Why Register a Trademark?

Aug 12 21:12 2015 Matus Navrat Print This Article

Trademark is important for the identification of a product or a service in order to distinguish it from other products and services of a competing business. Using the trademark can enhance the credibility of the company, which contributes to the consolidation of the company’s position on the market.

Before launching an advertising campaign. When you launch an advertising campaign through AdWords,Guest Posting billboards, PR articles or in other media, you will attract new customer base. New customers should remember your company and your offering through a single phrase or logo. Once the brand or logo is remembered in the minds of your customers, you should protect it from use by competition, which wants to attract your clients. Before filing the trademark registration, it is important to search whether your brand or logo has been registered by someone else earlier.

Departure of the partners from the company. A common situation when the owners of the brand decide to register a trademark is a dispute in the company. In this situation one of the partners leaves the company and the remaining partners register a trademark to prevent the former partner from competing with their company by using the same brand.

Franchising. Owners of a well-run business often want to share their experience with younger or starting entrepreneurs and help them by lending them their brand or logo. This brand or logo already has an established reputation among customers, either through repeated ads or recurrent good experience with their products or services. This concept is called franchising. When the former owner of brand or logo intends to lend it to somebody, it is necessary to have this brand or logo registered as a trademark. After you lend your label or logo, you can come into disagreement with the borrower about the quality of the products or services provided under the brand or logo, or you can disagree about the extent of permissible competition. In such situation, you, as the owner of the brand or logo, need to be exclusive owner of the brand or logo.

Tax reasons. If a trademark is owned by foreign entities, the domestic entities have to pay royalties for use of the trademark. Such royalty payments are tax expense. However, it is important that these tax expenditures, which reduce the tax base and thereby the amount of tax, are not subject to a withholding tax, and, therefore, they do not abate tax. Withholding tax can be avoided by the payment of royalties to mother companies incorporated in other EU state, because the EU Directives command for elimination of barriers in the single European market. 

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Matus Navrat
Matus Navrat

Mr. Navrat received his law degree from New York University School of Law. Mr. Navrat is currently advising mainly on complex corporate, tax, and intellectual property matters.

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