Difference between logo mark and word mark

Indian trademark law saw its origin way back in the 1940s with the advent of the Trade and Merchandise Act, 1958, subsequently increasing the need for protecting the trademarks. This upsurge can be attributed to the rise in growth of trade and commerce in the country over the years. Ever since then, the trademark law in India has been amended quite a few times to adapt with the standard of the growth of trade and commerce. Intellectual Property is an intangible property, yet one of the most important assets of a business and hence, businesses looking at the Indian market are the most in need of a trademark protection to safeguard their intellectual property rights.
However, one of the primary questions that arise when a business or a startup decides to protect their brand or trademark is – whether a business should protect its trademark as a word or a logo?

Trademarks in India can be registered in different forms namely word mark, label, logo and device mark and deciding whether to register the mark as a word mark or as a logo as a trademark is the toughest decisions to make for one before applying for registration of a trademark. Although, there isn’t a definite answer for the question, there are many factors which lead to deciding whether a business should register the brand name or trademark, as a logo or a word mark or a combination of both which is termed as a composite mark.

Trademark application as a word mark:

A word mark registers the word a person would want to use and renders stronger and wider protection to that person’s business. Once registration is granted for a word trademark, the applicant has the right to use and represent the word in any format or font which grants it extensive protection including exclusive rights to the word as a whole and also allows the applicant to depict it in various formats regardless of its style for all the goods and services in respect of the mark. In other words, by filing a word mark, one would prevent third parties from using one’s brand name in any regard.

Trademark application as a logo:

A logo or a composite mark on the other hand gives a person the rights in the combination of images, design and words taken together. Therefore, the protection given to the words encompassed in the logo are limited in comparison with the standard word marks since the rights in a logo are entitled only to the logo as a whole. If one wishes to register a particular stylized appearance or a combination of stylized wording, orientation, shape, colour and design, filing a trademark as a logo would be appropriate. In other words, by filing a logo, one would prevent third parties from using the said logo or any other logo deceptively similar, rather than the words incorporated in the logo.
Quite often, the brand name of businesses constitutes both of words and logos rather than just a logo. The safest way to protect the intellectual property in such instances would be to file the trade mark as both as a word mark and as a logo. However, since filing multiple trade mark applications would be an expensive affair, the next safest pick for businesses who are looking at cost efficiency would be to register the trade mark as a word mark.
An ideal example for such a scenario would be that of the well-known brand PEPSI. Since 1962 till date, PEPSI has changed its logo a significant number of times. Had it registered its initial trade mark application as a logo in 1962 and ceased usage of the same each time a new logo was created, then it would have to file a new trademark application for every such new logo created. The initial
trademark application would not protect any of the subsequently created logos. However, since PEPSI registered their trade mark as a word mark, they were able to do away with such redundant hassles. Ideally, separate trademark applications for word as well as logo should be filed to attain the broadest
protection for any business. While big companies might have the budget to justify such multiple applications, this may not seem economical for startup businesses. Hence, it is advisable to file the trademark as a word mark, giving one the next broadest protection against unwarranted infringers.
But again, if a business will apply for word mark registration or logo registration will completely depend on the business strategy since if a logo mark is distinctive enough then the business can go
ahead with the logo registration only. The crux of the story is mainly your client should be able to recognize you as in recognize your brand among all the other competitive brands. Your brand should stand out in the pool of thousands of other brands or competitors. Your brand should be unique or distinctive, whether as a word or a logo or a combination of both.

What should be the exercise price/strike price of an Employee Stock Option?

The exercise price for a stock option will depend on the objective for which the ESOPs are being granted. ESOPs for employees can be granted based on different considerations by different companies. In fact, even with respect to different employees within the same company, the exercise price may be different, as the ESOPs may be granted to the different employees by the company with different objectives in mind. Let us elaborate on how it works.

Remuneration lower than the market level

If you are granting ESOP benefits to your employees in lieu of salary, with the objective of making up for the lost compensation for an employee who has taken a huge salary cut and joined a start-up, it is only fair that the ESOPs be granted to the employee at an exercise price which is as low as possible. Typically, that would be the par value (or the face value) of the shares. The typical face value is INR 10, though, it differs from company to company. It would be advisable to check the face value of your company’s equity shares before finalizing the exercise price.

Market level remuneration

If your employees are already drawing market level salaries and the stock options are granted to them in the form of added incentive or bonus, then the exercise price of the options should be higher.

For example, if you are granting ESOPs soon after a fundraising round, then you could use the valuation of shares assigned by the investors in such round as the benchmark. So, if you have issued shares at a price of INR 100 per share to the investors, you could fix the exercise price at INR 100 per share or maybe at a discount to the fair market value, for instance, INR 80 per share.

I often get asked, if INR 100 (i.e. issuing shares at the fair market value) to the employees would be an unfair exercise price. I honestly don’t think so, simply because the employee is not going to buy the shares immediately. The employee can only buy the shares depending on the vesting date as per the vesting schedule, which will be after a minimum period of 1 year in India (given the mandatory 1 year cliff period). By that time, hopefully the fair market value of the shares of your company would increase. Therefore, at the time of exercise date, the ESOP still benefits the employee as the exercise price would be a discount to the then fair market value of the shares of your startup.

