Is Trademark an intangible asset for MSMEs or an Expense?

Is Trademark an intangible asset for MSMEs or an Expense - Intellect Vidhya

Shakespeare famously said, ‘What’s in a name?’ However, this expression no longer applies because today the entire reputation, goodwill, and fame rest with the name, i.e., a trademark; therefore the question ‘is trademark is an intangible asset?’ has an affirmative response.

Trademark as an Intangible Asset

A trademark is a name that a brand or business employs to allow consumers to recognize their brand and to differentiate their name from the rest in the market. When a brand or company achieves greater market share and consumer loyalty, the likelihood that other competitors may copy a similar name to deceive the public and profit monetarily increases.

To prevent others from using a similar or deceptive similar trademark, it is essential to have a registered trademark, which grants not only the exclusive right to use the mark but also the right to initiate legal action against those infringing on this right. In the same way, a trademark is more than simply a name; it also represents a company’s operations, services, reputation, and efforts.

A trademark carries huge weight and is valuable since it is associated with a firm’s reputation, and given the significance of trademarks; the question ‘is trademark is an intangible asset? has just one acceptable reply, and that is an emphatic “YES”; it cannot be denied that a trademark is an intangible asset for a business or a company.

Intangible Asset vs Tangible Asset

A tangible asset has a finite value and physical existence; it may be sold, acquired, or transferred for monetary compensation, but an intangible asset is a beneficial potential that does not have physical existence. These assets provide financial benefits to the company, but they are intangible, as opposed to tangible assets. Intangible assets include all forms of intellectual property, such as patents, copyrights, designs, and trademarks.

MSMEs and Indian Economy

MSME stands for Micro, Small, and Medium Enterprises. MSME were first time defined under the Micro, Small, and Medium Enterprises Development (MSMED) Act in 2006. The act was recently changed in 2020 with considerable revisions in the numbers pertaining to investment and turnover, which led to an increased number of medium-sized businesses.

  • A microenterprise is an enterprise where investment doesn’t exceed Rs. 1 crore and where the turnover doesn’t exceed 5 crores.
  • A small enterprise is an enterprise where investment is more than Rs. 10 crore and where the turnover doesn’t exceed 50 crores.
  • A medium enterprise is an enterprise where the investment is not more than 50 crores and the turnover doesn’t exceed 250 crores.

The Indian government has promoted MSMEs with programs and initiatives such as ‘Atamnirbhar Bharat’ and ‘Make in India’,  with the assistance of government-provided subsidies and cost-cutting measures, the MSME sector in India is growing and booming like no other industry. 

Protection without registering trademark 

As indicated previously, the MSME sector in India is expanding, and such expansion typically increases market rivalry. The growth and reputation of a MSME will entice others to use a similar or deceptively similar name to deceive the public or to profit from its goodwill. In such cases, without a registered trademark, the only recourse for the proprietors of a MSME is to go to court and employ the common law tort of passing off which requires money and time.

It is possible to shorten such a laborious procedure of enforcing a trademark by providing the infringer with a trademark registration certificate. The infringer is unlikely to oppose a valid trademark registration certificate in a court of law. Without having a registered trademark, it is not possible to directly sue competitors for trademark infringement, and the trademark is more likely to be copied. A registered trademark increases the business’s valuation and prevents others from registering a similar mark.

Trademark as a Necessity 

When an MSME is incorporated, it is with the intention of seeking expansion and prosperity. For larger firms, there are numerous compliances that must be met, but for MSMEs, the government has taken a liberal stance and ignored much compliance in order to reduce the costs associated with the development of MSMEs. Each compliance must be weighed according to its importance.

When it comes to trademark registration, MSME owners have a tendency to disregard or delay the process, deeming it unnecessary or an unnecessary investment. However, a trademark is not an additional investment; rather, it is an intangible asset that will yield more profits in the future. By paying minor fees at the time of registration, a registered trademark saves a MSME from future expenditures on passing-off actions.

