Unregistered marks offer rights, but proving them is rarely easy. Espie Angelica A. de Leon looks at the limits of unregistered trademarks and the steps businesses can take to better protect their brands. 
 

A Singapore-based company once tried to hijack another company’s name and brand. The latter was an ASX-listed company that operated in Singapore. However, its marks were not registered there. 

The Singaporean company filed a trademark registration application for a mark that was identical to the other’s. Both marks represented similar services. It also registered domain names similar to those of the ASX-listed company and reached out to the latter’s customers as well. It did not end there. The local firm also secretly acquired a separate trademark registration for another mark likewise owned by the other company.  

The aggrieved party opposed the pending trademark application at the Intellectual Property Office of Singapore on the grounds of passing off and bad faith. The opposition was upheld, and the registration was blocked. In addition, it filed a case in the High Court, obtained a summary judgment and injunctions to halt the defendant’s use of the mark. The company also filed a separate lawsuit involving the other mark, which was granted registration. 

“After the client prevailed in all proceedings, we assisted with post-judgment enforcement, including compelling a transfer of certain domain names to our client and forcing the defendant to change its company name,” related Natalie Huang, a local principal at Baker McKenzie Wong & Leow in Singapore. 

At the other end of the spectrum are smaller businesses, including startups. Though they may have limited resources and have other priorities, these small- and medium-sized enterprises (SMEs) shouldn’t overlook intellectual property protection. 

In the Philippines, around 99 percent of registered business owners are those of SMEs. “We did a survey of small- and medium-sized enterprises, and their priority and focus was generating sales, while protecting their brands was at the bottom of their list,” revealed Editha R. Hechanova, president and CEO of Hechanova & Co. and managing partner of Hechanova, Bugay, Vilchez & Andaya-Racadio in Manila. “They only realize its importance when others start copying their marks.” 

All this trouble just because of unregistered trademarks. “Time and costs had to be expended to undo such misconduct,” noted Huang.  

Unregistered trademarks are also called common law trademarks.  

However, the term “common law trademarks” is less common in some jurisdictions. “Most trademark practitioners would not be familiar with the term common law trademarks, and instead the term unregistered trademark is more commonly used,” said Hechanova. “This may be because the Philippines is essentially a civil law country.” 

The Philippine IP Code states that trademark ownership can only be acquired through valid registration. “But there were several decisions which made prior use of the mark prevail over the rights of the registered trademark owner, until the decision in Zuneca Pharmaceutical v. Natrapharm in 2020, which clearly ruled that trademark ownership is acquired only by registration, and allowed only the continuing use of a similar mark of a prior user in good faith,” said Hechanova.  

Natrapharm owns the registered trademark Zynapse, which is the name of a citicoline drug, while Zuneca owns the confusingly similar mark Zynaps, an anti-convulsant drug. The Supreme Court of the Philippines found Zuneca to be a prior user in good faith and therefore not liable for trademark infringement or damages. “The only restriction imposed by the Supreme Court is that Zuneca can only transfer ownership of the mark with the business involving the mark. Both parties were required by the Supreme Court to clearly distinguish their products on their packaging to avoid confusing the public, since the drugs have similar names,” Hechanova shared. 

Taiwan also operates under a civil law system. “Consequently, common law trademark rights do not exist here in the same way they do in jurisdictions like the UK or the U.S. Instead, we distinguish between registered trademarks and unregistered marks,” said Yi-Kai Chen, an attorney-at-law at Winkler Partners in Taipei. 

Enforcement challenges 

Though unregistered marks or common law trademarks have enforceable rights, non-registration comes with many challenges. 

One major challenge faced by unregistered mark owners is that they cannot initiate a criminal action or file a civil suit for trademark infringement and claim statutory remedies such as damages. Unregistered marks may only be protected via the tort of passing off and the protection of well-known trademarks.  

Passing off places a heavier evidentiary burden on the owner of the unregistered mark. According to Jyeshta Mahendran, a partner at Shearn Delamore & Co. in Kuala Lumpur, the tort of passing off requires three key elements: goodwill, misrepresentation, and damage.  

“Because common law trademarks usually are characterized by long and continuous use, they have earned goodwill, which is a property right enforceable in an action for unfair competition,” said Hechanova. 

“Goodwill must be established by showing substantive use of the trademark in relation to the relevant goods in Malaysia. Thus, extensive evidence of use for a substantial period in Malaysia is required to satisfy the element of goodwill. The need to produce such evidence can be a challenge to businesses, as they may not necessarily keep records of use of the unregistered trademarks,” Mahendran explained. 

Aside from goodwill, the mark owner must also show the existence of misrepresentation and damage or the likelihood of damage caused by misrepresentation. “In practice, that means gathering evidence of a brand’s recognition – sales figures, advertising, customer testimonials, etc. – and having to show actual or likely confusion in the public’s mind. This often involves an evidence-heavy, costly process involving consumer surveys and other proof of public recognition,” Huang said. 

If it is a well-known mark, it may also avail protection. “Where it can be proven that an unregistered trademark is well known in Malaysia, rights to such an unregistered trademark may also be enforced by way of Section 76 of the Trademarks Act 2019, which entitles the proprietor of a well-known trademark to restrain offending use by injunction,” said Elisia Engku Kangon, a senior associate at Shearn Delamore & Co. 

“The only exception that protects unregistered trademarks that are not well-known is a provision in the trademark act that prohibits the registration of a trademark that is identical or similar to another’s prior-used mark if such registration is sought with the intent to imitate,” Chen pointed out. 

