What are Common Law Trade Marks (or unregistered trademarks)?

Common law trademarks are unregistered trademarks protected under Australian Common Law principles. They are not registered but enjoy protection based on their use and goodwill.

In this article, Farrah Motley, an intellectual property lawyer, explains Common Law trade marks in Australia. As well as their differences from registered trade marks, how they arise, and their benefits and drawbacks.

What are Common Law trade marks?

Common Law trademarks are unregistered trade marks with the Australian Intellectual Property Office. Instead, they are protected under Common Law principles based on their actual use and the goodwill associated with them. Basically, Common Law trade marks are established and protected through use rather than registration.

Common law trademarks are different from registered trademarks

The main difference between common law trademarks and registered trademarks lies in their legal protection. You can read more about common mistakes in trade mark registration in another article we wrote.

Registered trademarks enjoy exclusive rights granted by law, which provide a stronger legal position and nationwide protection. On the other hand, are based on established use and reputation, and offer more limited protection within specific geographical areas or niche markets.

Examples of Common Law trade marks

How do common law trademarks arise?

Common law trademarks can arise through use in commerce

When you consistently and prominently use a particular mark in connection with your goods or services, and that trade mark is associated with the reputation and quality of your business, you may acquire common law trade mark rights in Australia. These rights are based on the concept of “first in use, first in right.”

According to this concept, you may be recognised as the owner of a common law trade mark if:

• you are the first person to use a trade mark for a particular good or service; and
• no one has already registered that trade mark with IP Australia for the same or similar goods.

However, determining who was the first to use a common law trade mark can be highly contentious.

Common law trademarks can be created even without registration

Common law trademarks can be established without formal registration. As long as a mark is used consistently and is known by consumers, it can acquire legal protection under common law principles. This gives owners some trademark rights even before formal registration, which can be time-consuming and costly. However, the registered trade mark owner has the exclusive right to use, licence and sell its trademark for the goods and services listed in the application.

Benefits of registered trademarks

Registered trademarks are:

1. relatively easy and cost-effective to take action against infringers who use the same or a similar trade mark for goods and/or services that are identical or similar to the goods or services for which the trade mark is registered;
2. easy to buy, sell, mortgage and licence; and
3. available on the public record for third parties to search the register so they can deter from adopting it or a similar sign
4. complete defence to any action brought by another trade mark owner for trade mark infringement.

Benefits and drawbacks of unregistered trademarks

Benefits of common law trademarks

Common law trademarks offer certain advantages. They are flexible and cost-effective. Let us find out more about them.

Flexibility

Registered trademarks are limited to the goods or services specified in the registration. However, common law trademarks, unlike registered trademarks, can cover a wider range of goods or services associated with your mark. Such flexibility allows you to adapt and expand your business without needing to update or change your trademark registration every time you introduce new offerings.

Common law trade marks also offer more freedom to design and choose your trade marks. They allow you to choose and establish a mark that suits your business needs, as long as it is distinctive and does not infringe the rights of others. However, registered trademarks are subject to strict examination and may be subject to restrictions due to conflicts with existing registrations.

Cost-effectiveness

Registering a trademark involves costs such as application fees, legal fees, and maintenance costs. In contrast, common law trademarks can be established without the costs associated with registration. If you are a small business owner with a limited budget, you can protect your brand and acquire trademark rights without the financial burden of registration.

Moreover, common law trademarks do not require periodic renewal or maintenance fees as registered trademarks do. Once established, the rights in a common law trademark can be maintained and enforced as long as the mark continues to be used in commerce and retains its distinctive character.

Drawbacks of common law trademarks

While common law trademarks offer flexibility and cost savings, they also have certain limitations. For example, limited protection and challenges in enforcement.

Limited Protection

Common law rights are usually limited to the geographical areas where you have used the mark and established a reputation. This means that your rights may only extend to regions or states where you have done business. As a result, your competitors may use similar marks in areas where you are not present, limiting your ability to prevent infringement.

Moreover, common law trademarks may have weaker deterrence effects compared to registered trade marks. The lack of a registration symbol (®) commonly associated with registered trade marks might make it more difficult to warn others about your protected rights. In addition, without the nationwide recognition that comes with registration, potential infringers might be less aware of your common law trademark rights, which could make them more likely to infringe.