Trademark Registration for MSMEs

The 2017 amendment to the Trademark regulations has drastically decreased the registration fee. In general, the Trademark office charges proprietorship firms Rs.4500/- per class per application and non-proprietorship firms Rs.9000/- per class every application. However, enterprises with MSME registration are required to pay a registration fee of Rs.4500/- per class every application, which is half of what other companies must pay. 

The registration procedure is relatively straightforward and few documents are required. The materials necessary for trademark registration by MSMEs are proof of identity and address of the applicant, proof of address of the organization, a partnership agreement or certificate of incorporation, an MSME registration certificate, and the trademark to be registered.

An Intangible Asset that is more valuable than any Tangible asset

A trademark is an intangible asset that, with the passage of time, has the potential to grow to be larger and more valuable than any other tangible asset. The only thing that enables average customers to identify a company with which they are familiar is a trademark, which serves as the identity of a brand. It is possible to buy, sell, or licence a trademark, just like any other tangible asset; yet, a trademark’s value extends far beyond its monetary worth; it is also responsible for an MSME’s goodwill, trust, and repute in the marketplace.

Conclusion

MSMEs are one of the most important contributors to the Indian economy. However, there is a dearth of awareness regarding the protection of intellectual property rights among the entrepreneurs. Considering the potential of infringement in future the MSMEs must look at the trademark registration as a necessary step and not as and added expense. A minimal fee for registering the trademark can save a huge amount on the legal proceedings that might come up in the future and it will also protect the goodwill of a MSME in the market.

Share:

Facebook
Twitter
LinkedIn
WhatsApp

Related Posts

Protecting Electric Vehicle Designs with Indian Design Patents

With the rapid growth of the electric vehicle (EV) market, protecting unique designs is crucial for manufacturers. Read this article to understand the importance of design patents in safeguarding EV innovations under Indian design law. IntroductionThe electric vehicles (EV) industry has seen an exponential growth whether it is technological advancements or environmental concern with sustainable mobility solutions. As creativity in the industry increases, safeguarding the unique designs of electric cars becomes essential. Design patents for electric vehicles are one of the best ways to protect the distinctive aesthetic and functional features seen in EVs. This article examines how electric vehicle manufacturers in India can use design patents to protect their innovations and provide a detailed overview of Indian design patent law, including the perspective of the Indian Design Patent Office. What is a Design Patent? A design patent protects the visual and ornamental features of the product, such as its shape, configuration, and general appearance of the product. Design patents cover the look of a product, compared with utility patents, which cover the functional aspects of an invention. For instance, design patents for electric vehicles can protect the overall shape of the vehicle, the layout of the dashboard, the design of seats, the look of the lighting elements, and any other visual features of the vehicle. Definition of “Design” under Indian Law According to the Designs Act, 2000, a design is defined as the “features of shape, configuration, pattern, ornament, or composition of lines or colors applied to any article, whether in two-dimensional or three-dimensional form, by any industrial process or means, including any known process or means.” Essentially, the design encompasses any visual aspect of an article that is aesthetically appealing and can be viewed by the eye. The design needs to be novel and industrially applicable. This means that it must be possible to reproduce it on a large scale using industrial processes, such as mass production techniques.” For EVs, the design could also include: Why are Design Patents Important for EV Manufacturers? Indian Design Patent Law In India, the protection of designs falls under the Designs Act, 2000, and the Designs Rules,2001. This legislation provides the legal framework for registering and protecting the visual and ornamental aspects of an article, including electric vehicles. The Designs Act allows for the registration of designs that are new, original, and have industrial application. Here are the key aspects of Indian Design Patent Law relevant to EV manufacturers: For the manufacturers of electric vehicles, this implies that there can be no replication of a single element whether it be the vehicle’s exterior, the dashboard or any other segment; it must be unique in its design. Design protection plays a significant role for the plaintiffs in sectors like the EV industry, where the visual attractiveness of a product is crucial to its viability. This prevents competitors from copying the unique features that make the manufacturer’s vehicle stand out in the market. Design patent strategies for EVs can ensure that unique features are protected from competitors copying successful elements in the marketplace. Role of the Indian Design Patent Office In India, designs are registered with the Indian Design Patent Office which operates under the aegis of the Office of the Controller General of Patents, Designs and Trademarks (CGPDTM). Its role is critical in the examination of design patents and in granting protection for intellectual property. The office acts a forum for adjudicating design-related disputes. The office provides various services, including: Conclusion With the EV sector blooming in India, the design of these electric vehicles now requires protection more than ever. The aesthetic features that distinguish an EV in the market are protected through electric vehicle design patents, which represent a powerful means of protection for these types of vehicles. This will also help to avoid a situation where Indian electric vehicle manufacturers spend considerable time creating innovative products with no recourse to patent protection to gain a competitive advantage. By effectively registering and safeguarding their distinctive designs, manufacturers can not only set their offerings apart but also establish a robust portfolio of intellectual property that will contribute to their sustainable growth in the fiercely competitive global EV landscape.

