CS S. Dhanapal

Intellectual property (IP) has taken a very important role in the economic world today.  Long gone are the times when brick and mortar were treated as assets of a company. Today, it is the grey matter inside a human brain that is the asset.  Companies are gearing up fast to accommodate the rage that is IP now. 

Every new thing created fell into the public realm without any restriction on its usage. But, with the dawn of new technology and political barriers and competition, inhabitants have started to value their individual creation; such intellectual asset is termed an intellectual property right. Universally known as IPR, the intellectual property rights bear a great impact on the corporate sector and individuals who creates it. Each and every idea or object made is an intellectual property created by an individual for the usage of the people at large. From an interior design of a house, an article written by a scholar or the design of a logo of a company can all come under the purview of intellectual property among other like items.

A company has its task cut out as a commercial enterprise, i.e., to make profits.  Its endeavor is therefore to utilize to the maximum the available resources.  The development of technology especially in media and computers during the second half of the last century has given the impetus for centuries old concept of IP.  A company is no longer looked at as a mere employment tool for its neighborhood, it has acquired global proportions.  Understanding and utilizing IP, as an asset, is critical to a company not only to grow but also to survive.  The truth is evident in even the traditional companies now becoming IP savvy.

Such creations, when they are created into a tangible form and are registered, give them a protection from usurpers. The owner acquires a right to sue such user in the court of law and seek justice. The Intellectual Property Rights Law has also been enacted for better understanding and streamlining the usage of Intellectual Property Rights.

The business environment of today has become very concise and dynamic with the access of Internet. It enables the users to access any information throughout the globe. This has become a serious threat to the valuable asset of intellectual property. The article endeavors to identify these areas and explore further into the changing scene of the intellectual property rights.

A company has to look at the following as their important IP assets:

a. trademark;

b. copyright;

c. patent;

d. industrial designs; and

e. trade secrets.

A glance at each of the following is important as follows:

Of these, trademarks are perhaps the utilized more than the other areas by every company.  A trademark is a perpetual monopolistic right given to a person who uses it with respect to goods or services he provides.  In essence, a trademark identifies the product manufactured by one trader or service provided by one and that of another, thus identifies the source of the product or service to one manufacturer or service provider.  In India, a trademark can be a word, letter, numeral, name, symbol, label, brand, device, signature, shape of goods, packaging, and colour combination.  From a customer point of view, he buys a particular product by a trademark because he is then clear of what he gets.  From a trader’s point of view, it helps him make the promise to the consumer about the quality of his product and build a customer base.  In due course a trademark may become well known.   

Copyright.  A person who owns the copyright has the exclusive right to copy.  In other words, if any other person copies the work, he would be violating the copyright.  Thus, it is a negative right as it does not expect you to use it but protects your right if others mis-use it. In this way, it is different from a trademark which you must use to maintain the monopoly.   A copyright can be available in a literary work like this book, a sound recording, dramatic work, cinematograph film, musical work, artistic work like a painting, computer programme etc., 

Design. A product is sold not only because of its quality but often because of its appearance also.  Such appearance, shape and configuration of a product when it is novel and new is protected as a design.  A design must be exclusively identified by the eye.  It should not be dictated by any convenience in use or based on utility.  For e.g., a mobile phone may have a distinct shape that is new and novel that can be protected.   But if the features are designed to better grip, easy handling of keys etc., it cannot qualify for a design.  Without registration, which is valid for 15 years, a person cannot take any action against the infringement of design.   

A patent is an exclusive right granted for using an invention which is new, novel and is useful. Just like a design, a patent application must be filed before the same is commercially used.  Any patent which is a mere improvement or modification of an existing invention will not be granted a patent.  Here again no person can initiate an action for infringement of patent unless he has a registered patent. 

Trade secrets are essentially confidential information that are vital for a part of the company’s manufacturing or trading activities. It is by its very nature not registered and kept alive for as long as a company manages to keep it secret. However, presently this area of law is falling out of fashion as companies as content with getting their ideas properly registered and obtain a limited right rather than manage to keep it a secret at a considerable risk.

Though the four branches excluding trade secrets have fundamental differences, the principles underlying all of them are the same. The legislations regarding Intellectual property is ultimately for the benefit for the people, contrary to popular belief.  A person must be rewarded for using his intellectual skill and the society should derive the benefit ultimately.  The protection given also depends on a number of factors, viz., level of skill, use for the public, time for the proprietor to reap his benefits etc., For e.g.,  a patent requires a level of skill and expertise that only a person highly skilled in his job can achieve.  But at the same time, the invention ought to be beneficial to the society also and the owner should not be allowed to monopolise the invention forever. Thus a patent is granted protection for 20 years and thereafter any person is free to use the invention.  In the process, a person’s effort, his INTELLECTUAL PROPERTY, is protected and the society is also benefited.  It thus creates a right environment where a person knows that his invention will be rewarded and encourages him to use his intellectual skills.  Creation of a trademark involves lesser skill than one required for a patentable invention.  But the monopoly granted to a trademark owner is virtually forever subject to the owner renewing his registration every 10 years by paying a required fee.  Though the creation of trademark is not as difficult, the public stands to gain by the continued availability of a product with a brand.  The older the trademark, the more confident the people are when buying the product.  Thus, no useful purpose would be served by curtailing the trademark rights for a limited period.  Therefore, each of the area in the field is given a time limit for its validity.  The ultimate gain must go to the general public for whose benefits these laws – indeed any law is – created.