Challenges in Enforcement

The enforceability of common law trademarks is more difficult than registered trademarks. Without registration, it becomes difficult to prove ownership and the extent of your rights. You will have to prove and document your prior use of the mark and its association with your goods or services. This burden of proof can make legal proceedings more complex and costly.

Moreover, unregistered trademarks face problems when enforced in different jurisdictions within Australia. If you have only established rights in a specific region, it may be more difficult to take action against infringers operating in other areas, especially if they have registered trademarks in those territories. This may limit your ability to take legal action against infringers outside your established territory.

Common law trademarks are also susceptible to conflicting claims, especially if several parties use similar marks in different geographic areas. These conflicts can lead to disputes, which requires significant resources to resolve.

Importance of monitoring and enforcing common law trademarks

Protecting Your Rights as a Trade Mark Owner

You can protect your brand and its goodwill by diligently monitoring and enforcing your common law trademarks. After all, any unauthorised use or infringement of your mark can dilute its distinctiveness, confuse consumers, and potentially harm your business. Through regular monitoring, you can identify infringements or unauthorised uses at an early stage and take appropriate action to protect your rights.

Maintaining Exclusive Use

If you do not take action against infringements of your Common Law mark, you may set a precedent that weakens your rights. This makes it even harder to prevent future infringements. Asserting and protecting your rights in the mark and preventing others from capitalising on your brand equity can maintain your exclusive right to use the mark in connection with your goods or services.

Preserving Brand Reputation

The reputation of your trade mark is based on the quality, reputation, and distinctiveness associated with your Common Law trademarks. If you allow unauthorised use or infringement, this can damage your brand’s reputation if substandard or misleading products or services are associated with your mark. Therefore, you must protect the integrity of your brand, consumer trust, and the value associated with your mark.

Mitigating Customer Confusion

Enforcing your Common Law trademarks reduces the risk of consumer confusion. If other businesses use marks similar to yours, consumers may be misled or uncertain about the origin of the goods or services they are buying. Monitoring and enforcement actions help maintain clarity in the market and protect consumers from misleading or deceptive practices.

Establishing Legal Precedent

Active monitoring and enforcement of common law marks help to set legal precedents. You create a record of protection for your mark and can strengthen your position in future disputes. These precedents contribute to a more stable legal environment, and provide guidance and clarity to both trademark owners and potential infringers. This way, you can clarify the rights associated with your trade mark.

Strengthening Position for Registration

Monitoring and enforcing your Common Law trademarks can also strengthen your position if you seek formal registration. Evidence of a history of use and enforcement can support your application by establishing the distinctiveness and recognition of your mark in the marketplace.

How to protect common law trademarks in Australia?

Common Law marks can be protected through legal action, primarily through the doctrines of passing off and trade practices law.

Passing off

Passing off is a Common Law doctrine that protects unregistered trademarks. It aims to prevent others from misrepresenting their goods or services as yours, causing confusion among consumers.

If you want to succeed with a passing off claim, you usually have to prove that:

1. your mark has acquired a significant reputation or goodwill in the marketplace as a result of your use.
2. the actions of another party, such as using a similar mark or engaging in deceptive practices, have caused or are likely to cause confusion among consumers.
3. You have suffered or are likely to suffer loss as a result of the misrepresentation.

Trade Practices law

As a common law trade mark owner, you may also be able to protect your rights by bringing an action for misleading or deceptive conduct. Under Australian Consumer Law, a person or business is not permitted to:

1. misleading or deceptive conduct; or
2. conduct likely to mislead or deceive consumers.

If someone misuses your common law trade mark and this causes confusion to consumers, you could bring an action under Australian Consumer Law. However, whether there is or is likely to be misrepresentation depends largely on the facts of your case.

For example, a person or business could mislead or deceive consumers by making them believe that your business has endorsed their goods or services. In any case, you should seek legal advice if you believe that a person or business has engaged in misleading or deceptive conduct.

Both passing off and trade practice actions require extensive evidence, including proof of reputation, consumer confusion and damage suffered. While these avenues can protect common law trademarks, they may not provide the same level of legal certainty and ease of enforcement as registered trademarks.

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