The worth of a trademark lies not only in creating but exploiting it in a manner that provides commercial benefit. Further trademark commercialization helps to establish unique design elements and identify the product or service offered by the proprietor. However, the foundation of commercializing a brand lies in the protection and other steps to gain profits from the trademark. There are several ways to gain profit from the trademark. Some examples are: Trademark licensing, transferring the trademark’s protection rights, selling it to a company or even increasing the value of your products with the use of trademarks. The present article discusses the concept of trademark commercialization, highlighting all its aspects and showcasing relevant case laws.
Role of Trademark Protection in its Commercialization:
A brand must have a trademark that helps in differentiating between similar services. To survive in the growing international market, every trademark owner has to earn a brand reputation for their brand to increase the value. The success of the trademark is influenced mainly by its popularity, as having a brand name is not enough. In order to link a particular trademark to its name, the owner has to first register that trademark under his name in the Trademark Registry of India (TRI), governed by the Ministry of Commerce. Every country has their own Trademark Registration Office. After receiving a registration certificate, nobody can use the same trademark to carry out their commercial activities once the trademark gets associated with the owner. With trademark protection, the owner holds all the rights, profits and liabilities of the trademark.
Role of Legal Service Providers in Commercialization of Trademarks:
It is a well-known fact that in the Commerce matters, where huge amounts of money are at stake, it is wise to seek legal counsel and know about all the alternatives, scenarios and options, the profits and losses that come with each, and what can be done in case when somebody’s claims the ownership of your trademark. The company have to set off legal Advisors with whom they turn for help in any matter of the company. Even in the initial stages, legal service providers help bring investors, make agreements and contracts with the same, give advice on selecting an appropriate, legally applicable trademark, and assist in the registration process. Without expertise, trademark owners will be misguided and might face huge losses due to simple factors that they did not even know.
Evolution of Trademark Commercialization:
The first trademark was registered on August 30th 1870, filed by Avril chemical paint company. Before this registration method was established, there was no way of knowing if two people were selling products or services with the same brand name. The first use of trademarks is believed to be blacksmiths who made swords in the Roman Empire. The slow evolution of trademarks from being just symbols to now well-registered rights entails many factors such as the growing industrial competition in the late 1900s, the globalization of brands and the international competition. All these factors helped make the making use making us realize the importance of trademark protection and commercialization. Before this, trademarks were just symbols used to describe a particular service, and later they became an advertisement method when the competition grew. People started realizing the commercial value of a symbol. Once it was popular enough, it could be borrowed, sold, or licensed for money. This simple concept started its commercialization. The more popular trademark in the market, there will be higher the value. Finally, after sufficient competition in the market, it was also introduced in legislation for its registration, and rules regarding the use were formed.
To gain profits from a trademark, the proprietor has to think about long-term actions and orders that need to implement prior to the trademark registration. Marketing is a critical sphere in the commercialization strategy and plays a significant role in preparing the prospects for the commercial venture. In order to be successful in the market, a trademark is an essential marketing strategy.
This is why it is necessary to build a strategy for the maximum utilization of the assets such as trademarks. An example of the commercialization strategy is the “first to the market approach.” The present approach is used when the trademark owner is confident that his services are unique and can dominate the market before any competition arises. Various entrepreneurs have used this approach, like Mark Zuckerberg for ‘Facebook‘, Larry Page and Sergey Brin for ‘Google‘ or Steve Jobs for ‘Apple‘. Steve Jobs founded Apple in 1976, and in 2021, it is still the most valuable brand in the world, followed by Amazon.
How to Commercialize a Trademark:
Out of the various ways of making money from a Trademark, the licensing structure is the most frequently used in the lessons in structure.
- You can allow others to be affiliated with your trademark in exchange for a fee in the form of royalty, depending on your brand’s popularity and commercial application.
- The political application of this strategy can be seen when a brand is trying to reach a foreign market in a new geographical location, entering a new industry, franchise their business or meet consumer demands. However, in order to do this successfully, one must first analyze the strength of his brand, the size of the market he is trying to enter and the applicability for the exclusivity of his brand.
- Another way you can use your trademark commercially is to grow the repetition of your brand in the market, increase the geographical reach of your business, and amplify the gravity of your brand presence in the existing market. The sales conversion rate (which estimates the efficiency of a company’s sales teams by assessing their ability to convert leads into valuable consumers) increases with the trademark reputation and helps strengthen the security of investments in the business venture.
