Tag Archive: trademarks

  1. Using Trademarks As Collateral To Secure

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    The Business Collateral Act B.E. 2558 (2015) (BCA) was enacted to provide additional means for creditors to secure primary obligations, such as amounts due under loan agreements. Collateral is a specified asset which serves as a security for the lender in the event the borrower defaults on the loan repayment. According to the BCA, there are two types of assets that can be used as collateral, namely, tangible and intangible assets. Tangible assets are assets that have a finite monetary value and usually a physical form such as land, buildings, automobiles, and machinery. Intangible assets are non-physical assets like goodwill, patents, trademarks, and copyrights.

    In the past, intangible assets were not usually accepted as collateral for loans, due to the fact that it was quite difficult to interpret the value of these types of assets. However, with the enactment of the BCA, intangible assets, especially company trademarks, are now becoming a popular asset to be used as collateral due to the fact that their value is so high, and their opportunity for growth far exceeds those of tangible assets.

    A trademark is a type of intellectual property consisting of a recognizable sign, design, or expression which identifies a brand’s products or services. Trademark owners may need to borrow money from lenders, and lenders usually require security for loans so that if the borrower defaults on the repayment of such loan, the lender can seize the property pledged as collateral or security for the loan. The parties usually enter into a security agreement that specifies the particular trademarks being used as collateral. Trademarks, as well as other intellectual property rights, can be crucial to a borrower’s financial success and may represent a significant portion of the value of the borrower’s business.

    Section 8(5) of the BCA permits the use of intellectual property rights as collateral. However, it would seem that this section was added to the BCA as an afterthought. The reason for this is because this section contains phrases that are not suitable for intellectual property rights such as “loss” and “damage”. In addition to this, there exists no criteria of how to accurately calculate the value of a trademark. This is because the value of a trademark can rise and fall depending on a number of factors such as customer trust and loyalty, and brand image and reputation, as well as the revenues generated by the sale of the products covered by trademark rights. Additionally, there exists no criteria on how to enforce a trademark as collateral under Thai law.

    In conclusion, with the enactment of the BCA, trademarks are now being accepted as collateral to secure loans to reduce financial frictions in credit markets. With lenders demanding high yielding assets to secure their loans, and the value of trademarks rising continuously, it was only natural for lenders to accept intellectual property rights, including trademarks as collateral. However, it is hard to accurately assess the value of trademarks, and the BCA does not provide a specific criterion in which this is possible. The value of a trademark is usually determined by the trademark’s ability to generate income and future predictions of profits derived from such trademark. For the practice of using trademarks as collateral to be more effective, additional principles regarding the use, appraisal, and enforcement of intellectual property rights used as collateral should be added to the BCA.

    If you have any questions regarding Using Trademarks as collateral to secure loans, feel free to contact us at [email protected] or call us at +66 (0)2 117 9131-2.

  2. Trademarks in Thailand

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    Trademarks are used to identify a particular product or service. Often companies invest a significant amount of money in introducing and establishing a trademark. To protect this investment, it is essential to grant the exclusive use of this trademark for the investor.

    In general, there are two different ways to protect a trademark in Thailand:

    1. Local trademark rights

    The local trademark registration follows the international standardized classification of the Nice System. Local trademark protection is ensured by the Trademark Act (No.3) B.E. 2559 (2016), where a trademark can be registered at the Department of Intellectual Property (DIP). The registration fee is 1000 THB for one to five items, and 9000 THB for more than five items. Registration is valid for 10 years and extendable for a further 10 years by paying a fee to the DIP. It is required that the owner of the trademark is a natural or juristic person located in Thailand. A natural person is required to be a Thai citizen. For juristic persons, it is possible to register a trademark in the name of a Thai affiliated company. Trademark protection under the Trademark Act only grants protection in Thailand; other ASEAN-Countries are not included.

    2. Madrid Protocol

    After the Kingdom of Thailand joined the Madrid Agreement Concerning the International Registration of Marks (Madrid Protocol) on August 7, 2017, which came into effect on November 7, 2017, it is now possible to ensure the protection of a trademark internationally. The preservation of the trademark is guaranteed in the majority of the ASEAN countries; the exceptions are Malaysia and Myanmar.

    The Madrid Protocol provides a system, which allows a trademark owner with an existing trademark registration – the so-called basic registration – in a member-state of the Madrid system, to extend the trademark to other member states by applying for a so-called international registration.

    This centrally administrable system allows its users to obtain multiple trademark registrations in separate jurisdictions. The certification under the Madrid Protocol creates a bundle of national rights that can be managed easily. The period of protection is also 10 years and can be extended by a further 10 years. The applicant should be aware, that a refusal, withdrawal or cancellation of the basic registration within five years after its registration will have the same consequence on the international registration.

    if you have any question with regarding to Trademarks in Thailand, Please feel free to contact us at [email protected]