Frequent Questions
What follows is taken from chapter 9 of the book “Doyle’s Practical Guide to Thailand Business Law”. The book is currently on sale at Bookazine, Asia Books and Kinokuniya bookstores throughout Thailand.
What are the Benefits Associated with Registering Trademarks in Thailand?
Effectively branding products and services is becoming increasingly important in today’s ultra competitive market place. This situation makes protecting the company’s trademarks, which are the visual symbols of the brand, essential.
The purpose of this chapter is to explain:
- the general objectives of trademark law; and
- the benefits associated with registering trademarks in Thailand.
Objectives of Trademark Law
The objectives of trademark law include:
- assisting consumers in determining the origin of goods being sold;
- protecting consumers from confusion resulting from the use of identical or similar marks; and
- protecting trademark owners from counterfeiting and other forms of unfair competition.
Benefits of Registration
There are many benefits to registering trademarks. The first four discussed below are associated with protecting trademarks against would be infringing third parties in Thailand. The last two focus on how to enhance the value of a business by registering its trademarks.
1. Preventing Trademark Squatting
Trademark squatting occurs when a party who does not rightfully own a trademark registers the mark anyway in a country where the true owner has yet to register the mark.
In Thailand, this can pose a big problem for the true owner, as challenging the imposter’s claim to the mark can be extremely difficult.
If the true owner then decides to challenge the squatter’s ownership of the mark he may submit a petition to cancel the imposter’s mark registration at the Intellectual Property Court in Bangkok.
Note that the petition must be submitted within five years of the date that the previous registration of the mark in Thailand was approved, and the evidentiary standard required of the true owner in order to cancel the imposter’s mark registration is quite high.
The owner’s only other alternative would be to negotiate with the imposter for the imposter to transfer ownership of the Thailand registration certificate for the mark to the true owner.
Owners of new marks used in Thailand should always try to register those marks in Thailand as early as possible in order to prevent this situation.
2. Imposing Penalties
Although enforcement in Thailand has improved dramatically in recent years, trademark infringement still of course happens. It is, therefore, vital that trademark owners take the steps necessary to place themselves in a good position to enforce their trademark rights if it becomes necessary to do so.
The first and most important step that a trademark owner can take to place himself in position to enforce his rights in Thailand is to register the trademark with the Department of Intellectual Property (DIP).
Registering the trademark with the DIP gives the owner much more power to enforce his rights against would be infringers than he would have if the mark is registered outside of Thailand only. There are many reasons for this, but the most important of these is the increased penalties applicable to infringing third parties if the mark is registered with the DIP. Below are the maximum penalties applicable to parties who either produce a counterfeit mark or import or sell goods bearing a counterfeit mark.
| Not registered in Thailand but registered overseas | Registered in Thailand | Registered in Thailand and 2nd offence within 5 years | |
|---|---|---|---|
| Fines applicable (import, production or sale) |
up to 6,000 baht | up to 400,000 baht | up to 800,000 baht |
| Imprisonment applicable (import, production or sale) |
up to 3 years | up to 4 years | up to 8 years |
Note that even though terms of imprisonment are technically applicable to trademark infringers under Thai law, in actual practice, Thai courts in the past have been generally reluctant to impose a sentence of imprisonment on infringers in these situations.
3. Claiming Priority
Under Thai law, if a trademark application is filed in one country and then is subsequently filed in Thailand within six months of the initial filing of the trademark, the owner shall receive protection in Thailand as of the date of the initial filing (as long as the country of first filing grants similar rights to Thailand parties).
4. Providing Evidence of Ownership
Trademark registration in one country can also be used as evidence of ownership of the mark in other countries when disputes arise.
5. Enhancing Share Value
The amount of goodwill a company accumulates with the purchasing public can greatly enhance the value of that company’s shares.
Goodwill is an intangible asset that denotes the confidence and good feelings that the market associates with a business’s products and/or services. Many times the consuming public associates the goodwill created in the market with the company’s trademarks rather than with the name of the company. This creates a situation where the company’s registered trademarks can be very important and valuable assets.
NIX Ltd. is later approached by a US clothing company to enter into negotiations for the US company to purchase a controlling stake in NIX Ltd. from existing NIX Ltd. shareholders. During the negotiations, the US company sends valuation experts to determine the value of NIX Ltd.’s assets including the goodwill associated with the “Cherry” line, which would arguably be the company’s most valuable asset.
Determining the value of a trademark is a fairly subjective exercise, but because the company has already registered “Cherry” in the countries where the clothing line is sold, NIX Ltd. has clearly defined legal rights to the mark. This fact places NIX Ltd. in a much stronger position to negotiate a higher value of the goodwill associated with the mark, thereby allowing the NIX shareholders to maximize the acquisition opportunity. If the company had not registered the mark the company would not have such specific rights to the mark, and it would almost certainly be in a weaker position to negotiate the value of the goodwill associated with the mark as an asset.
6. Trademark Licensing
As mentioned above, registering the mark gives the owner clearly defined legal rights. This degree of certainty of ownership is quite important when licensing the use of the trademark to third parties.
In trademark licensing agreements one party (referred to as the licensee) acquires particular rights to use a trademark from another party that owns or otherwise has rights to the trademark (referred to as the licensor).
In these situations it is not legally required but it is generally advisable that the mark which is to be licensed first be registered in the country(ies) it will be used.
In order to maximize the opportunity to license the use of the trademark “Razorbacks” the owner should first register the mark in Thailand under appropriate classes (see Chapter 10).
By registering the mark, the owner will be able to show prospective licensees that he has clearly defined rights with respect to the mark. If he does not register the mark his rights to it will be less clearly defined, thereby potentially making it more difficult for him to market the idea to prospective licensees.
Another situation in which registering the trademark to be licensed is quite important occurs when a trademark owner outside of Thailand wishes to license the use of a trademark to a Thailand party.
In this situation if the trademark owner has registered the mark in Thailand he may authorize the licensor to pursue claims against infringers on the mark in Thailand on his behalf.
A competing retail store then opens in Thailand called “Zipps,” and the Thailand company takes the position that the name infringes on the mark “Zippers.”
In this situation because 1) the mark has been registered in Thailand and 2) the licensing agreement has been registered with the DIP, the Thailand company would have the authority to pursue claims against infringers in Thailand on behalf of the UK owner.
If not, the local licensee would not have such right and the UK company would instead have to pursue the claim itself.
Note that in order for the licensee in Thailand to pursue a claim in Thailand against a third party on behalf of the owner, the licensee must first register the licensing agreement granting licensee the rights to use and protect the mark with the DIP. This registration can normally be accomplished within a day.