- The third way usually employed by brand owners for the commercialization of their trademark is selling their business to an individual or a legal entity through trademark assignment. With this method, the owners can transfer or assign their Trademark rights to that individual or entity.
It is better to have more effective and more consistent use of your trademark, to enhance the business value.
Royalty is a legally binding fee paid to the trademark owner when selling it to an individual or a legal entity. This fee grants the use of the previous owner’s trademark and its assets to the entity that bought it.
What are royalty rates?
A royalty rate is a percentage of sales generated by using a trademark. Every industry has a different royalty rate as each trademark has a different value. A brand’s ability to generate sales heavily depends on its marketing strategy and its worth in the market. The ability of the trademark to incline its royalty rate graph in the upward direction is tested with its use in the market. It fluctuates with the innovations the company has to offer. Once a brand has established its dominance in the market, it is easy to expand its services in different industries.
A recent example of trademark use to increase royalty rates and expand into a different industry is Nykaa, founded by Falguni Nayar for cosmetic, beauty-focused retail services and has expanded into a multi-brand e-commerce company Myntra. On October 28th 2021, Nykaa successfully released its Initial Public Offering (IPO) in the market. Royalty rates are the quickest and most convenient way to analyze the strength of a brand in a particular industry. It is easy to calculate and find comparable royalty rates on any royalty rate database or search engines such as RoyaltyRange or RoyaltyStat, as they are open for the public to explore.
Benefits of Trademark Commercialization:
- It helps in efficiently communicating the company’s goals and informs about its presence in different geographical areas, irrespective of the language used in that area. A brand’s logo is something that can easily be recognized. For example, people are living in remote parts of North Russia would recognize Facebook.
- Trademarks are an excellent way for an uneducated human being to recognize the services offered by companies.
- Trademarks allow the business to utilize the internet and social media and make it easy for the consumers to enjoy your services. Of course, social media itself is an example of these services.
- Trademarks are an asset whose value increases over time, and they have proved to be so precious that their value never expires. For example, The Coca-Cola trademark has been well known since the late 1880’s when it was not registered.
Relevant Case Laws: To understand the working of trademark commercialization in the judicial system, let us go through a few important landmark cases.
YAHOO! INC. V. AKASH ARORA & ORS: The first landmark case of cybersquatting. In this case, the Delhi High Court held that a domain name serves the same as a trademark and is entitled to the same protection. The defendant (Akash Arora) owned a domain name ‘Yahoo India‘ with the same enunciation as the plaintiff’s TM named ‘Yahoo‘. In this case, it was held that due to this similarity, internet users could be confused and may think that both services are of the exact origin. After this judgment, it was clear that once a symbol or name is associated with a particular service, anyone else cannot use it.
WALT DISNEY PRODUCTIONS V. AIR PIRATES: The present case also involves infringement of the plaintiff’s trademark and copyright (Walt Disney Prod.). The court issued a permanent injunction against the defendants (Air Pirates). According to the plaintiff’s claims, the defendants used their trademark for commercial gain by engaging in unfair competition and trade disparagement. The defendants claimed the ‘fair use‘, but the court was persistent while recognizing the trademark rights and analyzing the degree of infringement.
COCA-COLA COMPANY V. BISLERI INTERNATIONAL PVT. LTD: This is another Landmark case on infringement of trademarks. In 1993, Bisleri sold its intellectual property rights of a fruit drink called ‘MAAZA‘ as goodwill to Coca-Cola through a contract valid in India. Fifteen years later, Bisleri International Pvt. Ltd. Filed for registration of its ‘MAAZA‘ trademark in Turkey. Coca Cola filed a case against Bisleri for trademark infringement, also claiming permanent injunction damages. The court provided an interim injunction favouring the plaintiff (Coca Cola). It restricted the defendant from using the trademark ‘MAAZA‘ internationally.
Conclusion: It is a necessity in today’s globalized economy to commercialize intellectual property. Trademark is one of the intellectual properties that helps to differentiate between services using symbols and letters. It largely contributes to the reputation and brand building of the product or services. Hence, it should be of utmost priority for a brand owner to become aware of the importance of trademarks, their applicability in the growing commercialization sector, their value, the process of its registration in the governing legal system for its protection, and to condition themselves so that any threats or improbable conditions along the way are effortlessly dealt with.
Disclaimer: The present article intends to provide general guidance on the subject, and you can also consult us in your specific case.