The Professional Indemnity element of your DIA membership is a valuable benefit and can offer crucial support when third parties bring claims against trainers for negligent instruction mis-advice, data breaches etc. But did you know it can also help protect your brand?
It’s surprising how many cases we see each year of members being accused of trademark infringement, or passing off as another brand. The law of passing off prevents one trader from misrepresenting goods or services as being the goods and services of another, and also prevents a trader from holding out his or her goods or services as having some association or connection with another when this is not true.
It can come as a shock to a trainer, simply going about their business as a small training company, to suddenly find themselves on the end of legal letters claiming they have infringed the trademark of a much larger brand who have the funds to launch such actions and pay lawyers to chase down ‘culprits’. Indeed this has become a specialism for some legal firms who actively search out what they believe are infringements, contact the larger brand who they believe has been affected and offer to chase the offending party down.
What’s in a name?
One such case is that of an ADI in the North East who found themselves at the end of intimidating letters from the lawyers of a well known motor insurer. The letters claimed that the trainer’s company name was too close to their own well-known brand, and as the trainer’s website also gave advice on obtaining insurance, they were passing off as that brand. Note: the ADI was not selling insurance, nor offering any products or links to products, they were simply offering their young drivers advice on motor insurance.
The insurer’s lawyers warned that if the ADI did not change the brand name and surrender their website domain, costly legal action would be taken, resulting in the ADI being forcibly made to change the brand and take down their website.
Clearly, these were very worrying letters for the ADI. They contacted us for advice, though this was after they had already incurred expenses from a lawyer as they had not realised the DIA PI cover assisted with such claims. It’s important to note that if you receive a claim against you by any third party in reference to your professional role, always contact us first for advice and to see whether legal representation can be made under the policy.
Luckily in this case we were able to resolve this with our PI insurer and the ADI was reimbursed for the expenses they had incurred and their lawyers were added to the panel of solicitors used by our insurer for the continuation of the case. However, that will not always be the case as it is clear in the PI policy that the insurer will not normally reimburse members for legal expenses incurred before consulting them and making a claim.
In the meantime, as the legal team put together their official response, DIA wrote to the brand in question, in the spirit of mediation, to query what registered trademarks they had in place. We did a trademark search and found they only had one trademark in place for a brand name different to the ADI’s by one letter. We also asked what evidence they had to substantiate the claim that the ADI was making an attempt to pass off as their brand in terms of the sale of insurance products. We also advised that, as a brand marketing young driver insurance products, the claimant would be wise not to chase down key influencers for their target customer and cause themselves reputational damage.
These attempts at mediation were immediately rebuffed in a particularly obnoxious and misjudged email from the insurer in question so we left it to our insurer’s legal team to do their job. Unsurprisingly, once the claimant realised the ADI had PI insurance in place, and that they were unable to provide any substantiation to their claims, they backed down – but not without the cost of considerable stress to our member. The member estimated that if they had had to give up their brand and domain, purchase a new domain, build a new brand, website and other marketing materials, plus have to build brand reputation again, it would have cost them thousands.
And sometimes it does cost thousands if the member, unlike the case above, has indeed unwittingly (or wittingly) infringed a trademark or is found to be passing off as another brand.
Brand protection is an important consideration for any business – big or small. A small investment in protecting your brand, alongside the comfort of knowing the PI element within your DIA membership can assist if you receive any such claims against you, is a sensible move for any professional training business which values its brand.
Philip Partington, intellectual property partner at JMW Solicitors, gives us his expert advice on brand protection.
Is your business’s brand protected?
The term Intellectual Property sounds complicated, and without a specialist legal advisor it can be!
Intellectual Property is the general name given to the law covering areas of various intangible rights, including trademark rights and protection to stop others from passing off their business as yours.
For some businesses the brand is why a business gets repeat custom. The brand becomes synonymous with the quality it represents. As such, these assets can have significant commercial value to your business.
However these assets are regularly overlooked and misunderstood in business. Companies often fail to appreciate the importance of registering their brands as trademarks.
As experienced intellectual property advisors, we help businesses identify these valuable assets and, where possible, register them to give your business the strongest protection. We also help businesses ensure that your employees don’t take them from under your nose and your competitors don’t use them without permission or payment.
What happens if I haven’t registered my trademark and someone steals my brand name?
Picture this. You are a driving instructor and you have not yet registered your brand as a trademark. Another business in your neighbouring town uses the same or a very similar name as your brand. What can you do?
All is not lost. You can contact us and we will assess your case under the law of ‘passing off’. In order to be successful, you will need to prove the following:
- You have goodwill (ie a reputation) in your brand. We can show this through your years of sales and promotions
- The other side has made a misrepresentation to the public that they are in some way connected with your business
- Your business has suffered damage.
