ARC News   •   November 01, 2017

A client of mine recently asked me a question – how can I prevent my sales agent from using my brand name/ mark upon the expiry of the term of agreement with me? He has a legitimate question here and I’m sure many business owners/ employers will be worrying about the same thing – what if my suppliers/ distributors/ employees/ clients decided to use my brand name/ mark/ logo/ symbol/ label/ slogan (hereinafter referred to as a “trade mark”) without my permission?

So, I asked him if he has registered the brand name in concern? And like most startups, young entrepreneurs or SME business owners, his answer was “No, but why, is that a must?”

Q: Is trade mark registration a legal obligation in Malaysia?

In Malaysia, there is no legal obligation to register a trade mark, and no legal requirement that an application to register a trade mark must be filed before using the trade mark.

Q: Since registration is not compulsory, should you register your trade mark then?

• Exclusivity

Trade mark registration is the fastest and most cost-effective way to ensure legal exclusivity for the use of your brand name or logo etc.

In order to significantly reduce the risk of being prevented from using your brand name or logo by other traders, you must register your trade mark. Another client of mine once told me that she was emotionally drained when she received a ‘cease and desist’ letter from a lawyer which requires her to stop using the name which she thought she owned, not to mentioned the amount of money she has invested to build up the brand name.

• To avoid the uncertainty and expense of passing off

It is still possible to take action against another party on the basis of ‘passing off’ if you do not register your trade mark. However, as this is a common law right, you must prove:

• You have goodwill/ reputation in the mark
• The other party has made a misrepresentation
• This has caused you damage.

Unlike trade mark infringement, where you can rely on the registration certificate as proof of your rights, passing off is difficult and therefore costly to prove. Such actions are potentially far beyond the financial means of most companies.

• Territorial basis protection

Registering your trade mark in Malaysia gives you nation-wide protection in Malaysia. Although it does not provide international coverage, a Malaysian application may be used as a basis for Priority Date Claim in the countries which are party to the Paris Convention or World Intellectual Property Organization (WIPO). More so, if you intend to expand your business overseas, this gives you a good platform to obtain rights in other countries – even before you commence business in those countries.

• Deterrent effect

By registering your trade mark, you deter other traders from using trade marks that are similar or identical to yours in relation to the classifications of goods and services like yours.

• Optimising the value of your brand

The value of your brand will increase significantly to potential purchasers if you hold a registered trademark, and hence any purchaser of your business is likely to pay higher for the goodwill that you build up.

• Controlling the use of your brand by others

A registered trade mark may be more easily licensed to others (e.g. agents, manufacturers, distributors, franchisees etc), thus providing an additional source of revenue for your company, or may be more easily the basis for a franchising agreement.

• Obtain funding from financial institutions

On occasion, financing institutions find a registered trade mark with a good reputation among consumers as a merit points to grant a loan.

Conclusion

It is crucial to make sure that your trade mark is registered in Malaysia and in the relevant export market(s), considering the value of trade marks and the importance that a trade mark may have in determining the success of a product in the marketplace.

Without trade mark registration, your competitors may use the same or a confusingly similar trade mark for identical or similar products and your investments spent in marketing a product may become wasteful.

Imagine your customers could be misled into buying the competitor’s product thinking it is your company’s product, this could not only affect your company’s profits and confuse your customers, but more importantly may also affect the reputation and image of your company negatively, particularly if the rival product is of inferior quality.

Yuki Chong Mei Yoke is a Partner at Messrs. Afif Rahman & Chong

Disclaimer: Every attempt to ensure the accuracy and reliability of the information provided in this publication has been made. This publication does not constitute legal advice and is not intended to be used as a substitute for specific legal advice or opinions. Please contact the authors for a specific technical or legal advice on the information provided and related topics.