The Functions of a Trademark

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Many of us probably know more or less what a trademark is, but do we also know its numerous functions, its role and importance for a company or the end-user? Here’s a list of the main functions of a trademark, which might help those who are thinking about starting their own business, and implicitly, to their first trademark related to the products or services they will provide.

 

1. THE TRADEMARK AS AN IDENTIFIER  OF THE PRODUCTS OR SERVICES

A trademark allows the consumers to identify a product from the market, based on their own previous consumption experience, or based on the recommendations they received from some one else, or even based on their perception over various advertisements.

Usually, the consumers identifies the producer behind the trademark, even if this recognition is not explicitly made.

The producer can have a different commercial name then the trademark applied to the product and, in this case, the trademark does not directly identify the producer. However, the consumer will be interested in knowing the name of the producer of a quality product and it will always associate it with the trademark of that specific product.

This is why the producer has to ensure that his trademark is registered, usually as a part of his commercial name, in order to be easily identified by the consumers along the other traders.

When trading the products of some other company, such as in the case of a store, a trademark is used to identify the trader that puts to sale the products of different producers. The trader, as owner of the trademark, is responsible for the quality of the performed service. The respected traders carefully select the products and the producers, by this means avoiding the depreciation of their own trademark due to the bad quality of the products received from the producers.

 

2. THE TRADEMARK AS SOURCE OF THE PRODUCTS OR SERVICES

The consumer will always perceive the source of the product: the producer – in case the product is being sold directly by the producer; or the trader – in case the product is being sold by an intermediary trader. It is important for the consumer to know who is responsible for the quality of the product, as the fact that the producer applies his trademark on the product ensures the consumers of the quality thereof.

In the consumer’s mind, the source is linked to identifying the producer, this identification including the source.

3. TRADEMARKS AND SYSTEMATIZATION OF THE MARKET

This function is linked to the fact that the trademarks are a legal way to identify products and services, as well as to the fact that there is a loyal competition in the market between the traders, this being acknowledged as a social duty.

 

4. THE TRADEMARK ENSURING A MONOPOLY

The registration of a trademark offers its owner an exclusive right to use it for the registered products or services. This exclusive right is ensured and protected by the law, as this is the essence of the trademark protection. Therefore, the owner can forbid any third parties to use identical or similar products on the market.

In order to ensure this monopoly, the owner benefits from legal defending ways and means.

 

5. THE TRADEMARK AS AN ASSET

A registered trademark is an asset. If the registered trademark is continuously being put to trade by its owner, it can be evaluated as an intangible active of the company, which can mean a significant part of the company’s capital.

In addition, a registered trademark can be the object of a commercial transaction such as granting the license to be used in a franchise. This means that the registered trademark can be an important market instrument.

6.  THE TRADEMARK AS A STRATEGIC INSTRUMENT

A trademark that is registered in Romania can also be registered as a community trademark (CTM) in all the 28 member-states of the EU trademark by filing a single application at OHIM; or it can be registered as an international trademark (IR) by filing an application at WIPO designating the countries of interest.

This possibility offers the owner of the trademark the fructification of his commercial interests in the states where the trading of the products is to be protected by the trademark. In conclusion, the trademark is an important strategic market instrument, offering its owner a higher security and a faster promotional means for his products on the foreign market.

7. THE TRADEMARK PROVIDING PROTECTION OF THE CONSUMERS

By making the distinction among products or services, but also by allowing the identification of the producer, the trademark is an useful way in which the consumer can chose quality products and services. The trademark is therefore the means that links the consumer to the products and services, while the distinction of the trademark facilitates and straightens this link.

Also, the trademark allows the consumers to easily perceive the poor quality of some products or services.

 

8. THE TRADEMARK AS GUARANTEE OF QUALITY

The reputation of a trademark will grow if applied on quality products and, respectively, the lack of quality will lead to a depreciation of the trademark.

The quality function integrates the communication (the way the consumers perceive the information regarding the quality of the product) and the reputation components (the consumers’ continuously growing trust regarding the trademark, the fact that it becomes more and more aware of it).

 

9. THE TRADEMARK AND THE ADVERTISING

A trademark that is attractive, easy to pronounce, with an enjoyable ring to, easy to memorize and that has started to get a certain reputation, will become an advertising means for the respective product.

Therefore, the sole usage of the trademark represents an advertising act for the product. The using the trademark in advertising, it shortens the time required for bringing the positive qualities of the product or service to the knowledge of the public.

 

10. THE TRADEMARK AND THE COMPETITION

Free market means competition. The quality and advertising functions of the trademark are helpful in the competition process. It is implied that the trademark helps the acts of fair competition in the market.

The value of a trademark is directly determined by the quantity of products sold under that certain trademark.

The consumer is willing to pay more for a product sold under a notorious trademark, knowing that, in general, the quality of the product or service will bring him spare time and money, and he hopes that this will be the case.

Therefore, the value of a trademark is also proportional to the added price that the consumers accept to pay.

The unfair competition ensured by using a counterfeit product (with trademarks that are identical or similar to a registered trademark) represent a specific type of infringements of rights. In this matter, the trademark legislation has strict provisions regarding the interdiction to register a sign that is identical or similar to a previously registered trademark. By this, the law interdicts the market competitors to counterfeit each others trademarks and ensures a social order in using the various trademarks.

 

11. THE ENERGETIC CONCEPT RELATED TO THE TRADEMARK

The consumer want to buy quality products. The quality is objectively determined as it leads to lower costs for using that product in a given period of time and to avoidance of lost time for any adjustments; overall, the consumer instinctively wants an energetic saving.

Being an objective and scientifically based desideratum, this energetic concept of the trademark should be successful in the community, as it ensures energetic savings for the members of the community.

Based on this criteria, a trademark is as valuable as it leads to important energy savings for the members of the society.