Understanding Trademarks for MSMEs

The Government of India has recently launched the Make in India drive, which will make it, even more, accommodating for providing reliefs to MSMEs. With that, it makes trademarks as the most important intellectual property asset for the Micro, Small and Medium Enterprises [MSMEs]. The enhanced important of trademarks in MSMEs is because of the extensive scope of branding. However, it is seen that the understanding amongst MSMEs regarding ‘brand’ and trademark as an asset is lacking. Moreover, over time, the link between a brand and a trademark has become more subjective. While most understand brand to be simply the names and logos, the scope of ‘branding’ is much more including image, character, identity, personality, essence, culture and reputation. A comprehensive understanding of branding amongst the MSMEs will allow their business to flourish with a cutting edge competition. In layman’s term, a trademark is only the registration of a brand name acquiring legal rights which will bar the use of same or similar brand from being registered. In the legal parlance, a trademark is to be seen as a ‘defence mechanism’, protecting businesses from loss of reputation by passing off under their brand name and creating goodwill amongst the customer base. On the other hand, it also empowers the customers to differentiate between two different MSMEs, in both B2B as well as B2C situations. Usually, MSMEs are customer-oriented, and thus it is a must for them to follow a pragmatic approach to trademarks. 

In India, given the lack of awareness about trademark and other IP rights, the MSMEs bring handy the common law of tort to confront the passing off under their brand name. Though this conventional method used in the courts is suitable for an ad hoc solution, it does not serve the purpose in long term planning. Moreover, trademarking in MSMEs is also a cost-saving measure when measured against the cost of a potential future infringement. It is usually an ‘affordable instrument of enforcement’ in the court of law. In the absence of a trademark for an MSME, they are forced to choose a more tedious enforcement process of approaching the court under common law tort of passing off. Instead, a trademark registration certificate will cut the process short, usually not contested by the infringer. The cost involved in the trademark registration in India for MSMEs is generally low given the government subsidies available. The idea is to promote the use of a trademark as a trade-able asset, like other assets of the MSME which can be sold, licensed or purchased. Given the globalisation of Indian markets paving the way for aggressive competition, enforcing trademarks is a handy tool for Indian MSMEs to stand a chance.