The Importance of Trademarks

What is a trademark?

A trademark is a sign capable of distinguishing the goods and services produced or provided by one enterprise from those of another enterprise.  Any distinctive words, taglines or slogans, letters, numerals, drawings, pictures, shapes or combinations thereof used to distinguish goods and services may be considered a trademark.

What are trademarks for?

The main function of a trademark is to enable consumers to identify a product or service of a particular company so as to distinguish it from other identical or similar products or services.  Consumers who are satisfied with a given product or service are likely to buy or use it again in the future.

By enabling companies to differentiate themselves from those of the competition, trademarks play an important role in the branding and marketing strategies of companies, contributing to the definition of the image and reputation of the company’s products or services.  The image and reputation of a company create trust which is the basis for establishing a loyal clientele and enhancing a company’s goodwill. Consumers often develop an emotional attachment to certain trademarks based on a set of desired qualities or features embodies in the products or services bearing the mark.

The value of a trademark

A carefully selected and nurtured trademark is a valuable business asset; it may be the most valuable asset they own.  A trademark with a good image and reputation provides a company with a competitive edge.

Why should your company protect its trademark?

Registration, under the relevant trademark statute, gives your company the exclusive right to prevent others from marketing identical or similar products and services under the same or a confusingly similar mark.

Without trademark registration, investments in marketing may become wasteful as rival companies may use the same or a similar trademark for identical or similar products.  If a competitor adopts a similar mark, customers could be misled into buying the competitor’s product thinking it is your product or service.  This could not only decrease your profits and confuse your customers but may also damage the reputation and image of your company, particularly if the rial product or service is of inferior quality.

In addition, a registered trademark may be licensed to other companies, thus providing an additional source of revenue or may be the basis for a franchising agreement.  

A registered trademark with a good reputation among consumers may also be used to obtain funding from financial institutions that are increasingly aware of the importance of brands for business success.

Trademarks:

• Ensure that consumers can distinguish between products and services;
• Enable companies to differentiate their products and services;
• Are a marketing tool and the basis for building brand image and reputation;
• Are licensed and provide a direct source of revenue through royalties;
• Are a crucial component of franchising agreements;
• Are a valuable business asset;
• Encourage companies to invest in maintaining and improving product quality;
• May be useful in obtaining financing.