To use anything one requires knowledge of the same.  An intellectual property is just like any other asset capable of being bought, sold, licensed, leased, mortgaged etc.,  A company has to have a clear and defined IP policy that must be scrupulously adhered to attain maximum utility.

Generally, an IP policy should include identification, registration, utilization or exploitation and protection from misuse.  Some companies by its very nature create rights like a software developing company.  Otherwise, educating the personnel about the importance of IP as an asset and its value to the company is very important in identifying an IP.  Registration requires professional advice.  A lawyer or a company secretary’s advice can be obtained on the registrability of the IP.  Their expertise is also necessary in obtaining search reports, prosecution and renewal of the IP asset.

An intellectual property can be effectively utilized by a company by itself or through others.  There are innumerous examples where a company has licensed its products and earned lakhs.  One can look in the market the products available to see there are number of products that are manufactured/marketed by a licensee using another trademark.  A book or other literary work is usually sold or licensed to the publisher by the author.  A patent can be well utilized by the patentee company itself.  If the patentee is an individual, it can be licensed to a few other companies and royalty obtained which can utilize the short term of the patent to the maximum.  An IP review and audit can be conducted by a company at regular intervals to govern as to how to exploit each IP a company possesses to the best.

Protecting IP is a very important factor in maximizing the returns from the IP portfolio.  Policing misuse of your IP is as important as protecting your house from trespass.  A successful prosecution or litigation is also indicative of the fact that the owner of the IP is serious about it and infringers would be hesitant to venture near it.

There are two types of legal protection available for trademarks. Under the Trade and Merchandise Marks Act, 1999, In case of registered mark, infringement can easily be established. In case of unregistered marks, the only protection is the passing off. Trademark law protects the right of the owner of a mark to use marks that distinguish his goods from others and to prevent others from using marks that are likely to cause confusion.

In order to establish infringement with regard to a registered trademark, it is necessary only to establish that the infringing mark is identical or deceptively similar to the registered mark and no other proof is required. Whereas if passing off action is taken, proving that the marks are identical or deceptively similar alone is not sufficient. The use of the mark should be likely to deceive or cause confusion. For passing off action it is necessary to prove that the use of the trademark by the defendant is likely to cause injury or damage to the plaintiff’s goodwill, whereas in an infringement case, the use of the mark by the defendant need not cause any injury to the plaintiff. However, when a trademark is registered, registration is given only with regard to a particular category of goods. Protection is, therefore, afforded only to these goods. In a passing off action, the defendant’s goods need not be the same; it may be allied or different.

A regular and concentrated effort will be certainly beneficial in keeping your IP portfolio productive.

Identifying a trademark is the first and the foremost task of any company.  While identifying the trademark what one has to keep in mind is that the trademark acts as a source to identify your product.  It would be there as long as you care for it.  So choose it with the same care as is shown to identify a spouse.  The basic principle that is required to be kept in mind is to choose a trademark that is not likely to be utilized by another. This is the fundamental principle of trademark law, NEVER HAVE A DESCRIPTIVE TRADEMARK.  A descriptive trademark for e.g., like WRITEWELL for pens, pencils cannot be monopolized because they can be legitimately used by others.  What can be used by others cannot become distinctive of your product or service.

A trademark MUST BE DISTINCTIVE.  A product or a service can be described only in a few ways.  So the entire gamut of the language or better still an incomprehensible word can be chosen as a trademark.  By choosing a trademark that is not descriptive you can straightaway eliminate the possibility of infringement to a large extent.  When your trademark is descriptive and the product that bears it is famous, it is inviting trouble.  An infringer will be emboldened to use it because he knows he has a defence and he may even succeed in them.

The only difficulty in having a distinctive trademark is that it becomes difficult to create a brand out of that.  It may take a long time for people to accustomed to the word as a trademark meaning a particular product or that it belongs to a particular source.  But weighing the balances, in the longer run, it is not only sensible but also advantageous to have a distinctive trademark.  IT PAYS TO BE DIFFERENT.

Once the trademark is chosen, it must be used and registered.  The Trademarks Act,1999 does not prohibit from applying for a trademark that is yet to be used, i.e., the trademark can be proposed to be used.  However, if the trademark is not distinctive it may run into problems.  Thus, it is a descriptive trademark, the applicant would be well advised to use the trademark widely and extensively before an application is filed.  In doing so, the applicant would be able to establish that though the trademark is descriptive, it has acquired a “secondary meaning”.  A secondary meaning is that which is acquired by a descriptive trademark by virtue of its long and wide user.  This may give a better chance for the mark to be registered.

