Trademark Due Diligence

A well-processed due diligence at the time of acquiring a trademark can help the owner decide whether or not to advance in selecting such a trademark. It must be unique to survive in the competitive market. Inadequate due diligence can result in loss of funds, time, and name in the market.

What is trademark due diligence?

Intellectual property (IP) due diligence is an indispensable part of the legal and due diligence method. It is often worth linking with the business's intangible assets, especially in present times. Subsequently, IP due diligence includes examining the intangible assets a business is holding; it is a strong intellectual property right existing within and the length of their support, considering the uncertainties involved concerning that and, in turn, assessing their original value.
Just as IP due diligence forms an essential part of an M&A activity, it is evenly needed for other activities, viz., joint ventures, issuance of new stocks and securities, and similar. Relevant IP diligence helps establish a program for managing associated IP rights, evaluating the uncertainties required in connection to the target's IP assets, and strategizing to determine the issues.

How is due diligence exercised at the time of trademark filing?

  • Ownership of a popular trademark is a desire of many businesses. However, it is not a single-day method, and the appropriate time for developing the trademark starts while considering its adoption.
  • The next step is the approval of a trademark, which is again a part of the business. It can choose to take up a word or a logo to avoid any connection or similarity with a previously existing mark. Often a subsequent mark is denied from registration individually on the grounds of similarity of the pre-existing mark. Therefore, registering a trademark is not an easy procedure, but a correct application matters a lot.
  • This step is often catered to by the trademark attorneys while applying to record the suitable use date for a certain trademark. Often, companies are at risk at the beginning of introducing a product in the market much before or after the registration to understand its demand. These trademarks must be registered with the previous date of use and the appropriate declaration of use. The date of first use is the first item observed while administering an infringement action. By a day's difference, the application can direct some heavy losses to the Company. The concept of the Prior use doctrine of a trademark is relevant even then.

    For example, in the Rejection report of the trademark application of a particular mark, the Senior Trademark Officer of Mumbai Registry refused to accept the mark for improper filing of a trademark. The trademark was applied for with a copy-pasted signature on a power of attorney, not the original signature. It did not submit the correct power of attorney even after issuing a notice from the trademark office. Thus, it was rejected for the reasons mentioned above. However, these kinds of incidents are pretty rare.

Why is it important to follow due diligence?

Careful planning, thorough review, verifying and proper investigation, and good preparation are considered due to diligence. The trademark attorneys from the applicant's side are committed to the significant liability of ensuring thorough market research and unique knowledge of the trademark to reach out amongst the competitors. 

If due diligence is not ratified, there is a huge chance of problems occurring. These blunders by the trademark attorneys could end up in the wastage of hefty sums in the proceedings for opposition and actions. This can even create a loss of a good output to the prior user of the identical trademark. Over time, the identification and reputation of the business associated with this trademark and losing a trademark is not just a financial loss but a significant loss to the goodwill and respect in the market. 

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