Why MSMEs in India Should Prioritise Trademark Registration
Introduction
Micro, Small and Medium Enterprises (MSMEs) have become very vibrant sources of growth in the currently competitive economic scenario in India. Such ventures are commonly based on the instrumental ideas and the brand value, which is localised. However, numerous people neglect to guard their brand identities, an oversight that might prove tantamount in the distant future. It is common to view trademark registration as a preserve of the big businesses, which is a misconception that should be changed. It is true that by failing to register trademarks, MSMEs are liable to lose and at the same time gain the most.
How is a trademark defined? A trademark can be used in any form of sign, words, symbols, names, logo or a combination to point and acknowledge the existence of the origin of goods or services[1]. In India, the Trade Marks Act, 1999, Section 2(zb) defines a trademark as a mark capable of being represented graphically, and capable of distinguishing the goods or services of one individual, association, or company, and those of another person or entity wherein the mark is represented graphically as part of the trademark[2]. Trademark registration grants the proprietor exclusive rights against the trademark, together with legal remedies in case of infringement.
Most of the MSMEs continue to do business without registering their trademarks, nonetheless. This ignorance is due to several vices: believing that their businesses are too small, or having a company name or domain name registered. In practice, incorporation and the purchase of a domain do not confer ownership in a trademark and any conflict that arises that an unregistered business will potentially have a weak legal claim[3].
Understanding MSMEs: The Backbone of the Indian Economy
The MSME segment in India indicates a number of more than 63 million enterprises with a contribution of almost 30 per cent of the country’s GDP, almost 45 per cent of manufacturing production and 40 per cent of exports[4]. These businesses are not mere numbers; they are dreams, thoughts, and innovations by millions of business people both in the towns and in the countryside in India.
Nonetheless, such enterprises can start small, with low funds, small workforces, and local markets. MSMEs engage in extensive activities in marketing, packaging, trade names, and unique product designs as they scale up. Sadly, some of them do without legally securing their brand names.
What is Trademark and Why it matters?
The purpose of a trademark is to help customers identify the source of a good or service. It can take the form of a word, name, logo, label, color combination, shape, or even sound.
A trademark marks the identity of one entity from another. A trademark creates credibility, trust, and emotional bonding among consumers.
By legal definition, the registered trademark grants, along with its proprietor, the exclusive right to use the mark for goods or services for which it is registered under the Trade Marks Act, 1999. It also enables them to stop others from using deceptively similar mark during the commerce process.
Trademarks: The Legal and Strategic Edge
After a trademark is registered, it becomes a type of intellectual property capable of ownership, licensing or sale, or otherwise monetising the property. been registered, a trademark constitutes property in its own right which can be licensed, owned, sold and monetised. This is especially crucial to MSMEs in a case where the business seeks to grow by franchising or regional licensing. In provisions contained in Section 28 of the Trade Marks Act, a registered trademark accords the owner exclusive rights to use the mark concerning the goods or services to which the trademark is registered, as well as the pursuit of remedy in the form of law in the event of infringement of the right of the mark[5].
The unregistered mark only suffers protection under actions known as passing off, a common law that imposes the burden on the owner to prove the prolonged existence of goodwill, deception and injury. This makes the case of a high burden of proof on the plaintiff as opposed to statutory rights under the registered trademark owners[6].
Additionally, trademarks present psychological value to the customers. The closely identifiable brand sign is frequently used as a slang to quality, dependability and consumer confidence. In very competitive industries such as textiles, agro-products and food processing, customer loyalty may depend on brand differentiation. According to Keller (2013), good brand equity may result in a higher market share, good pricing and retention of customers[7].
Real Risks of Non-Registration
Lack of trademark protection can be quite devastating. Consider a case scenario of a spice company whereby every decade the company could create its own customer base until the company learnt that one of its competitors was also selling the same brand along with it in Delhi. The company in Maharashtra had never registered the mark, and therefore, never existed any statutory right. Further, the company had to rely on a long and expensive passing-off action, which is not always likely to result in an injunction or damages[8].
Quite the contrary, those businesses that manage to register the trademark protection at the initial stage have great benefits. A landmark detail on this was a case of South India Beverages Pvt. Ltd. v. General Mills Marketing Inc., the Delhi High Court decided in support of the holder of a registered trademark, wherein it is explained that the burden of proof rests with the infringer as a result of registration of the named trademark.[9]
This is in contrast with many MSMEs across India who have lost their market identity in the face of similar-sounding brands that beat them to the adjoining markets or online. The consequences of these cases are either extended infringement suits or a complete change in name, which costs MSMEs not only their funds but also their goodwill.
The Case of Nirma: Brand Built on Trademark Strategy
Nirma is one of the most famous MSME success stories of India, and it began as a small detergent company in Gujarat. Naming its own product, giving it a unique name and packaging and above all registering trademarks to them allowed Nirma to enter the market in the 1980s and compete with major products such as Surf in the market in the 1980s[10]. Without legal protection of its brand, Nirma could not have enjoyed this success story. The brand was scalable and defensible because of trademark protection.
Trademark Registration as a Business Asset
Registration of a trademark cannot be regarded solely as a defensive legal tool, but it is a business strategy. A registered trademark is a valuable asset that may be secured or used as collateral, licensed to earn royalties, or it may be considered in mergers and acquisitions. It also sends an affirmative message to investors as they perceive ownership of IP as an indicator of maturity of the business and risk control[11].
Due to the digital economy, the visibility of a brand travels at a faster pace than before. This exposes MSMEs to counterfeiting, domain squatting and social media impersonation.
