Relevance of Trademark Strategies for Startups

Introduction

A Startup is a birth of business and considered as a seed from where the business starts growing. It is mainly focused towards delivering technological and innovative solutions to public. This feature makes it unique in modern business world especially in developing countries having huge youth population. In India, there are more than 1.59 lakh startups in India which makes its 3^rd largest country in startup ecosystem. Startups are crucial for economic development of a country as it generates employment, boosts GDP growth, attracts foreign investment and promote inclusivity. Every startup needs trademark strategy to promote as well as to protect business interests. It is one of the first essential step to build a brand known for its high-quality goods and services. So, trademark is a kind of intellectual property defined in Section 2 (zb) of the Trademarks Act, 1999, i.e., “mark capable of being represented graphically and which is capable of distinguishing the goods or services of one person from those of others and may include shape of goods, their packaging and combination of colours;”. Further, a mark can be a word mark or a device mark. Thus, trademarks allow customers to distinguish between products of one seller from others. It is a mark upon which goodwill and reputation of a business organization is made thereby establishes loyal customers towards a particular brand and build strong brand identity. This blog focuses on emphasizing the importance of trademark strategy for startups.

Points to consider to build Trademark Strategy for a Startup

Trademark registration plays an indispensable role in all kinds of business organization especially in Startups. The key elements of a trademark strategy for startups are as follows:

1. Adopt a Distinctive Mark: The first step is to adopt a distinctive mark so that possibility of confusion among potential customers can be erased and future rebranding cost can be saved. Additionally, the mark should not be deceptively similar or identical to any mark in the specified class. The mark should not be descriptive also.
2. Conduct Comprehensive Trademark Searches: Before adopting any mark, startups should conduct a thorough search of existing marks to check whether there is any deceptively similar mark that may cause likelihood of confusion among customers. This is a significant step for a startup because all their goodwill will be built upon that mark as similar to other forms of business organisation. It also involves checking the global marks because might be that mark is registered through the Madrid protocol in that country.
3. Analyse Class-Wise Filing: Third step is to analyse in which class or classes to register the mark. The mark should be registered in all possible classes in which startup want to deal in future.
4. Register Early: The most important step is to register the mark and startup must register their marks as early as possible. The early registration would restrict the other from using the same or deceptively similar mark. Startups should also register their domain name because even slight chain in the domain can also be considered as infringement so this will protect from fake websites.
5. Monitor and Enforce Rights: This step is after the registration which includes regularly monitoring whether anyone is using the similar mark. It includes checking Journals in which marks are advertised so that they can file Notice of Opposition. Even, in case if a startup found that someone else is using the deceptively similar mark, they can cease-and-desist notice directly to party who is infringing the exclusive rights of registered proprietor.
6. Global Expansion: Trademark registration also helps startups to globally enforce their rights in case of infringement. Startups can register can register their brand name through WIPO if they want to establish their operation oversees. For example, startup brands such as Zomato, OYO and Nykaa have expanded their operations worldwide so they require registration of their brand name in various countries. Meesho, an Indian startup has registered its brand name through WIPO in various countries such as Indonesia and UK.

Benefits of Trademark Registration for Startups

Trademark registration is essential for every startup to protect their business and economic interests. Benefits of trademark protection for startups from nascent stage are as follows:

1. Builds strong portfolio: Trademark helps startups to build strong portfolio by giving protection to their logo, name, and unique taglines. Trademark strategy is not just limited to a country and even can protect their rights of exclusive use worldwide. For instance, lenskart has trademark registration of its brand name under Class 9, 35, 44. This restricts others from using the same mark and helped lenskart to build its strong portfolio.
2. Brand recognition: Trademark registration helps startups to effectively use their brand name. It makes it easier for customer to easily associate products and services of particular brand. The trademarks registration also gives competitive edge as it enhances the brand visibility.  It also helps startups to raise funds as registration affirms authenticity. For example, the famous tagline “Paytm karo” associated with the app Paytm.
3. Exclusive Rights: Trademark registration give exclusive rights to registered proprietor and pprevents others from using identical or deceptively similar marks. For example, Zomato had registered its trademark so the mark “Zomato” can be used only by its registered proprietor.
4. Mitigating legal risks: If a mark is registered than it can easily file suit for infringement whereas for unregistered marks passing off is available in which one has to prove goodwill of mark, misrepresentation by others and this resulted into damages.
5. Future Global Expansion: If a trademark is registered through WIPO (Madrid Protocol) in many countries by a single application so this save time and cost of startups. For example, Airbnb rregistered its brand and logo in multiple countries using the Madrid Protocol, which allows companies to file one international trademark application and extend protection to over 120 member countries.
6. Prevents expenditure on Rebranding: If a startup without doing due diligence adopted a mark and started trading. They have to incur a huge cost in rebranding their products when they will receive a cease-and-desist notice form the registered proprietor. This cost would have been saved if the startup had registered mark before actually using it.

Limitations of Trademark Strategy for Startups

1. Costs and Maintenance: To prepare a trademark strategy for startups include high costs such as attorney fees and filing cost and often startup at nascent could not afford such big expenditure.
2. Time Consuming Process: The work of preparing trademark strategy is a tedious process and requires lot of time. The registration cantake 12–24 months or longer if there are objections/oppositions.
3. Enforcement Burden: To check whether no one is using the similar mark involves active monitoring of various marks.  Startup main work can be diverted if they focus on such things and can even led to compromise in the quality of goods or services they offer.

Conclusion

Trademark strategy plays a significant role in the initial success and growth of a startup because it builds the foundation through which a startup is known in the world. It also helps startups in establishing goodwill and make them sustainable in long run. Trademark strategy helps startups to build strong portfolio, brand recognition, exclusive rights, mitigating legal risk, global expansion and prevents expenditure on rebranding. Although, trademark strategy has numerous advantages, it also faces one of the biggest challenges i.e., funds. Often startups juggle for funds and amidst that juggle they have take out funds for trademark registration can create extra financial burden on startups. Therefore, startups have to be critical on making decision when is the right time to go for finally registering the mark.

References

1. https://depenning.com/blog/building-strong-brand-identity-trademark-strategies-for-start-ups-and-smes/
2. https://www.compliancecalendar.in/learn/trademark-strategies-for-startups
3. https://www.startup-movers.com/trademark-registration-for-startups
4. https://www.pitchdrive.com/academy/trademark-protecting-startups-brand
5. https://www.mondaq.com/india/trademark/1544664/building-a-strong-brand-identity-the-role-of-trademarks-in-business-strategy
6. https://www.mondaq.com/india/trademark/1231550/is-your-startup-investable