Mistakes in your start-up: struggling with the trademark!

Once you have developed your initial business idea and you are coming up with this very first Business Plan, one of the first steps to take in order to launch a start-up is the choice of the company name. This election involves a considerable use of time because of two reasons:
  1. First, because finding a different or a non-used company name is getting harder.
  2. Second, because finding a beautiful and desirable company name is not an easy task. 
 

The registration of the trademark is a very important (and not easy for an outsider) ‘must-do’ for a company

When you have the company name and the start-up is set up, the entrepreneur may already find this very first inconvenient: that web domain associated to the company name is not available, so you eventually buy this similar web domain, but not the one you exactly wanted. However, the real big issue may arrive when the entrepreneur tries to apply for the registration of the trademark associated to the company name and, unfortunately, the registration is quite difficult, if not directly impossible.
 
The registration of the trademark is a very important (and not easy for an outsider) ‘must-do’ for a company. It is important because:
 
  1. The trademark, unlike the company name, is used to differentiate products and services of a company in the market. It gives your start-up products and services distinctness against third persons (clients, suppliers, etc.).
  2. The trademark may be an essential asset of the company by creating ‘naturally’ a goodwill impossible to acquire otherwise.
  3. The registration of the trademark is the only way to avoid:
  • That a third party uses your trademark getting advantage of your goodwill.
  • That a third party supplies a product or service similar to yours by using a similar trademark.
  • The illegal use of a trademark by a third party, since the registration gives to the owner of the trademark the opportunity to stop this use by triggering several legal actions.
  • That a third party may hurt and downgrade the image and the reputation of your products or services by a combination of the aforementioned.
On top of this, the registration is not easy due to several reasons: the administrative proceeding is very strict; there are several types of trademarks with effects on several jurisdictions and territories; the correct design, creation, launch and registration of a trademark involves unavoidable subjective decisions; because lots of entrepreneurs do not know that trademarks are not necessarily linked to company names, etc.
 
The subjective decisions are a delicate issue. Thus, being granted a company name because there is no other similar or identical company name does not mean that you can be sure that you will obtain the registration of the concerned trademark because:
 
  • The meaning of “similar” is much wider in the trademark field that in the company names field (that means, there are a lot of more points to take into account that make a trademark similar to another trademark)
  • In the trademark field there are lots of third parties that may be involved and that may file an opposition to the registration of a similar trademark (in the company names field, only the Central Company Register has a voice).
  • A company may have lots of registered trademarks which may be totally different to its company name.
Should some of these problems come up and the registration of a trademark is impossible, you will have to face the following consequences:
 
    • Destruction of products using the trademark.
    • Impossibility of using the trademark.
    • Eventual compensation for damages and/or loss of profit to the owner of the previous registered trademark.
As a result of everything we have mentioned, the creation, design and decision about a trademark (and, indirectly, about the web domain) cannot be a secondary decision in the creation and launch of a start-up. Vaedro Asesores recommends you to turn the trademark issues in one of your priorities, to tackle it just after the development of the initial Business Plan. This is the only way to secure a proper development and registration of the trademark, the launch of the product and services and all the marketing actions involved.
 
And of course, before you decide anything about the trademark, please, ask your legal advisors. Vaedro Asesores will be happy to help you: the trademark field is a complicated path and having the best advice is the best way to avoid eventual problems.