Why register a trademark?

Trademarks are graphically illustrated signs or combinations thereof that distinguish entrepreneurs and their goods and services from other entrepreneurs' presented to consumers on the market. Owning a solid and well-known trademark is considered a business tool that allows an entrepreneur's business to create a good reputation in the market and, consequently, expand. As in most countries of the world, the legal protection of trademarks in the territory of the Republic of Azerbaijan begins only after registration. It is why we will touch upon the benefits of trademark registration in our today's article.

011. PROTECTION OF THE ENTREPRENEUR FROM PIRACY AND UNFAIR COMPETITION

Creating a quickly recognizable and original trademark does not guarantee an entrepreneur's success due to competitors who do not always conduct the fair competition. Actions of an entrepreneur aimed at gaining an advantage in his activities by unfair and contrary to existing legislation, thereby causing harm to his competitors or damaging their business reputation, are called unfair competition. An example of unfair competition is the imitation of an opponent's economic activity, the illegal use of a trademark, Geographical Indication, brand name, and the trade name of other entrepreneurs.

According to the Azerbaijani Law on Enforcement of the Intellectual Property Rights and Fight Against Piracy, as well as the Azerbaijani Law on Unfair Competition, violation or infringement of trademark rights is mainly can be in the form of production of counterfeit products - products illegally provided with trademarks, geographical indications, or brand names or indistinguishably similar to those marks[1], or in the form of production of the products with imitation of an opponent's economic activity[2].

Counterfeit products produced by the above-mentioned illegal methods, at first glance, practically do not differ from the original and create confusion among consumers. On the one hand, due to a decrease in sales, such products on the market entail material damage to the entrepreneur's activities. On the other hand, due to the poor quality of counterfeit products, moral damage can be inflicted by damaging the entrepreneur's reputation.

Recognition of the entrepreneur's ownership right to the specified trademark is primarily a necessary condition for the implementation of specific actions within the framework of legislation to prevent trademark infringement and, in case of actual violations, to demand compensation. According to the Law of the Republic of Azerbaijan on Trademarks and Geographical Indications, the main objectives of trademark registration are to grant the trademark owner exclusive rights to the mark and to create a legal basis for protecting these rights from possible violations. After such registration, the use of a trademark without the consent of its owner is considered a violation of trademark rights[3].

Azerbaijani legislation[4], as well as the legislation of other member countries of the Paris Convention for the Protection of Industrial Property[5], takes the fact of registration of a trademark and the acquisition of exclusive rights by this registration as the basis for battling the production of counterfeit goods, as well as for the unfair competition. The Code of Administrative Offences of the Republic of Azerbaijan and the Criminal Code of the Republic of Azerbaijan provides for administrative[6] and criminal[7] liability for the above-mentioned illegal actions.

Thus, according to the above mentioned, we see that to protect their trademarks from illegal actions by competitors and other market participants, entrepreneurs should necessarily apply for registration and, as a result, acquire exclusive rights. The registration of a trademark is valid for 10 years, and this period can be extended for 10 years each time without limitation at the owner's request of the mark with the payment of a fee. Thus, in the case of periodic renewal, registering a trademark for once gives the entrepreneur legal protection for an indefinite period[8].

022. ENTERING THE FOREIGN MARKET

Many entrepreneurs plan to enter the foreign market in the long term. Entering the foreign market also requires obtaining trademark protection in new markets. There are two main types of applications for registration on the territory of one or more foreign countries:

• filing applications in foreign countries one by one;
• filing applications under a unified system according to regional and international agreements.

Making individual applications in foreign countries is the right choice for entrepreneurs who want to protect intellectual property rights in a more specific or limited number of countries. In this case, the local patent attorneys should carry out the entire preparation and registration of documents.

Using the example of the Madrid System for the International Registration of Marks, we can see that applying to the regional and international registration system is a method of registration in more countries with less time, effort, and money. By filling out a claim document (application) in the Madrid system, an entrepreneur has the opportunity to obtain registration and protection of a trademark in member countries. In other words, with only one application, an entrepreneur can enjoy his exclusive rights in 125 world countries.

International trademark registration consists of several stages[9]. Firstly, the entrepreneur applies to register the “Basic Mark” to the National Intellectual Property Agency (COPAT). Only after that, the entrepreneur may apply for international registration through the National Registration Authority (COPAT). Thus, national registration is an essential condition for the international registration and protection of trademarks[10].

One of the advantages of trademark registration is Conventional Priority. According to the provisions of the Paris Convention, an entrepreneur who has filed a claim for registration in the country of origin (the country of primary registration) acquires a conventional priority when filing an application for registration in the member countries of the Convention within six months (the priority period) following the date of filing this document, i.e., gets an advantage over his competitors who applied for registration of the same trademark in a foreign country earlier than the entrepreneur.

033. ATTRACTING INVESTORS AND TRANSFORMING INTO FRANCHISING

We see that the trademark's value can be up to 80% of the total business value in the example of well-known trademarks. Thus, trademarks, having a substantial weight and robust protection in the market, seek to attract more investors and expand. To become such a trademark on the market and exercise exclusive rights, registration of a trademark is primarily a prerequisite.

The trademark owner may transfer his right to use the trademark to another person under the License Agreement and may partially or entirely transfer his rights related to the trademark under the Contract. An example of such a contract is a franchise agreement. The franchise agreement allows the entrepreneur to expand and enter foreign markets without direct participation. In addition, with this method, the entrepreneur's trademark can use more advantages over a certain period, becoming a well-known trademark. In any case, the transfer of trademark rights is possible only after its registration.

044. CONCLUSION

In conclusion, with the registration of trademarks, an entrepreneur receives both legal protections from unfair competition and violations of intellectual property rights in the market in which he works, and access to foreign markets, as well as the opportunity to attract more investors.

VLM and Partners LLC is one of the consulting companies with the broadest portfolio in trademark registration in Azerbaijan. You can also entrust us with the registration process to protect your intellectual property.

Author of the article: Sara Aghamaliyeva, Legal Associate. Author of the idea: Vugar Mammadov, Managing Partner. Editor: Selin Mammadova, Legal Associate.

05REFERENCES

• [1] Law of the Republic of Azerbaijan on Enforcement of the Intellectual Property Rights and Fight Against Piracy, article 1.0.11.
• [2] Law of the Republic of Azerbaijan on Unfair Competition, article 4.
• [3] Law of the Republic of Azerbaijan on Trademarks and Geographical Indications, article 32.
• [4] Law of the Republic of Azerbaijan on Enforcement of the Intellectual Property Rights and Fight Against Piracy, article 2.4.
• [5] Paris Convention for the Protection of Industrial Property, article 10ter.
• [6] The Code of Administrative Offences of the Republic of Azerbaijan, article 412.
• [7] Criminal Code of the Republic of Azerbaijan, article 197.
• [8] Law of the Republic of Azerbaijan on Trademarks and Geographical Indications, article 21.
• [9] https://www.wipo.int/madrid/en/how_madrid_works.html
• [10] Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks, article 2.