Read More »

How Design Patents Protect Automotive Innovations in India

Do you know how automotive companies in India protect their unique vehicle designs? Read this article to understand the importance of design patents, how to file one in India, and the step-by-step process to safeguard your automotive innovations. Introduction With the Indian Automotive industry moving at a fast pace, the one thing that defines the company’s standing is the innovation or uniqueness of the vehicle’s design. The rise in demand for new models and technology also calls for plenty of protection for these types of innovation. Designs play an important role in the attractiveness and branding of automotive goods and applications. In this article, we shall focus on how a design patent protects automotive innovations, the process to obtain one, and how it helps the automotive industry in India. What Is a Design Patent? Unlike utility patents, a design patent does not cover the way a product operates — it instead protects its appearance, including its shape, configuration and ornamentation. In the automotive world, this includes the exterior and interior styling of a vehicle, aka the car body, headlights, grill and dashboard, as well as the actual arrangement of the seats. Design patents differ from utility patents in that the latter protects the functional aspects of an invention, whereas design patents protect the aesthetic appeal of the product. Vehicle design patent protection in India is granted under the Indian Design Act, 2000 and the Design Rules, 2001, under which a framework exists for registration and protection of industrial designs. How Design Patents Protect Automotive Innovations in India In a country like India, where automotive design innovation is paramount in establishing product differentiation in a saturated space, a design patent ensures protection of the characteristics. Design patent protection for vehicles ensures that no other manufacturer can reproduce or imitate a car’s unique design without facing legal repercussions. A design patent allows automakers to stop the copying or replication of the design of their vehicle. This immunity is granted for 10 years and can be renewed. In a highly competitive space such as India, protecting market share as well as brand identity becomes crucial for automotive firms. How to File a Design Patent in India Filing a design patent in India involves a few systematic steps, ensuring that the innovation is properly registered and protected. Here’s how you can navigate the design patent application process in India for your vehicle design: Design Patent Requirements in India There are specific design patent requirements in India that applicants must meet: In the case of automotive companies, it becomes necessary for them to ensure that the design of the vehicle is concerned is compliant with these parameters before they can file for a design patent. Cost of Design Patent in India The cost of design patent in India varies depending on few factors such as the legal representation of the applicant, application fees & renewal fees. The filing fees for individuals and small entities are relatively low, making it an affordable option for automotive companies, especially startups or smaller players in the industry. The statutory filing fee for individual is approximately INR 1,000 and for a company, the cost may rise up to INR- 4,000 for each application. Steps to Obtain a Design Patent in India Here are the steps to obtain a design patent in India for a vehicle: Importance of Design Patent Protection for Vehicles In the Indian automotive industry, protecting design patents is important for encouraging innovation. It also assists car manufacturers to safeguard the time, effort, and money invested in designing their cars so that other manufacturers do not copy them. With most Indian consumers inclined toward vehicles with distinctive and attractive aesthetics, automakers need to safeguard their design identity. Furthermore, a design patent acts to protect the brand from counterfeit products flooding into the market, ensuring safety by preserving the integrity of the brand. It also provides automakers with the opportunity to distinguish themselves in a competitive market through the improved development and marketing of products with new and protected designs. Indian Design Patent Laws Indian design patent laws focus on protecting the ornamental or aesthetic qualities of industrial products, and the Indian Design Act is in alignment with international design protection standards. This allows the automakers in India to protect their vehicle designs and at the same time, apply for protection under the Hague System for international designs. ConclusionThe Indian automotive industry is highly competitive and a design patent is an important way to protect innovative designs for vehicles. Having a deep understanding of how the Design Patent application process works in India along with the requirements, cost, and steps is imperative for automotive companies to protect their Intellectual Property. As the Indian automobile market expands, the demand for design protection will only increase, and it presents a great deal of value for the creators and innovators of automotive designs. By filing a design patent in India, automotive companies can ensure that their creative innovations are well-protected, fostering a more vibrant and competitive automotive industry.