Obviously, preparing all that evidence can be costly and it would be far easier and cheaper to bring an action in those circumstances if you had already registered your brand as a trademark. However, our legal team has a significant amount of experience in preparing for cases such as this.
In our experience, we are often asked how different a new brand needs to be to get around infringing an old brand. Sadly, there are no instant answers to this question, everything depends on the circumstances. However, in these sorts of cases, the golden rule is don’t confuse the public. If the public is confused and sales are being lost because of it, then you can expect the rights owner to be on your back.
What are the benefits of having a registered trademark?
When registering your brand as a trademark, it is vital that you obtain professional advice. We often come across businesses that have done some research online and feel confident to file a trademark with the UK Intellectual Property Office. They then come to us when someone has infringed that trademark and we have to tell them the bad news; their self-filed registration is close to useless. After all, we are sure that you wouldn’t advise your customers to have their granddad teach them to drive!
Before you register a trademark it is very important to have a professional clearance search completed. A professional clearance search will look at the landscape around the proposed trademark and identify risks before your trademark is filed. As such, your mark and your specification can be carefully crafted so as to afford you the best protection and avoid stepping on anyone else’s toes! Also, once the mark is filed, if it is rejected then you will lose the official filing fees you’ve paid.
We often come across businesses trying to register their descriptive brand as a trademark. However, trademarks can’t usually be registered for descriptive brands. So, for example, if your business is offering driving tuition services, you won’t ordinarily be able to register DRIVING TUITION as a trademark.
However good professional advice can often overcome these issues and it is always worthwhile to think laterally and ask a professional to ensure your mark is registered.
Once you have registered your brand as a trademark, you will have a valuable asset. If your driving school wants to take things to the next level and franchise your brand to other instructors, so they essentially pay to use your brand, it is vital that you seek professional assistance. For instance, if you licence out your trademark then you should have a formal licence in place. In the absence of a licence it can be difficult to enforce your rights.
How to stop others infringing your registered trademark
Trademark infringement can arise when another business uses the same, or a similar, brand for the same or similar services. In order to bring an action for trademark infringement you need to have first obtained a registered trademark. If you have a registered trademark, then you should be able to stop others using:
- An identical brand for identical services and/or
- A similar brand for similar services, but you will need to show there is a likelihood of confusion or association and/or
- If your trademark is well-known, an identical or similar brand which is taking unfair advantage of your mark.
Trademark infringement is not always black and white. Indeed, one of the main reasons why allegations of trademark infringement fail is because the business that appears to be infringing a mark has actually been using the mark for some considerable time – and possibly even before a trademark was registered!
A word of warning, if you suspect someone is using your trademark without your permission then telling them, or worse, their customers, that you think your rights are being infringed can land you in hot water. Indeed, the Trademark Act 1994 contains provisions that do not allow you to go around making so-called unjustified threats to all and sundry. In making threats you could find yourself facing an injunction to stop your activities.
This can often lead to expensive cost awards being made against you. As such, it is important that you seek professional advice when you think that your trademark is being infringed.
What happens if I receive a letter alleging that I am infringing another business’s trademark?
Firstly, don’t panic!
It is vital that you seek legal advice well in advance of any deadline. If you ignore it, it could mean that you are required to pay the other side significant sums of money in relation to legal costs.
The second point to know is that just because another company is making allegations of trademark infringement it doesn’t mean they are right! There are a multitude of potential ways to argue that they are wrong. For example:
- They may not have a trademark at all, because it has expired
- They could claim your brand is ‘similar’ to their trademark, when, upon a ‘global appreciation’ (which is the relevant legal test), it is not
- They could claim your services are ‘similar’ to those specified in their trademark, when, upon a ‘global appreciation’, they are not;
- You may benefit from one of the ‘defences’ to trademark infringement. For instance:
- You are only using your own name
- Your brand is merely describing your services
- You have been using your brand in your local area for years and before they ever did
For DIA members who have the benefit of professional indemnity insurance, the legal fees for defending threats of intellectual property infringement are often covered under your policy.
Your brand is how you are known to your customers, so it is vital that you take care of it, through seeking specialist assistance to properly register it.
Once your key brand is registered, you can start to make money from it by franchising it out to other driving instructors. This could then become a great income stream that requires no or very limited active management on your part. However, you do need to have a formal agreement in place, or they could drive off with your business!
You should always be on the lookout for others trying to pass themselves off as being connected with your business, or just blatantly infringing your trademark. If you fail to take action, it could be too late as you may be out of business. There have been many instances where successful businesses have floundered because someone else was piggy-backing off the goodwill of their brand name and action wasn’t taken soon enough.
If you have received a claim from a third party, contact DIA and we will refer you to our PI insurer to assess the claim.
If you are concerned about a possible infringement or passing off of your brand you can have a free initial chat with JMW Solicitors who offer DIA members a first half hour consultation on all business and domestic legal matters, as well as discounted fees on its services.
Source: ADI News
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