Once a trademark is chosen, you have to file a trademark application for registration in the relevant “class”. The trademark registry will scrutinize the application both procedurally and substantially.  The Registrar also searches the Trademarks Registry for previously registered or applied trademark for conflicts.  An “examination report” is issued to the applicant with these conflicting marks and procedural problems which should be replied. A “show cause hearing” can also be sought for by the applicant to overcome the objections by filing relevant evidence.

The trademark will then be “advertised” in the Trademarks Journal, a Govt. of India gazette publication.  A maximum period of 4 months is prescribed for any person seeking to oppose the trademark.  Once opposed, the procedure involves filing of opposition, counter statement, evidences and a personal hearing at the registry.  There is also a provision for Appeal to the IPAB (intellectual property Appellate Board).  Orders of the IPAB can be further contested before the High Court and the Supreme Court.

If there is no opposition or if the opposition is successfully completed in favour of the applicant, the trademark certificate would be issued to the applicant.  A trademark once registered will last forever subject to renewal every 10 years on payment of fees.  A trademark can also be rectified on an application by any “person aggrieved” on the ground of non-use or fraud or lack of bonafide intent to use.  The procedure for rectification before the IPAB is almost the same as that of an opposition.

The registration process consists of the scrutiny of the application by the trademark registry for conflicting marks whether registered or pending.  The applicant is given a chance by a show cause hearing to answer the registry’s objections. The successful application will then proceed to be advertised in the Gazette.  Any person may oppose the trademark within 4 months (three months + one month extension) on the grounds mentioned in the act.  Only if the opposition is successful for the applicant, the trademark will be registered.

A registered trademark must be used; otherwise it runs the risk of being expunged from the register.  If a registered trademark is not used for a period of 5 years from the date of registration, any person interested can file a rectification of the register by expunging the trademark.  The use cannot be sporadic or few and far between.  The use should not be sham use to avoid non-use.  It must be commercial use.

It is well said by experts that, If you have a trademark, use it; if you use a trademark, register it. 

Maintaining records of use of a trademark is of vital importance in protecting the trademark.  Use of a trademark is often sought to be proved by evidence in a proceedings for infringement.  Though this is not required, this would give evidence of the trademark being not only registered but also has commercial goodwill in the market.  That goodwill is often proved by invoices using the trademark, advertising and promotional activities, caution notices etc., by the entity owning the trademark. Other evidence like newspaper /magazine reports, awards and accolades by others are useful evidence in proving reputation to succeed in an action.  Many a case has been lost because the proprietor of the trademark could not give sufficient evidence of use of the trademark.

Prompt and timely action against infringers, opposition in the trademark registry when an identical or similar mark is sought to be registered and regular vigil in the market is a serious deterrent against infringers.

Renewing a trademark once in 10 years is statutory.  However, the entity must review the working of a trademark at least every 3 years to have a clear idea as to its trademark portfolio.  A trademark that is useful must be renewed and that which the entity feels is a liability (a rectification for non-use can be bad publicity for a company) ought to be abandoned.

Valuation of a trademark is a recent phenomenon. Every organisation is keen to know the value of its trademark, as it is part of its goodwill.  It also helps a company know its brand value.  It must be reminded that a trademark is only part of the ‘brand’ which has many other attributes to it.  Valuation is a multi-disciplinary task involving lawyers, accountants, marketing personnel etc.  A properly valued trademark is an important tool especially during mergers or acquisitions.

By identifying, registering, using, maintaining and renewing a trademark portfolio well, an entity will be sure caring for its intellectual property well.

Though registration of a trademark is not mandatory, but it bestows very substantial commercial benefits as follows:

  • A trademark registration bestows rights countrywide.
  •   A registered trademark will cause an impediment to any subsequent application by any other person to register the same or a similar trademark.
  •  The Trade Marks Act bestows legally enforceable powers upon a registered trade mark that provide less expensive protection to enforce rights in a registered trade mark than in one that is not registered.  Privileges in an unregistered trademark only arise where a substantial standing /usage has been developed in the relevant trademark. To enforce these privileges, you must substantiate one’s standing /usage towards trademark, a very time-consuming and expensive task.
  •   It is easier to prove infringement which is also very wide compared to proof of ownership and reputation in an unregistered trademark.
  •   A registered proprietor of the trademark can file a suit for infringement at the place where he resides whereas a suit for unregistered trademark can be filed only where the infringer resides.

CONCLUSION

Therefore, it can be concluded that registering INTELLECTUAL PROPERTIES will be a strong protection and a value addition to the corporate sector.  It is as much an asset as any other property.  Always we have to remember as said earlier, IF YOU HAVE A TRADEMARK, REGISTER IT and IF YOU HAVE REGISTERED A TRADEMARK then USE IT.

(Written by S.Dhanapal, Senior Partner, S Dhanapal & Associates, A firm of Practising Company Secretaries, Chennai.)

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