Step 2: Trademarks
A trademark is a symbol or mark for a product or service. It can for example consist of words, figures, letters, digits, personal names, slogans, sound or holograms. It can also be a specific formulation of the product itself or its packaging.
Think back to the last time you were shopping in a supermarket. When you opened the bags from the shop at home, what did they contain? The bags probably contained a lot of products with trademarks you were already aware of. Why did you choose those particular products? Was it chance or something else? Trademarks act as a symbol for many things. They give the message that the product has a unique origin, but trademarks also symbolise much more than that. For example, if the last time you thought that biscuits with a particular trademark were nice, you would probably expect them to taste just as nice next time too. The trademark then also symbolises a particular level of quality to you. There may be other positive expectations which lead you to choose a product with a particular trademark. That is the way that many consumers think.
From a company perspective, it is a very important factor that companies can acquire an exclusive right to use the trademark. If a company succeeds in persuading customers that products or services from the company’s trademarks will meet the customers’ expectations, the company can build up substantial values linked to the trademarks. Customers are often loyal towards trademarks which they like and they are also often prepared to pay quite a lot to purchase a product or service with a particular trademark which they have confidence in.
Awareness of who is behind a particular mark gives consumers confidence that goods and services will meet their expectations. If customers are not satisfied, they might choose a different trademark next time. This means that the holder of the trademark will probably work hard to ensure that customers are satisfied and return. Company which have built up a reputation for a trademark have particularly comprehensive exclusive rights. The holder has the right to stop any use of the trademark which means that others exploit the reputation that the trademark has come to have. Exclusive rights provide an incentive to make consumers satisfied.
Coca-Cola (in various designs) is amongst the elite of the world’s best known trademarks and many experts believe that the trademarks are amongst the most valuable. How much do you think the company which holds the trademark rights to Coca-Cola (including logotypes, etc.) would be worth compared with its current value if everyone was free to use the trademarks? Purely hypothetically, would you be as interested in buying a can of Coca-Cola today if very similar cans could be produced by anyone?
2.1 What can be protected by trademark law?
Among other things, the Trademark Act regulates trademarks and other trade symbols for goods and services. Names of companies are regulated by company name law. (See Chapter 6) Trademarks perform many functions, but they indicate to buyers that the product they are purchasing comes from the holder of the rights to the trademark.
A trademark always consists of characters which can be reproduced graphically. Trademarks are usually words, but they can also consist of names, figures, letters, digits, holograms, or the shape of a product, etc. However, they need not be reproducible graphically.
Trade symbols are a somewhat broader concept which in practice means virtually the same thing as a trademark.
2.2 What requirements apply in order for a trade symbol to be protected?
There are two ways of obtaining protection for trademark rights. Trademarks are protected if they are registered. Exclusive rights to trade symbols will be triggered if they are established. Holders of company names and other commercial marks (names of companies) also have exclusive rights as trade symbols. According to the equivalent principle, the holder of a trade symbol is protected as a trade name.
Regardless of whether registration or establishment is involved, the protection assumes that there is what is known as "distinctive character", which is a tricky term.
Both registration and establishment presuppose something called distinctive character. A trade symbol has distinctive character if it can distinguish goods or services which are sold by one commercial enterprise from those which are sold by another one. Distinctive character is one of the most difficult concepts within the whole of intellectual property law. The general rule is that a trade symbol with exclusive rights may not solely consist of a description of the type of product or service concerned. For example, no actor selling chairs could be granted exclusive rights to the word “CHAIR" itself. This is because all actors that sell chairs must be able to use the word “CHAIR”. Only a description of quality, quantity, intended use, value or geographic origin will also be considered to lack distinctive character. Reference is then made to generic or descriptive trade symbols which, according to the general rule, should therefore not result in exclusive rights.
Distinctive character can also be acquired through use so that a word is considered to act as a trade symbol. This can take place through use of the mark, so that the customer base comes to see the descriptive word as a trademark; it has acquired a “secondary meaning”. It is then a question of what is known as acquired distinctive character. However, small companies seeking to choose a suitable trademark often wisely avoid words which describe the type of product or service to be sold.
Protection for trade symbols can arise through establishment. In simple terms, establishment means that the mark is sufficiently well-known amongst the relevant public (the Trademark Act’s general term for the customer base or target group which the mark is aimed at), so that it works in the same way as a trade symbol.
The better known a trade symbol is, the stronger the protection will be. This also applies to registered trademarks. See more about this in section 2.6.
Trademarks are registered under different classes which indicate the types of goods or services which the protection concerns. See more about this in section 2.6.
The benefits of having a registered right instead of an established right often include greater respect for the registered symbol, the ® symbol can be used in marketing, the company will gain some protection from other parties registering marks where there is a risk of confusion and the holder does not have to prove establishment in the event of a dispute. The vast majority of the best known product symbols are also registered trademarks. The trademark can often be the holder’s most important and valuable asset and the registration fees are considered to be low.