Read More »

Design or Patent? Securing Your Auto Innovations the Right Way

In the automobile industry, intellectual property (IP) is of utmost important in order to protect new ideas and technologies. Two key types of IP that are often discussed in the context of the automotive sector are design protection and patents. While these two serve different purposes, they often overlap, especially in the automobile sector. In this article, we will cover what design and patent protections are, how they work, where they overlap, and what challenges businesses face. What is Design Protection? Design refers to the look or aesthetics of a product. In the field of automobile industry, design protection can cover the external shape of a car, the design of its parts, or its internal features. Design protection aims to stop others copying the distinctive look of a product. The Design Act and Eligibility In India, design protection is governed by the Design Act, 2000. To qualify for design protection, the design must meet these requirements: What Can Be Protected as a Design in the Automobile Industry? In the automobile sector, you can protect many things as a design, including: For example, the shark fin antenna on luxury cars or the unique grille of sports cars are examples of designs that can be protected. What is a Patent? A patent protects inventions—novel, useful products or processes. In the automobile industry, patents typically protect technological innovations and mechanical systems that make a vehicle work better. The Patent Act and Eligibility In India, patents are governed by the Patents Act, 1970. To get a patent, the invention must meet these criteria: Protection Time for Patents Patents last for 20 years from the filing date, as long as you pay maintenance fees. After that, anyone can use the invention freely. What Can Be Patented in the Automobile Industry? In the automobile sector, patents can cover things like: For example, Tesla’s electric powertrain or BMW’s advanced braking systems are patented technologies. Overlap Between Design and Patent Protection Design and patent protections have different purposes, but they often overlap in the automobile industry. A single product, like a car, can be protected by both design and patent. Here’s how: Challenges of Overlapping Design and Patent While having both design and patent protection can be helpful, it also comes with challenges: How to File for Design and Patent Protection? Filing for both design and patent protection requires careful planning and understanding of the legal process. It’s important to work with a lawyer who knows how to handle both types of protection. Conclusion The interplay between design and patent protection in the automobile industry provides opportunities and challenges for companies that want to protect their innovations. However, it also comes with challenges like complexity and costs. By understanding the differences between design and patent protection, and with the help of expert legal guidance, businesses can better protect their innovations and stay ahead in the competitive automobile market. Contact Intellect Vidhya Solutions—your partner in protecting intellectual property for any questions or needed support in navigating the complexities of design and patent law.

Read More »

