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Trademark practice - Company Sizes and Their Corresponding Trademark Registration Strategies

Panfeng Wang | Oct 27 2021

A trademark is defined as a distinct symbol that clarifies the origin of goods or services. Trademarks provide legal protection for a company’s brand while also playing a critical role in the company’s development.
Trademarks differentiate the goods or services of one company from those of its competitors. When purchasing products, consumers will recognize the trademark and thus identify the company providing said products. Over time, consumers may begin to view recognizable trademarks as symbols for good quality or other positive traits. In this way, the influence of a trademark may lead to increased trust and reliance among consumers, contributing to the development of company.

We suggest that companies at different stages of development implement different strategies for trademark registration and protection. Based on years of experience in this field, I have summarized a few effective trademark protection strategies below; they are tailored for enterprises of various sizes and are accompanied with specific case studies.

1. Small Company

Even at an early stage of development, companies should consider filing trademark applications that span multiple classes and a large variety of goods and services. In addition to classes that contain essential products offered by the company, it is suggested to include classes that could be of potential interest in the future.

For example, a new cosmetics company filing a trademark application in Class 3 (cosmetics) should also file in Class 21 (makeup tools) and Class 44 (beauty service). A young battery company may consider including Class 7 to cover "machinery for making batteries" and Class 37 for "charging service", in addition to Class 9 for “battery”.

This strategy not only helps to avoid trademark squatting by upstream or downstream enterprises, but also conserves trademark resources when pursuing business expansion later. Indeed, it provides more flexibility if the company moves certain goods or services from one class to another in the future.

Case 1

Company A is famous for its rich and creamy yogurt. However, this company only registered one trademark in Class 29 for “yogurt”. Its competitor soon filed a trademark application as the same brand, in Class 11, for "yogurt making machine" (which is not considered similar to “yogurt” by Chinese standards). The competitor then launched their yogurt making machine on the market, under the same brand. The competing company made massive profits from the product, only because consumers had mistaken it for an official product of Company A. If the yogurt machine had been of poor quality, it would certainly have damaged the reputation of Company A’s brand and products.

Case 2

Company B is a manufacturer of protective sports equipment, including helmets and goggles. Although Company B also produced some biker clothing, it did not file any trademarks in Class 25 for "clothing" because of the small amount of sales. This later proved to be a bad decision when the sales of Company B’s biker clothing sharply increased. When the company attempted to register a trademark in Class 25, they found that the trademark had already been squatted by another company. We quickly filed an opposition to the trademark and have tried very hard to negotiate a purchase agreement with the other party; unfortunately, both approaches have not been successful. The lesson to be learned from this case study is that it is always better to prevent problems before they happen, rather than to remedy them afterward.

2. Medium-Sized Company

Some small companies develop into medium-sized companies after years of consistent business expansion. Their brands have gradually become recognized by consumers, steadily growing their influence.

Rather than filing trademark applications in multiple classes, medium-sized companies should instead focus on pursuing trademark protection in all classes. This strategy not only stops brand dilution, but also facilitates the expansion of their commercial footprint.

Case 3

"Great Wall" (“长城”) is a very popular trademark in China. Variants of it exist in nearly every trademark class, including "Great Wall Broadband", "Great Wall Securities", "Great Wall Wine", "Great Wall Lubricants", and even "Great Wall Automobile". All of these are well-known trademarks, but they each belong to different companies. It is believed that the “Great Wall” trademark was first used by Great Wall Motor Company Limited, a Chinese company established in 1984. Had this company registered the trademark in all 45 trademark classes earlier, other “Great Wall” brands would not exist today. Trademarks such as "Great Wall Wine” registered in 1988 and "Great Wall Securities" registered in 1995 would therefore be prevented from diluting the "Great Wall" brand and causing confusion among customers for decades to come.

Case 4

BYD Company Limited (BYD Company) is a well-known Chinese carmaker; however, it registered its trademark "BYD" in all 45 trademark classes when the brand was first established in 2003. At the beginning of the COVID-19 outbreak in 2020, the BYD Company began manufacturing masks and generated over 1.31 billion dollars in revenue within the first half of 2020 alone; this sum accounted for more than a third of its main business revenues. This move not only helped in fighting the pandemic, but also achieved both fame and fortune for the BYD Company.

3. Large Company

As a company grows larger and manufactures a greater variety of products, a single-core trademark will no longer satisfy the brand positioning of its products. Big companies should begin developing brand architectures to sell different products or offer different services based on their features, grades, types, and consumer groups.

Case 5

P&G is the world's largest daily consumer goods company and has well established brand architectures.

Regarding the different features of its products, P&G owns the "Rejoice" brand for soft hair shampoo, “Pantene” for healthy and shinning hair shampoo, “Clairol” for natural-looking hair shampoo, and "VS Sassoon" for moisturizing shampoo. Regarding the grades of its products, the company has the brand "OLAY" for mid-range skincare products and brand "SK-II" for high-end skincare products. With respect to the types of its products, it has the manual razor brand "Gillette" and electric shaver brand "Braun". In relation to its consumer groups, P&G has the feminine health care brand "Whisper" and infant health care brand "Pampers". Many other examples could be listed here, and it is evident that these sub-brands establish a closer link between brands and products to better guide consumers.

Conclusion

In summary, a trademark portfolio acts as a bridge between companies and consumers. It should grow along with, or even ahead of, the growth of company.

For better development and influence, companies should prematurely register for trademarks in relevant trademark classes, or even in all trademark classes. Furthermore, a company should also consider registering trademarks for sub-brands, effectively plugging any potential loopholes.

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