Trademark is important for the
identification of a product or a service in order to
distinguish it from other products and services of a
competing business. Using the trademark can enhance the
credibility of the company, which contributes to the
consolidation of the company’s position on the market.
Before launching an advertising campaign.
When you launch an advertising campaign through AdWords,
billboards, PR articles or in other media, you will attract
new customer base. New customers should remember your
company and your offering through a single phrase or logo.
Once the brand or logo is remembered in the minds of your
customers, you should protect it from use by competition,
which wants to attract your clients. Before filing the
trademark registration, it is important to search whether
your brand or logo has been registered by someone else
Departure of the partners from the
company. A common situation when the owners of the brand
decide to register a trademark is a dispute in the company.
In this situation one of the partners leaves the company and
the remaining partners register a trademark to prevent the
former partner from competing with their company by using
the same brand.
Franchising. Owners of a well-run
business often want to share their experience with younger
or starting entrepreneurs and help them by lending them
their brand or logo. This brand or logo already has an
established reputation among customers, either through
repeated ads or recurrent good experience with their
products or services. This concept is called franchising.
When the former owner of brand or logo intends to lend it to
somebody, it is necessary to have this brand or logo
registered as a trademark. After you lend your label or
logo, you can come into disagreement with the borrower about
the quality of the products or services provided under the
brand or logo, or you can disagree about the extent of
permissible competition. In such situation, you, as the
owner of the brand or logo, need to be exclusive owner of
the brand or logo.
Tax reasons. If a trademark is owned by
foreign entities, the domestic entities have to pay
royalties for use of the trademark. Such royalty payments
are tax expense. However, it is important that these tax
expenditures, which reduce the tax base and thereby the
amount of tax, are not subject to a withholding tax, and,
therefore, they do not abate tax. Withholding tax can be
avoided by the payment of royalties to mother companies
incorporated in other EU state, because the EU Directives
command for elimination of barriers in the single European
Mr. Navrat received his law degree from
New York University School of Law. Mr. Navrat is currently
advising mainly on complex corporate, tax, and intellectual