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The company competitive advantages in the market from the point of view of a holder of the trademarks

02 Sep 2019 (updated at 10 Jan 2024)
Head of Trademark Department / Trademark Attorney Reg. № 1258 / Patent Attorney of the Russian Federation / Eurasian Patent Attorney Reg. № 63

The trade markets of the XXI century have a number of characteristic features: a variety of products, a constantly changing assortment, the availability of the competing companies offering the similar products and instability of a consumer interest in the products. It becomes difficult to obtain and maintain a competing advantage in such conditions. In order to draw the buyer’s attention to the manufactured products, an entrepreneur should determine correctly a quality and cost ratio, as well as individualize the product, thereby distinguishing it from other homogeneous ones.

A trademark as a guarantee of a competing advantage

A constant lack of time and an abundance of products lead to the fact that the buyer, who has come to a store, loses a possibility of purchasing a product consciously, and he feels annoyed, because he does not know how to choose one product among three or five similar products that have an identical composition and price. In this case, a trademark works as a sort of a “small beacon” for the consumer: a familiar designation guarantying a particular quality of the products allows saving time, effort, and sometimes money.

For this reason, at the stage of coordinating the characteristics and steps of the manufacture of the products, and possibly even after the launch of the manufacture, it is reasonable to design the designation under which the product will be released to the trade markets. The legislation of the Russian Federation stipulates a number of means of individualization used to individualize the products: trademarks, commercial designations, the names of the places of origin of products, and soon geographical indications. Each of the enumerated subject matters of intellectual property has a specific status; however, the legal regime of trademarks is especially favorable for the use by entrepreneurs. The holder of the registered trademark owns the exclusive rights to the designation, which allow possessing the protected subject matter in full, as well as providing other persons the right to use it.

The assertion that the trademark ensures a competing advantage to the entrepreneur is beyond dispute. The world famous trademarks Coca Cola, Apple and Samsung are a vivid proof of this. The properly used trademark is capable of performing a set of functions that facilitate the promotion and sale of the products. These include:

  • As noted by Y. Varfolomeeva, a trademark is a “market signal.”[1] It is known that the product with a colourful label and a memorable name primarily attracts the consumer’s attention and it is quickly remembered.
  • An advertising function due to which the buyer, who has recognized the trademark, acquires readily the individualized product. When the designation is widely known — it becomes a sort of silent advertising, which requires neither time nor financial costs.
  • A function of a guarantor of the quality of the product. The consumer is confident in the quality of the products individualized by the familiar designation and he favours it.
  • An information function. A well-designed designation becomes not only a guide for the consumer, but it also conveys to him the information on the quality, the distinguished properties of the product and on the manufacturer.

The competing advantages of an enterprise due to the use of the trademark

The actively used registered trademark provides the company with the recognition of the products and the consumer loyalty. This ensures stable profit, which serves as a source of financing the further manufacture of the products, the expansion of the product line, the improvement of the manufacturing steps and the improvement of the quality indicators of the product.

Regarding other companies, an absolute nature of the exclusive rights to the trademark also forms a privileged position. Due to this, the competitors are not entitled to use the designation without the holder’s permission, and the right holder of the means of individualization can provide the right to use the designation to other companies, thereby expanding the sales market and controlling the companies that use the trademark.

The trademark right holder’s risks

In conclusion, it is worth noting that the means of individualization being well-known and recognizable by the consumers, not only provides the entrepreneur with the competing advantages, but it also holds a number of threats. As the evidence from practice shows, the buyers are not always able to distinguish between the original product and the counterfeit product, and sometimes, they are even ready to purchase the products that are apparently counterfeit, when they are individualized by the popular trademark. An illegal use through illegal manufacturing the products or placing the designation on the finished products, the registration of identical and confusingly similar trademarks — unfortunately, the range of the possible illegal actions for the use of the trademarks is quite extensive. The “strong” and recognizable designation attracts the attention of consumers and competitors, as well as offenders; therefore, the most correct decision will be carrying out a set of measures to prevent the possible illegal actions:

  • Registering timely the designation as a trademark.
  • Regular checking the official Bulletin “Trademarks, service marks and the names of the places of origin of products” regarding the availability of the applications with the similar designations in respect of the similar products.
  • Entering the designation in the Customs Intellectual Property Registry (CIPR).
  • Certifying the rights to the trademark in other countries, when expanding the sales market.
  • Obtaining a domain name that reproduces a word element included in the trademark.

The above actions will allow the entrepreneur protecting the use of the trademark, and if necessary, preventing the illegal actions and recovering damages from the offender.

Head of Trademark Department / Trademark Attorney Reg. № 1258 / Patent Attorney of the Russian Federation / Eurasian Patent Attorney Reg. № 63