Online medical sales across country- Banned by Delhi High Court

On Wednesday, December 12, 2018 the Honourable Delhi High Court ordered a ban on sale of online medicines by e-pharmacists across the country. The Honourable Delhi High Court directed the Central government and the Delhi state government to implement the order on an immediate basis. A Public Interest Litigation (PIL) was filed by a Delhi based dermatologist Mr. Zaheer Ahmed who complained that lakhs of medicines were being sold on the internet every day without much regulation, posing a huge risk to both patients and doctors. A bench of Chief Justice Rajendra Menon and Justice V K Rao passed the order while acting on the Public Interest Litigation.

In the plea, the petitioner Mr. Zaheer Ahmed had pointed out that online sale of medicines is actually not permitted under the Drugs and Cosmetics Act, 1940 and Pharmacy Act, 1948 and even though the Drug Controller General of India in 2015 had clearly directed all state drug controllers to protect the interest of public health by restraining such sale online, lakhs of medicines continue to be sold online, often even without prescription. Unable to supervise,the government has failed in its responsibility to protect public health which is its constitutional obligation under Article 21. The petitioner in the PIL mentioned that “Unlike common items, drugs are highly potent, and its misuse or abuse can have serious consequences on human health, not just for the person consuming it but for humanity at large as some drugs can be addictive, habit forming and harmful to the body. A large number of children/minor or people from uneducated rural background use internet and can be victims of wrong medication while ordering medicines online,”. Blaming the government for not doing enough, the plea says online pharmacies are operating without a drug licence and warns that “unregulated sale of medicines online will increase the risk of spurious,misbranded and substandard drugs being sold” adding that “Some drugs have psychotropic substances and can be easily ordered on internet and misused for criminal activities or drug abuse.” The PIL states that Centre is aware of the risks involved in sale of medicines on internet since a panel setup by it for this purpose cautioned as late as September this year about risks involved in the online sale of medicines, particularly, prescription, habit-forming and addictive medicines. In September the Union health ministry had come out with draft rules on sale of drugs by e-pharmacies with an aim to regulate online sale of medicines across India and provide patients accessibility to genuine drugs from authentic online portals. The draft rules on “sale of drugs by e-pharmacy” state that no person will distribute or sell, stock, exhibit or offer for sale of drugs through e-pharmacy portal unless registered.

Further, in the past, the fight between traditional drug sellers and online e-pharmacies had taken a turn when the honourable Madras High Court had granted an interim injunction restraining online sale of medicines till further orders, based on a plea from the Chennai-based Tamil Nadu Chemists & Druggists Association. The court had directed the Centre to respond and posted the matter for further hearing on November 9, 2018.

The association had demanded to block links of websites selling medicines online as purchasing medicines from unlicensed online stores. These websites may sell fake, expired,contaminated, unapproved or unsafe products that are dangerous to patients and which might put their health at risk. Rules for selling drugs in India are based on Drugs and Cosmetics Act, 1940, Drugs and Cosmetics Rule, 1945 and Pharmacy Act, 1948 and these were written prior to arrival of computers and India does not legalise online sale of medicines, the petition said.

In the last two years, the 6-8 lakh odd traditional medical shops, under the banner of All India organization of chemists and druggists (AIOCD) have been protesting against proliferation of e-pharmacies in the country.
It is estimated that about 250-280 online pharmacies have come up in the country and they have cornered over Rs 800-1000 crore of the Indian drug market worth over Rs 1.2 lakh crore a year. Online pharmacies, like in other e-commerce business models, offer discounts ranging from 25 per cent to 60 per cent, besides offering value added services and free home delivery. Sources say half a dozen leaders like netmeds, 1MG, Lifecare, Medlife and Pharmeasy have so far raised over Rs 1,700 crore from venture capitalists and are aggressively marketing their business.

Following the protests, last year the Drug Controller General of India (DGCI) had formed a seven-member panel to look into the issue of online drug sales and had suggested licensing the pharmacies. As per the draft guidelines which are yet to be legalised, e-pharmacies have to register with the DCGI for a fee of Rs 50,000, which will be valid for three years. E-pharmacies will not be allowed to sell narcotic drugs, tranquilisers, and Schedule X drugs and are also not allowed to advertise any drugs.

In the west, the drug regulators have devised mechanism to monitor and regulate e-drug sales. The National Association of Boards of Pharmacy (NABP), the apex pharmacy body in the US, gives registration and certification for e-pharmacies and they have to display the certification logo on their website.

Are ESOPs free?

Are ESOPs free?

Yes and No.

The full form of ESOP is Employee Stock Options. Stock options are free and the options themselves are granted to the employees free of cost. They are considered as a part of an employee’s remuneration. It is a benefit given to the employee. There is no grant price to be paid for grant of ESOPs.

However, the definition of stock options is limited to only an option to purchase shares in the company in the future. An ESOP does not automatically convert into shares in the company.

This means that when the ESOPs granted to an employee vest, the employee will have to buy shares in the company. This process of purchasing shares in the company is called “exercise” of ESOPs. When an employee exercises the right to buy the shares in the company, the employee will have to pay the “exercise price” (or the purchase price) for these shares. This exercise price is typically decided upfront at the time of granting the ESOPs and stated in the ESOP policy, ESOP Agreement or the Grant Letter.

Therefore, technically, Employee Stock Options, as widely understood, are not free.


Want to understand more about ESOPs? Sign up with LexStart here and get access to our tutorials and FAQs for free.