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What are the risks of not registering your trademark?

Some prefer not to register their trademark, for various reasons: no budget, no time to take care of it, no will to defend it, no known competition on this name... This choice can be risky!

Immediate risks

Counterfeiting

As a general rule, people who do not register their trademark also do not realize either of background checks on the name that they wish to use. However, not knowing the legal environment of a name can be fatal: it can infringe the prior rights of a third party, even without knowing it. In fact, the qualification of infringement does not bother with proof of intent by the infringer: it is sufficient to show that a trademark identical or close to one's own is used in the same or a related sector of activity, regardless of whether the user of the trademark was aware of it or not.

Thus, an infringement action can be brought against the user of a trademark, even if he used it in good faith. One should therefore be very careful in this respect. The use of a trademark without a registration does not dispense with the need to carry out prior art searches. And even if you do so, you might as well take advantage of the opportunity to register the trademark and secure your rights!

Absence of rights

Like an untitled occupant of real property, a person who exploits a trademark without obtaining ownership through registration has no rights in that name. The absence of rights implies that one cannot prevent a third party from using the same name or a related name in the same field of activity or a related field (except for unfair competition), nor can one use the actions that are reserved for trademark holders: opposition before trademark offices, infringement actions, domain name recovery procedures, etc.

Not registering a trademark means limiting oneself to the extreme in terms of defending the name. It becomes almost impossible to prevent third parties from using the same or a similar name, which can cause serious commercial problems (diversion of customers, confusion for the consumer...).

Risks over the long term

Usurpation

In France, whoever files first is usually the one who is right. Since the mere use of a trademark does not confer any rights on that name, in principle a person who registers a trademark while it is being used by a third party, without having registered it, can validly become the owner of that trademark. However, the main right conferred on the proprietor is to prevent the unlawful use of a trade mark by a competitor. Consequently, the proprietor may therefore, in principle, prevent a person who has already been using the trade mark for some time from continuing to use it. A climax, isn't it?

It is therefore very important to register your trademark in order to secure your rights and avoid that a third party can prevent you from using it, even though you have sometimes been using it for a long time.

Cannot valuate the name

A trademark can only gain market value if it has been registered. Thus, the owner obtains a title of ownership, which becomes an asset of his patrimony or that of his company, and can assign or license it. On the other hand, a good exploitation of the trademark can increase its notoriety, and consequently its value. In the event of a sale of the company and/or the trademark, the latter may be valued at sometimes very high sums. However, if the trademark is not registered, it is impossible to benefit from this valuation.

It should also be noted that the absence of a trademark when a company is sold is often very badly viewed by investors, who then rightly question the overall legal security of the company.

Limiting the risks

It has been said that the mere use of a trademark, however broad it may be, is not sufficient in France to claim rights to that name. Nevertheless, there are other rights that may make it possible to avoid the risk of usurpation. In addition, actions other than infringement actions can be taken to fight against the copying of one's trademark by third parties.

Other prior rights

The company name and domain name, if used, can be used to prevent the usurpation of its unregistered trademark. Indeed, they both constitute anteriorities opposable to the registration of a subsequent trademark in the same or a related field of activity. By extension, they may also be claimed to prevent the use of such a mark, which would create a prejudice for the owner of the company name or domain name.

Other actions

Action in unfair competition

It makes it possible to prevent a competitor from using a trademark that is identical or close to an exploited and unregistered trademark. However, it is based on the liability under ordinary law. (article 1382 of the Civil Code). As such, it is necessary to demonstrate a fault (and therefore an intention) on the part of the competitor, a loss suffered (which is not always easy to prove) and a causal link between the two. This action is more difficult to bring than an infringement action, which needs neither fault nor prejudice to be validly brought.

The bad faith deposit

A trademark can be cancelled if it was registered in bad faith. Proof of this bad faith must be provided by the person claiming it, which is not always simple. In the case of direct competitors, it is a little easier because the opponent is likely to be aware of the trademark in question, and has taken advantage of the fact that it was not registered to do so in his name. But if there is no connection between the opponents in the dispute, it can be very complicated to have a trademark cancelled on that basis.

By being the owner of a trademark, it is possible to bring an action for cancellation simply on the basis of the existence of one's prior right, without having to demonstrate the applicant's bad faith, which greatly facilitates the procedure and increases the chances of success.

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