For the holder of a mark, it is important to ensure that customers in particular understand that it is a mark. For example, if a word has previously been perceived as a description of a type of product, this can be changed quickly. The effect of a word being perceived as the description of the product type, rather than a symbol, is that the right no longer applies. This is called degeneration and is very bad for the holder of the product symbol. The right can thus cease to apply. Remarkably, this can even happen to holders of very strong product symbols. Examples include dynamite, linoleum and nylon, terms which can now be used freely by anyone. This is a particular risk for new product types where an accepted word has not been established for the product type. In such cases, the strongest product symbol could then easily be perceived as a description of the product type. One tip is to use the ® symbol for registered trademarks and TM (Trade Mark) if the company believes that it has an established right. It can also be a good idea to inflect the word linguistically. In addition, it is of course important not to disappoint customers, but this has more to do with the value of the trademark than the existence of the protection.
A trademark can for example also not be registered if it is in breach of the law, good practice or public order, or if it could mislead the public or if it is sufficiently similar to other protected intellectual property rights. (See section 2.6 for an assessment of confusion in trademark law.)
2.3 Who holds the trademark rights?
Trademark law does not assume that a natural person will be granted the rights. The normal arrangement is for companies to hold registered trademarks and established product symbols. Trademark rights can be sold or licensed.
2.4 How long do trademark rights apply for?
A registered trademark is valid for ten years, but the registration can be renewed indefinitely, provided that a fee is paid to PRV.
An established product symbol will be protected for as long as the establishment continues, i.e. for as long as the relevant public is aware of the mark.
2.5 What uses can the trademark holder prohibit?
The exclusive rights mean that the holder can prevent others from using the symbol as a symbol for their goods or services. In simple terms, ‘use’ means placing the symbol on goods or packaging or marketing goods and services using the symbol in various ways.
2.6 What protection do the rights provide against other similar marks?
The general rule is that the holder of the exclusive rights to a product symbol can prevent others from using identical or confusable symbols for similar goods or services. Sufficiently well-known signs are afforded stronger protection and can often prevent actors from using the symbol regardless of the type of product or service concerned. The prerequisite is that there is a risk that others might otherwise be able to exploit the reputation of the known symbol or damage the reputation.
Risk of confusion primarily concerns the mark itself (mark similarity) but confusability also concerns the type of product or service (product or service similarity). The general rule states that both mark similarity and product similarity are needed in order for there to be a risk of confusion. Section 2.2 notes that products and services are registered under different classes. These classes are used as an aid in deciding whether the products or services could lead to a risk of confusion.
Trade symbols which are known by a significant proportion of the relevant public (in simple terms, the target group) are afforded particularly strong protection. (These were formerly known as “reputable” symbols.) Examples include ADIDAS, MERCEDES, IKEA and VOLVO. For example, if someone were to sell yoghurt under the trademark VOLVO, it need not concern similar products or services. If the mark is identical or similar, infringement will be deemed to occur even if the other actor sells completely different types of products than the well-known product symbol. However, this presupposes that the other mark is exploiting the reputation of the well-known trademark or could damage the distinctive character or reputation of the mark, which is often the case.
2.7 What restrictions are there on the trademark rights?
A registered trademark can sometimes contain several parts which when combined are considered to have distinctive character (see section 2.2), even if certain parts are not individually considered to have such character. The parts that lack distinctive character will then also be free for others to use.
Another example of a restriction on the exclusive right is if a product has been sold under a trademark with the permission of the holder within the EEA, then this cannot prevent resale. The right is considered to be exhausted in respect of the examples that are sold; see more about the term ‘exhaustion’ in section 1.7.
2.8 Possible recourses in the event of trademark infringement?
In Chapter 5, you can read about the recourses which a right holder has open to them if someone else utilises their rights. The recourses are very similar within the various intellectual property laws. Regardless of whether the infringement concerns a protected trademark or other product symbol,, the infringement is called “trademark infringement”.
2.9 International trademark protection
Trademark rights are ultimately covered by national legislation. A trademark right which is based on a registration with PRV or establishment in Sweden therefore has no effect abroad. However, there are other was of obtaining trademark protection with effect in Sweden. Firstly, an application to register a EU trademark can be submitted in accordance with the EU Trademark Regulation. The trademark will be registered by the European Union Intellectual Property Office (EUIPO) in Alicante, Spain and affords protection throughout the entire EU. Secondly, registration can take place through the so-called Madrid Protocol. This is a collaboration between over 80 countries which is administered by the World Intellectual Property Organization (WIPO).
Although trademark rights are largely protected by national legislation, the national regulations of the EU countries have been harmonised through the implementation of EU legal instruments, particularly a Directive which dates from 1989.
Other international conventions which have resulted in the convergence of legislation internationally are the Paris Convention and the TRIPs agreement, which also cover trademark protection; see the introduction and section 1.9.