Trademarks: dos and don’ts
Trademarks are often considered a business’s most valuable asset, far outweighing the value of manufacturing facilities, machinery or equipment. There are business owners who recognize this and take the protection of their trademarks seriously and there are those who don’t.
I recently came across this news article, which demonstrates these two extremes. The article is about two small business owners using the same name for similar services. One owner took the time to register her trademark and protect her brand. The other owner started her business without the expert advice and research recommended to move forward with use of a trademark.
According to the news article, Stephanie Pick first opened her Queen of Tarts pastry shop in Toronto, Ontario, in 1998. On the advice of her businessman father, who felt it was essential she protect her brand, the trademark Queen of Tarts was registered.
Small business owner, Linda Kearney, decided to put her life savings into opening a new café in Edmonton, Alberta. Her granddaughter came up with a clever name for her new business. Unfortunately, three months after she opened up her Queen of Tarts café Mrs. Kearney found herself in a legal nightmare with Ontario pastry chef Stephanie Pick. The Federal Court, in a default judgment, ordered Mrs. Kearney to pay Ms. Pick damages for trademark infringement in the amount of $10,000.00, plus court costs. She also had to cease using the trademark Queen of Tarts.
The legal situation these business owners found themselves in makes obvious three things: (1) there are benefits to registering a trademark; (2) there is value in hiring an expert to assist you; and (3) there is worth in trademark searching.
Many times clients have enquired whether a trademark search is necessary before they apply for a trademark registration, or use a mark. In most instances my answer is yes. Although searches are optional, they are generally recommended. The cost of the search is often far less than the cost to later change the mark, if it is determined that there exists a prior user in a related field. Mrs. Kearney, regrettably, learned this the hard way.
Had Mrs. Kearney requested a trademark search from a registered trademark agent or trademark lawyer, she could have avoided the legal nightmare she found herself in three months after opening shop. She could also have avoided the costs she incurred in doing so. A proper trademark search would have disclosed that the trademark Queen of Tarts was owned by Ms. Pick. This should have dissuaded Mrs. Kearney from moving forward with that name. Instead, Mrs. Kearney is required to transition to a new name and shell out the costs associated with this transition.
I often have clients ask me whether or not they could perform their own search or file their own application. The answer is yes, but like any industry, if you are not an expert in the field it is not recommended you do it on your own. A registered trademark agent is a professional who has been apprenticed, examined, and approved by the Trademarks Office to represent trademark applicants and registrants. A registered trademark agent can save business owners time and money by avoiding problems caused by issues like a poorly prepared application or inadequate research.
Had Mrs. Kearney sought the services of a registered trademark agent, she would have likely been directed to do a search. The search would have revealed the existence of Ms. Pick’s trademark registration and she would have been advised to come up with a new name. Instead, she now finds herself with the expense of having to change her business name and re-brand, not to mention the fees in damages and court costs.
Ms. Pick, on the other hand, took the time to hire an expert to assist her with the registration and protection of her mark. This small investment clearly paid off as she was able to assert her rights and protect her brand.
Many clients I come across are under the mistaken belief that registering their trade name with the Registrar of Companies, or incorporating their business provincially or federally affords them all-encompassing rights in that name, including trademark rights. Unfortunately, this is not the case. What many people do not realize, as appears to be the situation for Mrs. Kearney, is that federal trademark registration is often superior to federal or provincial company registration.
One of the main benefits of trademark registration is protection of the mark throughout Canada, regardless of where the mark is being used. Although Ms. Pick’s use of her trademark was limited to the province of Ontario, her rights in the trademark were not. As a result she was able to stop Mrs. Kearney from using the trademark Queen of Tarts in Alberta.
As well, having a registered trademark provided Ms. Pick the right to sue for trademark infringement before the Federal Court. Ms. Pick was not required to establish a reputation in her trademark. In fact she had temporarily stopped using the mark. Registration of the mark, Queen of Tarts, was evidence enough for her to successfully assert her rights.
As noted above, and as demonstrated in the Queen of Tarts case, there are obvious benefits to registering a trademark, there is definitely value in hiring an expert to assist you and there is undoubtedly worth in trademark searching. Any business that advertises services or sells products under a distinctive mark should consider protecting that mark with trademark registration. In today’s marketplace, branding is essential and protection should be too.