FREQUENTLY ASKED QUESTIONS
A Trademark law mandates trademark to be distinctive and non-descriptive in order to get registered. Rationale behind this provision is that non-distinctive or descriptive marks can’t be granted monopoly being generic to the trade and are open for public use without any exclusive rights over the same.
However, if a non-distinctive mark acquires a distinctive identity in the market due to prolonged use or business growth, then the restriction gets lifted on such mark.
Yes, a three-dimensional mark is registrable.
The registration of a trademark is valid for a period of 10 years. It can be renewed every 10 years, perpetually. In India, renewal request is to be filed in FORM TM-R within one year before the expiry of the last registration of trademark.
Yes, the filed mark is allowed to be amended as per the provision of Section 22 of the Trademarks Act, which allows the amendment of the mark provided it does not amount to a substantial change in the character of the mark as such. Any superficial or insignificant character or feature of the said mark, is allowed to be amended, if a request is filed in the prescribed format along with 16 copies of the amended label mark.
No. Registration of a trademark is not compulsory. However, the registration is the prima facie evidence of the ownership of the trademark. No suit can be instituted for infringement of unregistered trademarks. For unregistered marks, action can be brought against any person for passing off goods or services as the goods of another person or as services provided by another person.
During the life of business, things are bound to change. For example, in the early stages of business, you may have preferred to keep things simple with an LLP. But as your business and expectations grow, you may need to change your business structure. After all, what may have worked for your business during the first few years of its existence may not be optimal for you now.
If you’re considering changing your company from one business structure to another, there are a few things to keep in mind. The procedures themselves are not necessarily difficult or complex, but will typically involve some legal steps, such as a merger or the dissolution of one entity and the creation of a new one.
There can be significant tax implications involved with these moves, so seek the advice of an expert or tax advisor to determine what’s best for your business.
Choosing a business structure will depend on various factors like:
No. of partners-If you are a single person who owns the entire initial investment required for the business, a One Person Company would be ideal for you. On the other hand, if your business has two or more owners and is actively seeking investment from other parties- a Limited Liability Partnership (LLP) or Private Limited Company would suit you best.
Investment required- If you want to spend less initially, it would be wise to go in for a Sole Proprietor, or a HUF or a Partnership. But, if you are sure that you will be able to recover the setup and compliance costs, you can opt for a One Person Company, LLP or a Private Limited Company.
Liability of business- Business structures like sole proprietor, HUF, and partnership firm have unlimited liability. This means, in case of any default in loans, the entire money will be recovered from the members or partners in profit sharing ratio. The risk to personal assets is high in these cases.
Whereas, Companies and LLPs have a limited liability clause. This means that the liability of its members is restricted to the amount of contribution made by them or the value of shares each member holds.
Income Tax Rates-Income tax rates applicable to a sole proprietorship and a HUF are the normal slab rates. In case of a sole proprietorship, the business income is clubbed with the individual’s other income.
But in the case of other entities like partnership and LLP a tax rate of 30% is applicable. While in case of companies, tax rate is 25% s.t. a specified limit of turnover and other conditions.
Investors’ Funding-It is difficult to get investments when your business structure is unregistered. Entities like LLP and Private Limited Company are trusted when it comes to investment.
It is important to choose a business structure depending on the nature of business, financial condition, future prospects etc. Each business structure has different levels of compliances that need to be met with.
For example, a sole proprietor has to file only an income tax return. However, a company has to file an income tax return as well as annual returns with the registrar of companies.
A company’s books of accounts are to be mandatorily audited every year. Abiding by these legal compliances requires spending money on auditors, accountants and tax filing experts. Therefore, it is important to select the right business structure when thinking of company registration. An entrepreneur must have a clear idea of the kind of legal compliance he/she is willing to deal with. While some business structures are relatively investor-friendly than others, investors will always prefer a recognized and legal business structure. For example, an investor may hesitate to give money to a sole proprietor. On the other hand, if a good business idea is backed by a recognized legal structure (like LLP, Company, etc) the investors will be more comfortable making an investment.