The founder of Sports Direct, Mike Ashley, is the latest business owner to attract unwanted attention from US retail giant, TK Maxx, over the choice of a new brand name. Should he have seen it coming?
The dispute centres on the use of the name, Brand Max, as the brand name for a new store concept, which is currently being rolled out in the UK and Ireland. While it is unclear at this stage how the dispute might develop, it seems likely that the experienced retail entrepreneur failed to undertake the necessary checks for any existing trade mark rights before naming the new brand.
Before settling on a new brand name, entrepreneurs and business owners should carry out a trade mark clearance search. While this involves an investment at the outset, this would easily outweigh the potential cost of resolving a trade mark dispute or, in the worst case, defending a trade mark infringement action. Such searches should be viewed as an integral part of the due diligence process that is undertaken when launching a new brand.
When developing a new brand, the first step should be to determine whether the chosen name is available for use and trade mark registration. This is commonly done by an intellectual property specialist who will carry out the necessary clearance searches and advise the owner if there is a likelihood of any legal challenge.
As well as flagging any trademarks with the same name, these searches will also highlight any potentially similar marks and assess the risk involved in using them commercially. Based on this intelligence, the business owner can then decide whether to use and register the trademark or adopt another brand name if the one of interest is not available.
Internal pressures and a lack of resources can sometimes mean that the necessary legal steps are overlooked. However, spending the time to carry out checks prior to launching a new brand is likely to be beneficial in the long run, as well as reducing the risk of disputes with other brand owners.
Businesses should also be aware of unregistered trademarks. Rights in unregistered trademarks can exist through extensive use of a brand. As the title suggests, unregistered trademarks are not formally registered, meaning there is no registry in place to identify those brands which enjoy this status. Unregistered trademarks are, by definition, harder to identify, and an in-depth knowledge of the marketplace may be required to avoid disputes.
However, the initial searching process can make this easier. Such searches can include research of the market to understand whether another business or individual enjoys unregistered trade mark rights in the new brand of interest to you.
The implications of not registering, or conducting thorough searches on, trademarks can be severe. For instance, failing to spot a similar mark before launching a new brand could cause confusion or lead to the business being sued for trade mark infringement. If this occurs, the business may have little choice but to rebrand, which will inevitably be costly and delay income being generated from the newly branded product or service.
Once a new brand has been registered as a trademark, businesses should be vigilant and check that it is not being infringed. If a business becomes aware of a third party using their trademark, they should seek professional advice before notifying the infringing party and asking them to stop using the mark.
When deciding whether to take matters further, it is worth bearing in mind that if the rights owner decides to bring a claim of infringement, they can request payment of damages, legal costs and an order from the court to stop the use of the infringing brand. If the brand owner is concerned that the infringement could injure their reputation or lead to a loss of revenue and/or goodwill, it is advisable to take action.
If a business is expecting to grow on an international scale then they should consider carrying out further clearance searches at an early stage, covering the overseas territories that they plan to move into. Without this foresight, the business could find that its trademark infringes another in one of its target markets at a later date. At this stage, the costs associated with rebranding the product or service for a specific marketplace could be significant.
Whilst bringing a new brand to market is an exciting time for any entrepreneur, it is vital they take the time needed to carry out comprehensive searches and to ensure their route to market is as trouble-free as possible. By protecting trademarks from the outset, businesses can secure their future and avoid any nasty surprises in the years to come.
Mark Caddle is an associate and trademark attorney at intellectual property firm Withers & Rogers.