Difference between a Brand and Trademark
- From a management perspective, branding (the activities to build up and enhance the value of a brand) is to encourage the repeated use of a product/services while the purpose of registering a trademark (service mark) is to stop the unauthorized use of the product/services in question.
- Both brands and trademarks (service marks) are usually recognized as intangible assets under the accounting convention.
- Intangible assets embrace a number of things, such as land use rights, copyrights, membership subscription lists for publication companies, taxi license or goodwill arising from business acquisitions, etc.
Trade Mark Registration
The registration of a trade mark includes the local (HK) registration and international registration. Usually the local registration is done first, and then the local registration is to be used as base registration for the international registration under the Madrid Protocol.
Hong Kong is not a member of the Madrid Protocol. A HK company can register a trade mark in Hong Kong, but it is not possible for the HK company to do an international registration. A HK compnay has to find a base country to do the international registration.
In one case, we propose to set up a UK subsidiary company for the client. The use of a UK compnay has the following tax and non-tax advantages (before the Brexit comes into existence):
- The UK is a member state of the Madrid Protocol. The UK company, after the registration is completed in the UK, can be used to apply for international registration.
- The UK is also a member of the European Union, which has 27 members as at Nov 2014. A single registration with the EU can cover all the member states in the EU. Thus, it is time and cost efficient.
- The HK and UK government have concluded a double tax treaty (DTA). After the UK company has earned the royalty income, it can pay a dividend to the HK holding company from the after tax profits. The HK-UK DTA provides that the Hong Kong holding company is eligible for exemption from UK income tax on the dividend distributed by the UK company, except that the dividend is directly or indirectly distributed from the rental income derived from properties situated in the UK.
The Nice Convention, of which HK is a signing party, provides for 45 classes of trade marks. All of the member states adopt this classification system for the international registration of the proposed trade marks.
One can obtain the guideline for Nice Classification from the Intellectual Property Department of Hong Kong Special Administrative Region, China. Alternatively one can find it from the WIPO.