Trademark warning to small businesses

An expert in litigation has warned of the importance of carrying out research before launching a new product following a number of trademark disputes.

Stephen Crossley, solicitor in the Litigation team at Napthens solicitors, reveals that he has seen a recent trend of small businesses, particularly in the microbrewery sector, facing legal action for breach of trademark when launching new products.

This has happened when a company has launched a new product with the same or a similar name to one which already exists, but sold by a competitor.

Now Stephen is warning of the importance of understanding the law before launching such a product.

He cautioned companies to ‘do their homework’ when preparing to launch, and to seek legal advice at an early stage.

Stephen said: “This is a common mistake made, particularly by smaller companies which may not have the resources to carry out all the legal checks that are necessary.

“Before a product is ready to be brought to market, work should be done to understand whether other companies might be using the same or a similar name.

“Going to market without carrying out this research could lead to a business being in danger of committing trademark infringement and an offence known as passing off.

“Passing off means that a company has benefited from using another company’s goodwill to make profits for themselves.

The consequences of committing trademark infringement or passing off are severe as it gives the innocent party the right to claim damages, an account of profits, injunctive relief (including delivery up and or destruction of all infringing products) plus payment of the innocent party’s legal costs. Furthermore the development costs of creating the offending brand or product would be wasted. Businesses must seek legal advice at an early stage in the planning process to prevent such a costly scenario which could leave the offending company in both legal and financial trouble.”