Starting A New Business? Here Is How Trademark Registration Can Help

With the NDA government vehemently promoting its ‘Start-Up India’ initiative, more and more youngsters are being encouraged to start their own businesses.  However, starting a new business always seems like a herculean task, to say the least. Among all other legal compliances, that of the trademark registration process is one that might help the entrepreneur to ease out some of the stress.

This blog seeks to highlight the importance that a trademark registration carries for any business, whether old or new.

A trademark is a kind of copyright that allows the right holder to protect for its product, or service or both, either its brand name, its logo, its caption, its peculiar packaging or labelling or any such like attribute. Starting a new business requires immense amount of hard work, especially in the initial years, when the entity is trying to establish a reputation of its own among the customer base. Even later on, maintenance of the reputation is no less of an ordeal, since in today’s times, it won’t take much time for a consumer to shift preferences if quality of a product drops even by a sliver.

Therefore, it is crucial that the reputation be kept intact. A trademark ensures the customer that the product that he or she is buying is of a certain standard quality, has been manufactured by a brand they trust, and many a time, the registered trademark itself serves the purpose of advertisement.

Trademarks are registered under the Trademarks Act of 1999 and provides for the right of the trademark holder to bring a suit in cases of infringement.

With specific regard to business entities, that is, companies or partnership firms, both, the Companies Act, 2013 as well as the Partnership Act of 1932 provide for registration of names, which in some, but not all cases, might also be equated to registration of trademarks.

Section 4 (2) of the Companies Act, 2013 provides that a company, during incorporation, shall not be allowed to keep a particular name if that name:

“resembles too nearly the name of a registered trademark, or

is considered undesirable by the Central Government

if permitted would constitute a violation of law in force or be offensive”^[1]

An amendment has also been brought about in 2019 in Rule 8 of the Companies (Incorporation) Rules, 2014 in order to ease out any confusions that any entity might have with respect to its registered trademark. The 2019 amendment also has the effect of broadening the scope of the rights of the right holder.

Therefore, it is really crucial for any company, more so for a newly established company, to register a trademark in its name lest the business entity shall be deprived of the opportunity of maintaining a stable reputation among its consumer base. Since prevention is better than cure, it is preferable that the trademark be registered in the initial stage itself, that is, while setting up of the new business itself.

^[1] Section 4 (2) of the Companies Act, 2013, http://www.mca.gov.in/SearchableActs/Section4.htm.