Consequences of Failing to Register a Trade Mark

Many articles discuss the benefits of trade mark registration, but few discuss the consequences of failing to register a trade mark. Trade mark registration offers many benefits, most important of which is the ability to prevent or stop unauthorised use of the trade mark. There is some protection provided to unregistered trade marks, although this can be difficult and costly to enforce. Registering a trade mark is the best way to protect your brand.

Common Law Protection: Passing Off

Trade marks are protected under the Trade Marks Act 1995 (Cth). Alternative protection is provided through the common law tort of passing off. In simple terms, passing off is causing damage to trader’s reputation by representing that certain goods or services are those of, or are somehow connected to, that a trader’s goods or services when they are not.

Situations Where Passing Off Fails

A successful passing off claim relies on three key elements:

• i) reputation
• ii) misrepresentation, and
• iii) damage.

A failure to establish one of those three elements means the claim will not be successful.

Lack of Reputation

Common law protection is only given to trade marks that have established a reputation, or ‘goodwill’ in respect of their brand. In many cases, proving this reputation can be difficult. Where no reputation can be established the passing off claim will fail.

For example, a trader who has a small amount of trade and only limited brand presence may find it difficult to stop someone else from using their brand name without authorisation. If they aren’t well known, they won’t have an established reputation that can be protected. Even if they have established a reputation in one location, it will be difficult to stop unauthorised use of their brand in another location, where their reputation has not been established. Furthermore, proving this reputation by collecting and presenting evidence can be both time consuming and costly.

Registering a trade mark solves these issues. A claim of infringement of a registered trade mark does not rely on the trade mark owner having a reputation. It provides national protection, so protection is granted throughout Australia, whether or not the trade mark is well known. Since no reputation needs to be established, there is no cost of collecting, preparing, and presenting evidence.

No Misrepresentation

In general terms, misrepresentation is where the conduct in question misleads or deceives consumers, or is likely to do so. Establishing that consumers are likely to be misled can be challenging and costly. 

No Damage

Lastly, a successful passing off claim relies on establishing that there has been, or probably will be, damage to the trader’s reputation. Even though this will, in many cases, be a relatively simple matter (in comparison to proving reputation and misrepresentation), it can still attract its own costs and complications. A claim of infringement of a registered trade mark does not require that damage or a likelihood of damage be established.

Other statutory protection: Australian Consumer Law

In addition to passing off, some protection is provided to unregistered trade marks through the Australian Consumer Law (Schedule 2 of the Competition and Consumer Act 2010 (Cth)). Like passing off, however, it can be costly to enforce this protection.

Conclusion

Registering a trade mark remains the best and most cost-effective method of protecting a brand. A failure to register a trade mark means that brand protection relies on proving reputation, misrepresentation, and damage, a task which can be both difficult and costly. Without a trade mark registration, a brand is vulnerable to misuse by third parties with limited available recourse.

LegalVision has a team of great IP lawyers who can assist you. Please call our office on 1300 544 755 and our Client Care team will happily provide you with an obligation-free consultation and a fixed-fee quote.