Imagine spending years building a successful brand, only to discover that someone else has already registered the same or a similar trademark.

You may have invested heavily in your products, advertising, social media presence and customer relationships. Your customers recognise your brand, and your business has built up significant goodwill. However, when you finally decide to register the brand as a trademark, you discover that a third party has registered it first.

In a more serious situation, you may even receive a letter demanding that you stop using the brand because the third party has obtained trademark registration. The letter may also include a demand for monetary compensation.

“Trademark squatting” is commonly used to describe a situation where a person registers a trademark associated with another business or brand, usually without any genuine intention to use the mark.

The squatter may then attempt to use the registration to prevent the genuine brand owner from using or registering the trademark. In some cases, the squatter may also try to negotiate payment in exchange for transferring the trademark back to the genuine owner.

How Trademark Squatting Happens

Trademark squatting can happen in several ways.

A common mistake is to focus on building the business first and leave trademark registration for later.

For example, a business may launch a brand, spend years promoting it and eventually develop a strong customer base. Once the brand becomes successful, a third party may notice its commercial value and file an application for the same or a similar trademark.

The business owner may then find that registering the trademark is no longer straightforward. The owner may have to spend considerable time and money dealing with the third party’s application or registration.

What may initially appear to be a small saving can eventually result in much greater costs involving opposition proceedings, legal advice, evidence gathering, negotiations or court proceedings.

Consider Current and Future Goods and Services

Trademark protection is generally obtained in relation to specified goods and services.

For example, a business may initially register its brand for clothing because that is its main business. Several years later, it may expand into bags, cosmetics or retail services.

If a third party has already registered the same or a similar trademark for those additional goods or services, the business may encounter difficulties when trying to expand its trademark protection or commercial activities.

This is why trademark protection should take into account not only what your business does today, but also where the business may expand in the future.

Why Early Protection Matters

Recovering or defending a trademark after someone else has registered it can be far more expensive than protecting the trademark from the beginning.

A real-world example can be seen in Power Root Bhd’s “Ah Huat” brand, which became involved in a long-running trademark dispute in Indonesia. Power Root ultimately reached a settlement under which the relevant trademark was transferred back to the company, with the overall consideration reported at approximately RM1.27 million.

Legal Options in Malaysia

The appropriate course of action depends on the status of the trademark application or registration.

Once a trademark application has been accepted and published, there is an opportunity to oppose the application during the publication period.

In Malaysia, the opposition period is generally two months from the date of publication of the acceptance, subject to an extension of up to a further two months.

If the third party defends the opposition, the proceedings may become lengthy and may potentially take two to three years or more, depending on the circumstances of the case. The process may involve the filing of pleadings, evidence, written submissions and other procedural steps.

If the trademark has already been registered, the registration may, depending on the circumstances, be challenged by filing invalidation and/or cancellation proceedings in the High Court.

While there are legal options to deal with trademark squatting, these options are generally more complicated, time-consuming and costly than preventing the problem at the outset.

File Your Trademark Early

Do not wait until your business becomes successful before protecting your brand.

A trademark application can generally be filed even where the trademark has not yet been used.

Businesses should consider filing their key brand names and logos at an early stage, particularly before a product launch, marketing campaign or expansion into new markets.

Conduct a Trademark Search Before Launch

Before committing substantial resources to a new brand, it is sensible to conduct a trademark search.

A search may identify identical or similar marks that could create problems for registration or future commercial use.

Identifying a potential conflict early can be much easier and less expensive than discovering the problem only after the brand has been launched and substantial resources have already been invested.

Monitor New Trademark Applications

Registering your trademark is not the end of the process.

Businesses should also consider monitoring newly published trademark applications for identical or confusingly similar marks.

Early detection gives the trademark owner an opportunity to consider whether an opposition should be filed within the applicable period.

Keep Evidence of Trademark Use

Businesses should keep proper records showing how and when their trademarks have been used.

These records may include:

• invoices and sales records;
• product packaging and labels;
• advertising materials;
• website and social media records;
• promotional materials;
• photographs of products and premises; and
• business documents bearing the trademark.

Such records may become important if a dispute arises, particularly when establishing who was the first user of the mark, as well as the history and extent of use of the trademark.

Plan International Protection Early

Trademark registration is territorial. A trademark registered in Malaysia does not automatically provide protection in other countries.

If your business plans to expand overseas, it is important to consider trademark protection in the relevant markets at an early stage. Otherwise, a third party in another country may register the brand before you do, potentially creating problems when you eventually enter that market.

Final Thoughts

For many businesses, a trademark is one of their most valuable intangible assets. It represents the goodwill, reputation, customer loyalty and brand recognition built through years of investment and hard work.

Yet the cost of securing trademark protection at an early stage can be relatively small compared with the potential cost of dealing with a dispute after a third party has already filed or registered the mark.

Do not wait until someone else claims your trademark before taking action.

Registering and monitoring your trademark early can provide greater certainty, reduce the risk of costly disputes and help protect the commercial value you have worked hard to build.

Prepared by Lau Jian Quan & Jacky

This article is intended for general information only and does not constitute legal advice. It should not be relied upon as a substitute for specific legal advice based on the facts and circumstances of any particular matter. Legal advice should be sought before taking, or refraining from taking, any action in reliance on the contents of this article.

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