Registered trademark as a source of competitive advantage for SMEs

Only 10% of the surveyed micro, small and medium-sized enterprises (SMEs) have registered intellectual property rights – reads the Intellectual Property SME Scoreboard 2022 report by the European Union Intellectual Property Office (EUIPO). Entrepreneurs most often decided to register national trademarks (6.4%) and EU trademarks (4.2%). Patents for inventions were only ranked third (3.6%). Significantly, as many as 93% of the SMEs that registered at least one of the intellectual property rights believe the registration has benefited their businesses.

What is a trademark?

A trademark's primary function is distinguishing the entrepreneur's goods or services from those of other businesses. It is a symbol intended to easily and quickly draw the customers' attention to the goods or services the entrepreneur sells.

A trademark can take many forms. The most common types in the market are those consisting of words (word marks), graphic elements (figurative marks) and marks that include both verbal and graphic elements (semi-figurative marks). Sound marks should also be mentioned (the famous MGM film studio lion's roar) or 3-dimensional marks (e.g. the goods' or packaging's shape, store décor).

How does trademark registration benefit?

There are unregistered and registered trademarks throughout businesses. It should be noted that trademark registration is not mandatory and only depends on the entrepreneur's decision. According to the EUIPO's report, most SMEs do not decide to register trademarks. The reasons for that are complex. The EUIPO report shows that most respondents point to the lack of benefits of registration. So, is registering a trademark worthwhile?

In simple terms, registering a trademark is based on entering it in the register kept by the competent industrial property office. In Poland, trademarks are registered by the Patent Office of the Republic of Poland in Warsaw. European Union trademarks can be registered with the European Union Intellectual Property Office (EUIPO) in Alicante (Spain).

The registration gives the exclusive right to use the trademark in a business in a given country or countries (national or regional trademarks, respectively) for the goods and services stipulated in the registration application. This right can be compared to the ownership right of things, hence the ‘intellectual property right’ term. Just like the owner enjoys exclusivity in availing themselves of an object, the trademark registrant is the only authorised entity to use the registered trademark. For example, the Microsoft trademark owner has the sole right to use it in relation to operating systems. Without the trademark owner's consent, other entrepreneurs must not use the trademark. If they decide to infringe on the trademark owner's monopoly, they may be reckoned with civil and criminal liability. An unregistered trademark does not provide such exclusivity, and pursuing rights related to its infringement is more complex and uncertain.

 Therefore, the question posed at the outset must be answered in the affirmative. Yes, registering a trademark is most beneficial and can significantly contribute to the development of SME businesses.

How to register a trademark?

In order to register a trademark, an application must be submitted to the competent industrial property office. If it satisfies the formal criteria, information about the application is published in the official journal. Within three months of the publication, other parties may object to the registration based on their rights (e.g. earlier trademark, logo copyright).

However, if everything goes smoothly, the office will issue a decision to register the trademark.

Both in the case of trademarks registered in Poland and EU trademarks, the monopoly on using a registered trademark lasts for ten years from the date of submitting the registration application. However, the protection can practically be extended indefinitely for successive 10-year periods. It should be borne in mind that the trademark registration and the subsequent renewal of protection are subject to official fees.

European funds for the registration of trademarks

Finally, we should also mention a vital initiative of the European Commission, i.e. the ‘Ideas Powered for business’ fund. It is a financial support programme for SMEs seated in the European Union. Monies from this fund can be spent, among others, on paying trademark registration fees.

In January 2023, the third edition of the programme was launched.

Many entrepreneurs from the SME sector, especially those just starting their businesses, do not register trademarks because of the expensive registration fees. We do hope the European Commission's initiative will contribute to changing the situation. It is all the more important that intellectual property is of fundamental significance in a knowledge-based economy.

Author: Marcin Witkowski, attorney-at-law, Chudzik i Wspólnicy Law and Taxes

This article comes from magazine:
FOCUS ON Business #10 May-June (3/2023)