From IP guru Duncan Bucknell:
Here are five reasons not to file a trade mark, in no particular order:
1 – your business is only ever going to be confined to a subset of a country (and not extend to the whole country);
2 – you can’t afford it just yet;
3 – you don’t actually care if people use your brand without your permission (there are business models where this makes sense);
4 – you have no real brand, you rely on a descriptive moniker which attracts volume based sales, not brand loyalty;
5 – the product or service is still confidential and you don’t want competitors to be able to get an insight into it by monitoring the trade mark databases.
I’ll go along with all of those reasons. My motivation for re-posting the list in the first place (I’m not sure what Duncan’s motivation was) is to show clients that not all IP lawyers are knee-jerk automatons when it comes to registrations, and to show lawyers that indeed there are situations where registration is unwarranted.
I’ve actually had quite a few clients over the years that fall into one of the categories set forth by Duncan. Example: one type of business very common to the China market is the trade/sourcing firm. These are often small outfits with a presence back in their home country and perhaps a small office here. The company assists home country enterprises in finding local manufacturers in China to produce both components/parts or finished products. The sourcing firm never ends up selling anything, and remains a service provider only that caters to a small group of clients, often generating new business through word-of-mouth.
Branding is often of little consequence to these guys, as you can see in some of their company names (e.g. Middle Kingdom Logistics, Dragon Sourcing Consultants — I just made those up, but you get the idea). Sometimes a trademark makes sense for these guys, but often it doesn’t, particularly since these guys usually need to keep costs at a bare minimum.
Not to name any names, but I have seen quite a few times in my practice how IP colleagues will see trademark registration as a necessary component to incorporation, particularly in China, even when this action is completely unnecessary. In other words, these attorneys will always advise clients to register their company names and/or product names.
Why is this advice given? Cynics will of course suggest that these guys are just trying to sell additional services for the extra fees. I’m not going to argue with that as I’ve known those types of lawyers in the past. Yes, it does happen.
To be fair, however, some of these “over filers” are probably just going through the motions without stopping to consider whether trademark registration is really going to benefit their client or not.
I would certainly advise China practitioners that, when in doubt, file the damn trademark — the cost/benefit analysis is a no brainer. However, if you can devote even a couple of minutes of time to thinking this through, you may find that the albeit small cost of registration may be needless spending. And if you can advise a client how to save some money, even if it’s only a few hundred dollars, they’re going to love you and give you more work in the future (i.e. if you are really trying to gouge your client for the cost of a trademark, not only are you being unethical, you are also extremely short-sighted when it comes to client management).