In contrast, enforcement of rights attached to registered trademarks is generally more straightforward as the law presumes a proprietor’s ownership of the mark and its validity. There is also no need to prove goodwill and consumer confusion to the same extent as necessary as in the case of an unregistered trademark. 

Another challenge is the “localized fame” requirement. “Under the territoriality principle, fame established abroad does not automatically confer protection in Taiwan. The owner must prove the mark is well-known specifically among relevant businesses or consumers within Taiwan,” explained Chen. 

“Common law rights are geographically limited to where goodwill exists. If the owner does not have goodwill in respect of a certain segment of the public, a passing off claim might fail,” Huang added. “A registered mark, however, gives nationwide protection, even in areas or market segments where a proprietor has not yet built up a customer base or goodwill.” 

Such territoriality creates gaps in protection when the brand decides to penetrate new markets. “In India, courts and the Trade Marks Registry often place reliance on evidence of actual use within India, resulting in a stricter threshold for establishing transborder reputation, particularly where local sales or targeted activities are limited,” said Sonal Madan, a partner at Chadha & Chadha IP in New Delhi. 

Owners of unregistered marks or common law trademarks are also vulnerable to “bad faith” squatting. “While the trademark act allows for opposition or invalidation against a bad-faith registration by a prior user, proving bad faith for an unrelated squatter remains difficult,” said Chen, adding that Taiwanese law applies the first-to-file principle. 

Chen assisted a renowned international English educational publishing brand in enforcing its rights over an unregistered trademark in Taiwan. The publishing company previously had its trademark registered in Taiwan, but it expired decades ago. Unfortunately, a Taiwanese industry rival took advantage and misappropriated the mark via preemptive registrations. For more than 20 years, this competitor rode on the coattails of the English brand’s reputation. “The evidentiary threshold for protection of unregistered marks is high. Fortunately, we were able to unearth decades-old evidence to substantiate the brand owner’s fame and the registrant’s bad faith. This allowed us to cancel the squatter’s registrations that had been in place for over two decades,” shared Chen. 

The Philippines also applies the first-to-file rule. “So if someone else secures registration of a mark similar to the common law trademark, the owner of the common law trademark could face losses in terms of reduced revenues or limitation in market expansion, assuming that the goods or services are similar or related, and/or be faced with unnecessary and high litigation cost in either protecting or defending its brand,” said Hechanova. 

The risks of conflicting adoption, parallel honest use and competing claims to proprietorship also tend to increase since trademark rights do not surface in clearance searches or routine due diligence. 

Another challenge is the unregistered mark owner’s general inability to seek government assistance when trademark infringement or counterfeiting occurs, according to Huang. 

Enforcement for unregistered trademarks can also be especially difficult when it comes to ecommerce platforms. Some of these platforms have complaint systems which require the trademark registration certificate of the complainant before an infringement complaint can be filed. This is certainly a huge problem if the mark is unregistered. 

How to strengthen protection of unregistered marks 

How should the owner of an unregistered or common law trademark strengthen the protection of the mark? 

The obvious answer to this is to apply for trademark registration. “In short, registration turns a brand into a legally protected property right, making it easier to enforce and commercially exploit, and provides much stronger remedies against unauthorised use than relying on unregistered rights,” said Huang. 

Applying for registration takes time, though. In the meantime, there are other ways by which to strengthen protection. 

Perhaps, a default measure would be to build and document their business enterprise’s goodwill via continuous use and marketing. There must be comprehensive record-keeping of trademark usage. “Business should ensure that there is a proper system of storing relevant documentation and invoices, promotional materials, social media posts, press reports, consumers’ feedback or testimonials, awards and recognitions, as these are some of the examples of documents which would need to be adequately archived. Such measures would ensure that the trademark owner is well prepared with evidence when the need arises to establish the element of goodwill,” said Kangon. 

“It is also important to archive evidence showing the date of first use. Such evidence should be properly documented and dated,” Mahendran added. 

Other relevant records that need to be documented are those of sales turnover, advertising expenditure, market share data, customer lists and other similar business metrics. 

“Where reliance is placed on transborder reputation, proprietors should retain robust evidence of spillover reputation, including global advertising campaigns, website analytics and online accessibility metrics, a cross-border consumer base, participation in international trade fairs and recognition in international trade publications or rankings,” Madan added. 

They can make use of alternative IP assets. “Graphically designed logos or patterns within a trademark may be protected under Taiwan’s copyright act, which provides protection without registration. Furthermore, unique product configurations can be protected through design patents,” revealed Chen. 

They may secure related rights such as domain names to strengthen protection. 

Since unregistered trademarks are prone to bad-faith squatting, owners must also actively and regularly monitor trademark gazettes and publications so they can issue demand letters, lodge complaints, file oppositions, invalidations or passing off suits when necessary. 

Foreign brand owners must not only protect their own foreign marks in jurisdictions where they wish to expand and operate. They are also advised to protect localized Chinese marks as well. Chen explained: “Foreign brand owners often leverage local distributors or agents to market their products and services in Taiwan. To effectively resonate with Taiwanese consumers and enhance marketing impact, these local partners frequently adopt Chinese-equivalent trademarks that approximate the pronunciation or meaning of the original foreign marks. However, these Chinese marks are distinct from the original foreign trademarks. Furthermore, the actual user of these marks is the local partner rather than the foreign brand owner. Under these circumstances, it is difficult for foreign brand owners to assert rights over these valuable localized Chinese marks.” 

Registered trademarks and unregistered marks both offer enforceable rights, yet the gap between them are glaring.