AI Voice Cloning and Its Copyright Legalities: The Arijit Singh Case

The fast developments in AI voice synthesis led to in a revolutionary era in technology: immediate voice cloning. Modern algorithms can now produce a nearly identical replica of an individual’s voice using just a few minutes of their voice recording. Most of us probably have heard a number of songs that include the voice of our Prime Minister; these recreated tracks are a clear example of AI voice cloning. Such technology has allowed creators and businesses to create things like songs, speeches, etc., in the unique yet identifiable voices. It could enhance creative and personalized media but, in doing so, also creates complex ethical and legal difficulties, particularly with respect to copyright, privacy, and personality rights. AI Voice Cloning: Understanding the Technology Voice cloning is dependent on the cutting-edge of deep learning and machine learning algorithms to analyze an individual’s voice frequencies, tone, and accents. Once those specific characteristics are recorded, they can be reproduced digitally in order to create audio that as closely as possible resembles the original speaker. This feature, when paired up with Speech Synthesis Markup Language (SSML), enables users to personalize aspects like pronunciation, pitch, and speed, making it as realistic and lively a voice as possible, closely identifying with a natural human voice. These are great possibilities, but there is a flip side where this technology can be abused if used without the knowledge of the person whose voice it matches. The Arijit Singh Case: A Significant Decision on Personality Rights The recent ruling by the Bombay High Court in favour of Bollywood singer Arijit Singh brought attention to the legal issues surrounding AI voice cloning. The court, in the present case, provided interim relief to Arijit Singh, recognising that his voice, name, and likeness are essential components of his identity, referred to as “personality rights.” Arijit Singh initiated legal action against Codible Ventures LLP, a firm that allowed users to generate content using his voice without obtaining consent. The court’s decision to define the unauthorised use of Singh’s voice as a violation of his rights sets an important precedent. It emphasises that an individual’s voice, much like their name or image, is an integral aspect of their identity and is protected under personality rights.  The court acknowledged Singh’s status as a well-known and influential artist, pointing out his reputation and goodwill in India. The court highlighted that previous cases concerning personality rights indicate that using a celebrity’s voice or personal traits for commercial gain without permission constitutes a clear violation of those rights. This ruling clearly suggests that tools that allow for the generation of content in a celebrity’s voice without their permission infringe upon their rights and pose risks to their economic and public standing. Legal Considerations: Copyright, Personal Rights, and More The decision involving Arijit Singh carries major consequences for several legal concepts, such as copyright, intellectual property, and personality rights. 1. Personality Rights: This case highlights that a celebrity’s name, voice, and likeness are integral parts of their personal brand and identity. Protecting these rights stops illicit third parties from profiting off someone else’s identity and plays a crucial role in protecting their career and livelihood. 2. Copyright and Ownership: The complexities of ownership arise when dealing with AI-generated content that utilises cloned voices. Is the voice model subject to copyright protection, and who holds the legal rights to the content generated with that voice? When a voice model originates from a public figure, the boundaries of copyright law can become vague. It raises questions about who actually holds the rights: the creator, the individual whose voice is replicated, or the developer of the AI. 3. Economic and Reputational Concerns: The unauthorised use of a prominent voice can have adverse impacts on the person’s professional life. In Singh’s situation, his reputation and popularity render his voice a crucial element of his personal brand. The court’s decision recognises the potential harm that unauthorised use of his voice may pose to his professional standing and revenue. 4. Right to Publicity: This case expands the idea of an individual’s control over the commercial use of their identity. With the growing ease of AI voice cloning, it is becoming more vital to safeguard individuals against the unauthorised use of their identity. This acknowledgement offers a foundation for protecting people’s identities and personal characteristics in the era of AI. Setting Standards for AI Voice Cloning The Arijit Singh case highlights the pressing need for well-defined and thorough regulations concerning the commercial application of AI voice cloning technology. Considering the possibility of misuse, here are some suggestions to tackle these challenges:  Explicit Consent Requirements: The use of an individual’s voice or likeness must obtain clear, documented consent, especially when it pertains to commercial purposes. Transparency: Informing consumers about the use of an AI-generated voice is crucial to prevent any potential misunderstanding, particularly when the cloned voice closely resembles a well-known individual. Defining Usage Boundaries: Setting clear boundaries between personal and commercial applications can help prevent misuse while allowing individuals to utilise the technology for their own non-commercial purposes. Conclusion This ruling by the Bombay High Court, giving practical effect to Arijit Singh’s right over his voice, is a positive balancing act between harnessing the modern technology of AI voice cloning and protecting individual rights. Considering the new technology of voice synthesis, society must develop legal protections against the appropriation of one’s voice, name, and likeness. This ruling is a landmark case in that it shows how the law can adapt to emerging technology and preserve innovation while ensuring the protection of individual rights against invasive practices. Such frameworks will be critical to ensure the responsible use of this powerful tool, prevent misuse, and safeguard individual identities as we explore its potential further.

Read More »