Trademarks, why protect them?

“It is better to fail in originality, than to succeed in imitation.”
Herman Melville

Let us start off by defining what is understood by the word trademark and then move on to explaining the benefits attached to trademark protection.

A trademark is a word or sign which identifies the products or services of a certain company on the market, differentiating it from the products or services of other companies. It is a symbolic representation which may be composed of a symbol or a set of symbols that can be represented in graphic form. It is also an indicator of where the products or services originated and a reference for the qualities of the products or services to which it refers.

The trademark has three core functions. First and foremost, it has the differentiating function, that is to say, it allows the trademark to be differentiated from the trademarks of others, thereby individualising its products or services. Secondly, the trademark has a quality function, that is, the trademark conveys indirectly to the consumers trust in a given level of quality of the products or services which carry the trademark. Thirdly, the brand name has an advertising function, which is visible in the special magnetism that some brands exert over the consumer.

Although it is not compulsory to protect a trademark, this step is a safeguard for companies that intend to develop, operate or make their products and services known on the market.

There are countless advantages to protecting a trademark through registration, which will be discussed below in order to elucidate the reader, prospective businessperson or even consumer, as to the benefits of registering a trademark.

Registration confers an exclusive property right that will enable the holder to prevent third parties from using, producing, manufacturing, selling or marketing the protected symbol in economic terms without the consent of the holder, which is one of the main advantages in protecting the trademark and which is set out in the Industrial Property Code (DL 36/2003, of 5 March), particularly in Article 224 of the Code.

Portuguese law thus provides a registration system for creating or granting title to trademarks.

Another essential advantage to registering a brand name is a direct consequence of the above-mentioned advantage: it is the fact that registration prevents third parties from registering an identical or similar symbol for identical or manifestly similar products or services. Thus, the holder of a trademark is granted a right to oppose an application request for another trademark similar to that of the holder. This legal mechanism is set out in Article 258 of the Industrial Property Code.

Moreover, with the aim of dissuading potential infringements, the registration of a trademark allows its holder to add the mention that these are protected, using the expressions “registered trademark”, “TM” or ®.

Furthermore, the fact of obtaining protection through the registration of a trademark enables the holder to recoup the financial effort and investment in human and intellectual capital used in the design of new symbols.

Another one of the major advantages to registration is that it guarantees the possibility of transferring or granting operating licences to third parties, free of charge or otherwise.

It is, however, very important to be aware that the sole title to and use of trademarks is obtained only through registration and never simply by use on the market.

The right to a trademark in the Portuguese legal order is, consequently, a right arising out of the registration of a distinctive symbol and there is no exclusive right to a given symbol if it has not been registered.

Apart from the advantages to registering a trademark, these distinctive commercial marks enjoy additional protection with regard to unfair competition and, in order to be able to make an unfair competition claim, it is essential that the economic activities pursued by two or more businesspeople are identical or similar and that the acts can be classified as unfair, not with the objective of limiting or restricting competition but, on the contrary, with the justification that, otherwise, competition could not attain its goal, which is to enable the success of companies that the consumers deem more worthy of success. As a result, unfair competition can only exist when there is a certain proximity between the activities carried on by the economic agents in question, from the moment that the average consumer is unable to distinguish between these activities and cannot therefore exist when the conflicting companies are engaged in completely different industries.

In short, we could go so far as to say that industrial property corresponds to the need to order competition.

Corporate and Commercial Department