Common Trade Mark Mistakes Startups Make

When you’re starting a business, there are plenty of things competing for your attention.

You’re developing the product or service. Finding customers. Building a website. Setting up systems. Working out pricing. And, somewhere along the way, choosing a name and creating a brand.

Trade mark protection can easily end up on the “we’ll deal with that later” list.

The problem is that some trade mark mistakes become much harder — and considerably more expensive — to fix once the business has gained traction.

Here are some of the most common mistakes I see startups make, and what you can do differently.

1. Choosing a name before checking whether you can use it

Finding an available domain name is not the same thing as clearing a brand for use.

Neither is finding an available Instagram handle, registering a business name with ASIC, or doing a quick Google search.

Before investing heavily in a new brand, you should consider whether somebody else already has rights in the same or a similar name for relevant goods or services.

Importantly, you aren't necessarily safe just because there isn't an identical trade mark.

A similar-looking or similar-sounding mark can also create problems, depending on the circumstances.

Imagine spending six months building a brand, paying for a website, packaging and signage, and starting to build recognition with customers — only to receive a letter alleging that your brand infringes an existing trade mark.

Changing direction when your business is still an idea can be relatively straightforward. Rebranding once customers know you by that name is another matter entirely.

The practical lesson: search early, before you become commercially committed to the name.

2. Assuming a registered business name means you own the brand

This is probably one of the most persistent misconceptions about trade marks in Australia.

Registering a business name with ASIC does not give you the same rights as registering a trade mark.

A business name registration allows you to trade under that name. It does not necessarily give you exclusive rights to use it, and it doesn't mean that using the name won't infringe somebody else's rights.

The same applies to registering a company.

You might successfully register Example Ventures Pty Ltd with ASIC and still discover that another business has earlier trade mark rights that affect your ability to use EXAMPLE VENTURES as your brand.

That distinction matters because your brand may ultimately become one of your business's most valuable assets.

3. Choosing a name that describes exactly what you do

There is an understandable temptation when naming a startup to choose something that immediately tells customers what the business does.

From a marketing perspective, that can feel sensible.

From a trade mark perspective, it can create difficulties.

Trade marks are intended to distinguish one trader's goods or services from another's. Words that simply describe the goods or services, their characteristics, quality or geographic origin can be difficult to monopolise.

There is also a broader commercial problem.

If the words making up your brand are words that all of your competitors legitimately need to use, it can be much harder to build meaningful exclusivity around them.

Compare a highly descriptive name such as Melbourne Online Accounting Services with a distinctive invented or arbitrary brand.

The descriptive version tells you immediately what the business does. But almost every accountant providing online services in Melbourne may reasonably need to use those same words.

A distinctive brand gives you something that is much more clearly yours.

The practical lesson: when choosing a name, don't just ask whether customers will understand it. Ask whether it can become a distinctive and protectable asset.

4. Registering the trade mark in the wrong name

A trade mark is property.

That means the question of who owns it matters.

A common startup scenario is for a founder to lodge a trade mark application personally because the company hasn't been established yet, or because they simply complete the application themselves without thinking about ownership.

Later, the company takes off.

There are shareholders. Perhaps investors come on board. Eventually there might be a due diligence exercise, capital raise or sale.

Someone then discovers that one of the business's key assets isn't actually owned by the company at all. It's still sitting in the founder's personal name.

That can usually be addressed, but it may require an assignment and potentially tax or structuring advice.

It can also raise much bigger questions where founders have fallen out.

Before filing, consider which entity should own the intellectual property and how that fits into the broader structure of the business.

5. Getting the goods and services wrong

Trade mark registration doesn't simply give you ownership of a word across every industry and every possible product.

Your application identifies the goods and services for which you are seeking protection.

Those goods and services are organised into different classes, but the important question isn't simply: Which class do I need?

The better question is:

What does this business actually need to protect?

A software startup, for example, might need to consider the software itself, the way the software is delivered, and other services provided under the brand.