Trademark certificates are a must for any kind of verification of sellers or brand registrations on major e-commerce sites like Amazon or Flipkart. In that way, an unregistered MSME could have no access to full online marketplaces-which places them in a significant competitive disadvantage.[12]
Registration of trademarks also enjoys international benefits. In fact, with the establishment of the Madrid Protocol, a registered trademark in India carries with it the option of having the trademark protected through over 120 possible member states through a single application.[13] This is crucial to export-based MSMEs or the ones entering a foreign competition because their Indian brand name is not stolen abroad.
Legal Procedure: Simplified for MSMEs
The complexity of the law is one of the key factors that makes MSMEs shy away during registration. Nonetheless, it has been made extremely simplified and cost-effective, particularly following the introduction of the Trade Marks Rules, 2017. The registration cost per class is concessional at 4,500 Rupees (in case of e-filing), and one can do it online using the IP India portal[14].
These procedures would involve carrying out a pre-search, making an application form TM-A, and a response to the examination report received by the registry. In case the application is proposed, it is published in the Trade Marks Journal to receive four months of opposition. Without any legitimate objection, the mark will then be registered, and it will attain a validity of a ten-year time period renewable at any time under Section 25 of the Act[15].
In addition to helping the MSMEs, the Indian government has established IPR Facilitation Centres, a cost reimbursement scheme and organises frequent training and sensitisation workshops that are conducted through the MSME Development Institutes and the Champions Portal. The objectives of these initiatives are to provide the MSMEs with information and tools to be able to manage their IP assets well.[16]
Conclusion: A Mark of Survival and Success
There is a certain stage in the lifecycle of any enterprise when the attitude towards the brand of a customer exceeds the attitude towards the quality of the product. The story, the trust, and the expectation all belong to the brand. The time has arrived unexpectedly for the MSMEs in India as more and more competition is coming up, exposure online and the increased awareness of consumers.
Such a procedure as registering a trademark is not only an easy process, but a badge of good reputation, safety and professionalism. In the case of MSMEs, it makes sure that the results of their sweat and energy, that is, a distinctive logo, name, or tagline, can be secured by the law and hence, are not exploited or stolen. With ideas being easily copied out there, ownership should be publicly declared.
The legal and policy framework has changed in India to a much more accessible environment for registering trademarks. Driven by few costs, streamlined online procedures, and tax breaks by the government, there is nothing to stop MSMEs from moving with speed and purpose. It is not just a brand, it is the stamp of your business that will be carved in a legal document.
Author:– Bhavika Khetrapal, in case of any queries please contact/write back to us at support@ipandlegalfilings.com or IP & Legal Filing.
References
Primary Sources
- The Trade Marks Act, 1999
- Trade Marks Rules, 2017
- South India Beverages Pvt. Ltd. v. General Mills Marketing Inc., 2015 SCC OnLine Del 9140
- Ministry of MSME, Government of India. (2023). Annual Report 2022–23
https://msme.gov.in - WIPO Madrid System – Madrid Protocol for the International Registration of Marks
https://www.wipo.int/madrid - Press Information Bureau (PIB) – Government Schemes for MSMEs on IPR
https://pib.gov.in
Secondary Sources (Books, Articles, Journals, Websites)
- Keller, Kevin Lane (2013). Strategic Brand Management (4th ed.). Pearson Education.
- Bhattacharya, Anurag (2011). Branding Stories of Indian Brands. HarperCollins.
- Singh, Anupam (2021). Misconceptions About Trademarks Among Indian MSMEs.
Journal of Business Law, Vol. 19, Issue 3. - World Intellectual Property Organization (WIPO). (2023). IP and Business Growth Toolkit.
https://www.wipo.int/publications/en - IndiaFilings Knowledge Center. (2022). Trademark Registration for MSMEs in India.
https://www.indiafilings.com - LegalServiceIndia.com – Trademark Protection in India: A Strategic Tool for MSMEs
https://www.legalserviceindia.com
[1] WIPO. (2022). What is a Trademark? Retrieved from https://www.wipo.int/trademarks
[2] The Trade Marks Act, 1999, § 2(zb).
[3] Singh, A. (2021). IPR for Startups and MSMEs in India. Journal of Business Law, Vol. 5, Issue 3.
[4] Ministry of MSME, Government of India. (2023). Annual Report 2022–23.
[5] The Trade Marks Act, 1999, § 28.
[6] K.R. Chinna Krishna Chettiar v. Sri Ambal & Co., AIR 1970 SC 146.
[7] Keller, K. L. (2013). Strategic Brand Management (4th ed.). Pearson.
[8] Desai, R. (2018). Brand Battles in Small Business. Indian Journal of IP Law, Vol. 2.
[9] South India Beverages Pvt. Ltd. v. General Mills Marketing Inc., 2015 SCC OnLine Del 9140.
[10] Bhattacharya, A. (2011). Branding Stories of Indian Brands. HarperCollins.
[11] WIPO. (2023). Intellectual Property and Business Growth. https://www.wipo.int
[12] Amazon Brand Registry India. (2024). Seller Requirements. https://brandservices.amazon.in
[13] Madrid Protocol. (2023). How to Register International Trademarks. WIPO.
[14] Trade Marks Rules, 2017, Rule 11.
[15] The Trade Marks Act, 1999, § 25.
[16] Press Information Bureau (PIB). (2022). IP Facilitation Support to MSMEs. Retrieved from https://pib.gov.in/.
