What is a trade mark?

 

Overview

Definition

A trade mark is a sign used in the course of trade in relation to goods or services, to indicate a commercial connection between those goods or services and the owner of the trade mark. Businesses use trade marks so that purchasers and users of their goods or services can easily distinguish those goods and services from the goods or services of their competition.

In section 17 of the Trade Marks Act 1995 (Cth) (“TM Act”), a trade mark is defined as:

[A] sign used, or intended to be used, to distinguish goods or services dealt with or provided in the course of trade by a person from goods or services so dealt with or provided by any other person.

In section 6 of the TM Act, a sign is defined as:

[A] sign includes any combination of the following, namely, any letter, word, name, signature, numeral, device, brand, heading, label, ticket, aspect of packaging, shape, colour, sound or scent.

This definition is broad and allows for graphics or pictorial trade marks, and other possibilities.

There are many famous examples of pictorial trade marks; such as Apple’s famous “apple and bite” trade mark; and, in Australia, a picture of a lion is a trade mark of General Motors Holden.

The trade marks of many corporations combine words with pictures. For example, Nike has a registered word trade mark (i.e. the word Nike), and a registered picture trade mark (i.e. the “swoosh” picture). These two trade marks are used separately and together as the Nike logo.

The purposes of a trade mark

The purposes of a trade mark include:

enabling the trade mark owner to distinguish their goods and services from those of other traders;

enabling purchasers to identify who makes or provides the goods or services (thus assisting in their decision-making on questions of quality, price and other purchasing considerations).

In order for a trade mark owner to distinguish their goods or services from similar goods or services, their trade mark must do more than simply describe the goods or services. If the intended trade mark merely describes the product or service, then it is unlikely to be registrable as a trade mark (seeRegistered trade marks”). For example, the word “tasty” is unlikely to be registrable as a trade mark in relation to cheese because “tasty” describes the taste of cheese. One trader cannot monopolise the word “tasty” since other traders are likely to want to use the word to describe their own cheese. Also, the word “tasty” does not clearly indicate a connection between the owner’s cheese and the owner, because “tasty” describes cheese generally, not just the cheese from a particular trader.

Registered and unregistered trade marks

A trade mark can exist without being registered. Unregistered trade marks are known as “common law trade marks” (seeCommon law trade marks and passing off”). A trade mark can also be registered under the TM Act (seeRegistered trade marks”). Registration is encouraged to:

allow clearer searching of available trade marks;

enable trade mark owners to avail themselves of the enforcement rights given to owners of registered trade marks under the TM Act.

Differences between trade marks and the names of companies, businesses and domains

Confusion often arises about the rights of owners of registered trade marks, compared to the rights of those who register company names, business names and domain names. It is important to understand that registering a business or company name with the Australian Securities and Investments Commission (ASIC) does not give the registrant enforceable rights in that name.

Since May 2012, the Commonwealth Government, through ASIC, has controlled the names of businesses and companies (which were formerly administered on a state-by-state basis). ASIC requires businesses and companies to register their names in order to be permitted to trade under those names. However, registration with ASIC does not mean that the trader owns that name. Trade mark registration is the best way of securing enforceable rights in a trading name.

Company names

A company name is created when a company (also known as a corporation) is incorporated. The Corporations Act 2001 (Cth) applies particular legal requirements to corporations. Incorporation is indicated by the use of the abbreviations “Pty Ltd” or “Ltd” after the company’s name. (“Pty Ltd” is an abbreviation of “Proprietary Limited”.) “Proprietary” indicates a privately owned corporation. Another form of incorporation is as a public company. Public companies are indicated by the abbreviation “Ltd”. Public companies are generally owned by a larger number of shareholders than is permitted for proprietary companies (proprietary companies must have no more than 50 shareholders who are not employees of the company, while there is no limit on the number of shareholders of a public company).

When selecting a company name, check to see whether that name is already registered (search for company names in ASIC’s registers at https://connectonline.asic.gov.au). If it is already registered, another name must be chosen. This means that registering a company name prevents another person from registering the same name. However, it may not prevent a deceptively similar name from being registered (e.g. registering the name “ABC Company Pty Ltd” may not prevent “ABC Corporation Pty Ltd” from also being registered). (Note that each company has a unique Australian Company Number, which can assist to accurately identify a particular company.)

Business names

A business name is the name a trader conducts business under. Registering a business name is a compulsory statutory requirement if a natural person wishes to trade under a name that is not their own. For example, if Fred Brown establishes a lawn-mowing business known as “Fast Fred Mowing”, he is required to register the name “Fast Fred Mowing”. If he wishes to trade under the name “Fred Brown” then registration is not required, because this is his own name.

If a person trades under a name that is not their own and has not registered the name as a business name, they are in breach of section 18 of the Business Names Registration Act 2011 (Cth).

In the example above, if “Fast Fred Mowing” has already been registered by Fred Black Gardening Pty Ltd, then Fred Brown will not be able to register that identical business name. However, he could register “Fast Fred Gardening”, since registering a business name does not give Fred Black Gardening Pty Ltd any rights over “Fast Fred” or “Gardening”.

As discussed below (seeCommon law trade marks and passing off”), rights in trading names may arise under common law from using a name as a trade mark and rights may additionally be obtained by trade mark registration. This is important to understand, because many small business traders believe that registering their business name is sufficient protection, enabling them to have sole control and use of that name. But, if another trader already has enforceable trade mark rights for a deceptively similar business name, mere business name registration will not protect the new trader from possible liability for trade mark infringement (or other legal liability such as misleading or deceptive conduct or passing off). Nor will it prevent a third party from registering and using a similar name, as noted in the examples above.

Ideally, when choosing a business name, avoid similarities to existing names. Choosing a distinctive name will help businesses protect their name against infringement.

New traders are advised to check for any registered or unregistered (common law) trade marks when choosing a business name; and search for registered business names in ASIC’s registers at https://connectonline.asic.gov.au).

Domain names

Registering a domain name does not, in itself, protect the registrant from trade mark infringement liability (or misleading or deceptive conduct, or passing off liability) if another trader already has registered the trade mark, or has common law rights in the mark.

It is important to check that another trader does not already control a domain name.

See alsoDomain names and “cyber squatting” ” in The internet and the law.