A business that begins with one product may also have realistic plans to expand into related products or services.

That doesn't mean filing for everything imaginable. Overly broad filing can create its own problems.

It means thinking strategically about the business model rather than treating classification as an administrative exercise.

6. Waiting until the business is successful before filing

I understand why founders do this.

When cash is tight, it can feel sensible to wait until the business has proven itself before spending money protecting the brand.

But there's a tension here.

The more successful the business becomes, the more expensive a forced rebrand becomes.

You're accumulating:

• customer recognition;
• website traffic and search rankings;
• social media followers;
• signage and packaging;
• marketing collateral;
• goodwill; and
• reputation.

That is precisely why it is worth investigating trade mark protection relatively early.

It doesn't necessarily mean every idea needs an immediate trade mark application. But if you've decided that this is the brand you're going to build a business around, the trade mark position deserves attention.

7. Protecting the logo but forgetting the name

Another issue I see is businesses focusing heavily on their logo.

A logo can certainly be valuable and worth protecting.

But logos also tend to change.

Businesses refresh their branding. Fonts change. Icons are simplified. Colours are updated. Ten years later, the logo might look quite different.

The underlying name, however, may remain the same.

Depending on the circumstances, there can therefore be significant strategic value in protecting the word mark itself, rather than relying solely on a particular stylised logo.

Your protection strategy should reflect the elements of the brand that are genuinely important to the business.

8. Using the brand inconsistently

Startups evolve quickly.

You launch as one name, then marketing shortens it. Someone adds “Co”. The website uses another version. Social media adopts a nickname. A new logo introduces slightly different wording.

Before long, there can be several variations of what is supposedly the same brand.

That can create practical trade mark issues, but it also creates a broader branding problem.

A strong brand generally benefits from consistency.

Know what your core trade mark is, understand what you've registered, and make sure the business is actually using it.

9. Forgetting that trade marks are territorial

An Australian trade mark registration protects you in Australia.

It does not automatically give you protection in New Zealand, the United States, Europe, the UK or anywhere else.

For many businesses, that isn't an immediate problem.

But for startups with genuinely international ambitions — particularly software, e-commerce and digital businesses — overseas trade mark strategy is worth considering earlier than you might expect.

You don't necessarily need to register everywhere on day one.

What you do need is a roadmap.

Which markets are realistic? Where will you sell? Where might you manufacture? Where is the brand particularly valuable?

International protection can then be prioritised accordingly.

10. Registering the trade mark and then forgetting about it

Registration isn't necessarily the end of the story.

Once you've invested in a brand, you should keep an eye on what is happening around it.

That might include watching for:

• confusingly similar brands entering the market;
• new trade mark applications that concern you;
• misuse of your brand online;
• counterfeit products;
• unauthorised use by former distributors, contractors or collaborators; or
• domain names and social accounts that create confusion.

The earlier an issue is identified, the more options you may have for dealing with it before it becomes entrenched.

Your trade mark strategy should grow with your business

The common thread through all of these mistakes is that trade marks are often treated as paperwork.

They're not.

A good trade mark strategy starts with a broader commercial question:

What are we building, and what part of it do we want to own?

For an early-stage business, that means thinking about your name before investing heavily in it, understanding who should own the IP, protecting the right goods and services, and considering where the business is likely to go next.

You don't need to predict every direction your startup will take.

But you should make sure the brand you're investing in is one you have a reasonable prospect of keeping.

Not sure where your IP risks are?

You can use my free IP Risk and Ownership Audit to identify potential gaps in the intellectual property your business uses and owns:

www.elisesteegstra.com/ip-audit

Or, if you're preparing to launch a new brand or want to review an existing trade mark strategy, you can book a strategy call through www.elisesteegstra.com.

Disclaimer: This article is intended for general educational purposes only and does not constitute legal advice. You should obtain advice tailored to your circumstances before acting on any information discussed in this article.