Classes 35 and 41.
3. Plan the Protection Territories
Exporting is an important game plan or milestone for SMEs. However, the protection of a trademark is territorial-based. There is no single unitary system that could grant worldwide trademark registration.
Once the registration of our home country is secured, it is strategically important to start choosing which country to register first.
There are 2 routes for us to consider when filing an international application, which are:-
(i) Direct Filing
This is the most conventional and traditional approach for filing an international trademark application, whereby the appointment of the local trademark attorney at the intended countries is required to file the application directly.
(ii) Filing international trademark applications under the Madrid Protocol
This is an international filing system to facilitate trademark applications within 125 countries, and interestingly, Malaysia just joined as a member state on 29 December 2019. The Madrid System does not grant any trademark rights regionally or in any country. It merely facilitates the filing process and lowers the costs for international registrations. Each country still maintains its own discretion as to whether to grant a trademark registration.
Using this route, the appointment of the local trademark attorney at the intended countries is not required for smooth applications and the application is done through Malaysia’s Registry of Trademarks. However, if the trademark encounters any objection or issues from Foreign Trademark Office, the applicant still needs to appoint a local attorney to file the appeal or response.
Question is, which approach is better?
There is no conclusive verdict to this and should be decided on a case to case basis. Direct filing seems to involve higher costs, but application under Madrid Protocol may be subject to central attack on its basic application / registration.
For example, in the event the we wish to file international trademark applications in one or two foreign countries only, we may consider the direct filing approach. This is because the costs are not too significantly different compared to the Madrid System and the we will have the benefit of taking the advice of a local trademark attorney in the intended countries, who is more well-versed with their local laws and regulations.
However, as the number of countries grows, the gap of the costs difference between direct filing and Madrid filing will get wider. In this instance, filing under the Madrid System seems to be a more viable option.
While it is always important to monitor our cost, it should not be our sole consideration in our brand protection strategy.
Therefore, It is highly advisable for brand owners to seek professional advice from a trademark attorney or lawyer to increase the chances of success for their trademark applications.
Registered Trademark, Patent and Design Agent
LL.B (HONS), CLP, Advocate & Solicitor (Non-Practising)
IP Legal Intern
LL.B (HONS), CLP
Disclaimer: The above information is merely for general sharing and does not constitute any legal advice. Readers are advised to seek individual advice from professionals.