Intellectual property (IP) is anything from a particular manufacturing process to plans for a product launch, a trade secret like a chemical formula, or a list of the countries in which your patents are registered. It may help to think of it as intangible proprietary information. The formal definition, according to the World Intellectual Property Organization is creations of the mind – inventions, literary and artistic works, symbols, names, images, and designs used in commerce. IP includes but is not limited to proprietary formulas and ideas, inventions (products and processes), industrial designs, and geographic indications of source, as well as literary and artistic works such as novels, films, music, architectural designs and web pages.
For many companies, such as those in the retail Industry, IP is much more valuable than any other thing. By the turn of the 20th century, the face of the Indian retailing industry had changed significantly. The retailing industry, which, until the early 1990s, was dominated by the unorganized sector, witnessed a rapid growth in the organized sector with the entry of corporate groups such as Tata, RPG, ITC and Bennett Coleman & Company into the retailing market.
Establishing a strong brand is pivotal to business success. Protecting that brand is equally important. Yet many small businesses overlook an important first step in securing their brand trademarks. A trademark is any unique word, symbol, name or device used to identify and distinguish the goods of one seller from the goods of another – think Nike’s shoes, Reebok shoes, Benetton, Shopper Stop, Versace, Van Heusan clothes for example.
A trademark allows the seller to protect what’s trademarked from use and/or misuse by competitors while building brand loyalty among repeat customers.
Trademarks also help prevent confusion or manipulation of consumers, who come to associate distinct attributes–in particular, quality-with a distinct brand. Mostly in India there are such retail operators, who apart from offering retailing services, place their own brand along with the manufacturers’ brand in their retail outlets.
Another variant is that the retail operators purchase unbranded products and sell them under their own brand. In the latter two cases, registration of the retail brand must be done not only as a service mark but also as a trademark in relation to the relevant goods to which the retail brand is applied. And there are also such who sell their wares through their own retail outlets (for example, the well known manufacturers of clothing, Raymond and Bombay Dyeing, jewellery manufacturers such as InterGold, Orra, Tanishq and watch manufacturers such as Timex). Most of these manufacturers have registrations of their brands in respect of goods but seldom register their brands for retail services rendered under that brand.
Such non-registration can cause serious difficulties. For example, in one case pertaining to any textile firm A, an unauthorized retail shop is selling several brands of clothing, including A textiles. This shop had put up a ‘A’ signboard at the entrance suggesting that it was an outlet authorized by A. A is not able to prevent such use – the court ruled that the retail shop owner was entitled to use ‘A’on its signboard as he was selling genuine A clothing too. If A had a retail brand registration, i.e., registration for A for rendering retail services in respect of clothing, then it is likely that it may have been able to prevent use of its mark on the signboard on the basis of infringement of its service mark registration. With the liberalization and growth of the Indian economy since the early 1990s, the Indian customer has witnessed an increasing exposure to new domestic and foreign products through different media, such as television and the Internet. Apart from this, social changes also had a positive impact, leading to the rapid growth in the retail industry. Increased availability of retail space, rapid urbanization, and qualified manpower also boosted the growth of the organized retailing sector.
According to a report by Northbride Capita, the Indian retail industry is expected to grow to US$ 700 billion by the end of 2010. By the same time, the organized sector will be 20% of the total market share. It can be mentioned here that, the share of organized sector in 2007 was 7.5% of the total retail market.
According to a report by Northbride Capita, the Indian retail industry is expected to grow to US$ 700 billion by the end of 2010. By the same time, the organized sector will be 20% of the total market share. It can be mentioned here that, the share of organized sector in 2007 was 7.5% of the total retail market. These developments require new strategies for protection of retail brands, which are often the most important assets of retail operators. Protection of retail brands is necessary not only to sustain existing operations but also to generate new profit avenues through licensing of retail brands.
lady 2Trademark protection of retail brands is crucial. Until recently, trademark registration was only available for goods and not for service marks. This was a major disadvantage for retail brands as retailing is essentially a rendering of services and hence no adequate protection through registration was available for retail brands. Under Trademarks Act, 1999, apart from trademarks, it is also permissible to register service marks. Accordingly, it is imperative to register retail brands as a service mark under the relevant Class 35 of the Trademark Rules.
The increasing globalization of business brings with it a greater need for harmonization of trademark law and policy, central to which must be consistency in operation and application. Trademark owners doing business in diverse corners of the world, which may be governed by different legal systems, must have reasonable expectations of the scope of their trademark rights, as well as how and to what extent such rights will be enforced. As trademarks have evolved over the centuries from maker’s marks to, in some cases, valuable marketable properties in their own right, both the public and private sectors must place greater emphasis on trademark protection.
From the brands’ point of view, several aspects of retailing need understanding. Some retail operators may only sell or render retailing services in relation to third party branded products. In this situation, registration of the retail brand should only be as a service mark in respect of retail services. Till 2006, the government policy had put ‘no entry’ board on foreign investments in the retail trade sector, the effect of which was that major international retailers were prohibited from setting up their retail operations in India. Due to the recent liberalization measure with regard to foreign direct investment in the retail trade sector is directly linked with trademarks. Now, with government approval, 51 per cent of foreign direct investment is allowed in retail trade of a ‘single brand’ product’. And these retail trade operations in ventures having foreign investment up to 51 per cent are required to sell products under a single brand only and the same brand should be in use internationally.
Further, the product categories should be approved by the government. Finally, the products will be branded during the manufacturing process. An examination of trademark laws and practices, as they exist today, must necessarily begin with a look at their origin and evolution. Trademarks originated as craftsmen’s marks that artisans and others put on their goods to distinguish them from those of other artisans. The brand names that one sees today are the present incarnation of the old maker’s mark and often, after years of mass-marketing, have become so well known that they acquire immense value themselves, not merely because of the value of the goods to which they are applied, but because of the goodwill created among consumers, with the resultant capacity to sell goods, and not just the goods to which they were originally applied and for which they became famous. Thus, today, trademarks themselves often become the equivalent of valuable goods, to be bought and sold.
Though the term ‘single brand’ is yet to be defined, probably, retailers such as Wal-Mart and Tesco whose products carry different brand names of various manufacturers will not qualify as retailers entitled to set up shop in India. On the other hand, companies like Levis, Rolex, Omega, Parker, Mont Blanc and Chanel, which want to set up retail operations in India would qualify for a license for foreign direct investment. Also, it should be noted that foreign retail companies which buy products from different manufacturers and then brand such purchased products (on selection basis) would not be qualified for license for establishing retail operations as their products would not be branded during the manufacturing process.