1. Trademarks

Is Trademark an Intangible Asset for MSMEs, Or an Expense?

With the ferocious competition in the worldwide market, novel thought and ideas have to consider as an essential & significant asset for any economic activity to succeed and flourish. These novel thoughts are considered as an intangible asset under the regime of IPR. It increases the commercial cost of the business by expressing creativity.

The Indian government has recently introduced the Make in India drive, which will produce it even more considerable for assisting the MSMEs. Make in India Drive prepared a trademark as the most important intellectual property asset for the Micro Small & Medium Enterprises. The symbolic importance of the trademark in MSME is due to the comprehensive purview of branding.

A trademark is a mark competent to distinguish one business’s goods or services from other businesses. Trademark gets protection under the regime of IPR.

What Intangible Asset Term Denotes?

An intangible asset is an advantageous ability without physical existence. Patents, licenses, copyrights, broadcasting rights, trademarks, and goodwill can be considered intangible assets. Such assets generate financial advantages for the enterprises, but no one can touch them like other physical assets.

Asset Classification

The assets can be classified in to below mentioned categories.

  • Convertibility: – Fixed Assets & Current Assets 
  • Physical Presence:- Intangible Assets & Tangible Assets 
  • Usage: – Operating Assets and Non-operating Assets

Types of Intangible Asset

The below-listed are the types of intangible asset

  • Goodwill is an intangible asset, i.e., identified when one business obtains another business. Goodwill equals the value of the business’s value by the purchasing company minus the value of net assets of the purchased company. It shows the business reputation of a company.
  • A patent is an intangible asset that allows a business the exclusive right to production, use a specific invention, or sell.
  • Copyright is a comprehensive right to business to reproduce and sell software, journal, book, magazine, etc. It is an intangible asset available to secure legal protection by preventing others from reproducing or publishing authorship work.
  • Trademark is an intangible asset that protects others from using a business’s name, logo, or other branding items. It is a design, symbol, or logo used related to a particular product or a business.

Understanding the Connection between Brand and Trademark

The brands existing in today’s market become more abstracted and emerged adequately. The important part of enterprises contains images, character, identity, reputation, etc. The Logo introduced by the brand is the symbol of their identity in the market. The Micro, Small, and Medium Enterprises brand, through its image, character, identity, etc., helps to recognize them from their competitors existing or further come in existence to compete them in the vast market.

When MSMEs have their registered trademark, it is possible to stop legally to their competitors by using their mark. Trademark plays a vital role in protecting an MSME’s brand from losing prestige & maintains a trustworthy relationship with their customers. The MSMEs which has been trademarked can enhance value as an intangible asset to use as an ancillary to acquire monetary benefit from various financial institutions.

Influence of Trademark on MSMEs

In India, the MSME’s depend on the not unusual place regulation of tort of passing off to defend the logo call, logo, layout, image, etc. That lets the clients discover them within side the market. This method is largely the excellent Indian method of taking advert measures to boost long-term planning, leading to cost-saving measures.

The trademark is an intangible asset for MSMEs. Like another property of MSMEs, the emblems can also be sold, certified, or bought from different MSME or MNC according to the needs. Likewise, it is viable for an MSME to promote their whole enterprise even as keeping manipulate in their logo names, logos, layout or image that has been trademarked after which license that Trademark similarly to numerous manufacturers.

Point to Remember

In case the Trademark is not incorporated, the affected party cannot establish an infringement suit in a court of law. Still, it can only commence a lawsuit under the common law tort of passing off and giving the prior usage of the name to a court of law and then obtaining an injunction against the infringer.

Valuation of Trademark in MSMEs

The valuation of trademarks follows the ‘Rules on Appraisal’. However, the valuator’s subjective thoughts are highly likely that valuation may be impacted because the valuation process is not specified under the rule. Furthermore, the valuation may be formed uniformly because several valuation ways are not fully availed.

Trademarks are important because if the entrepreneurs prepare a quality product, they want to assure that customers can identify their product without any state of a dilemma with other products, especially other lower quality products. Reputation is important to stay in the market for a long time & trademarks protect your reputation.

Trademark For MSMEs Is An Intangible Asset, Not Expense.

MSMEs are one of the leading sectors contributing to the Indian economy. However, there is a lack of awareness among the entrepreneurs about IPR protection.

The Indian government has taken various steps to spread knowledge about IPR protection amongst MSMEs by making many amendments in the IP laws, reviving IPR offices, and digitization for filling an application to protect IPRs. Intellectual Property awareness scheme was started by the unit of IPR promotion & management to assemble and advertise IP culture in the nation to increase the awareness of IPR amongst the entrepreneurs:-

  • On dated September 16, 2019, the government has declared devaluation in fee for the filing of IPRs by MSME enterprises. The official fees for trademarked has been decreased by the 50% of its previous cost.
  • Ministry had also introduced a new blueprint under which the MSMEs will get financial aid to file IPR protection applications amounting to up to Rs 10,000 for trademark.

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