14 December 2013 | Reading time: 4 minutes
A company’s brand portfolio is regarded as one of its key assets and these portfolios are rapidly growing worldwide, which has brought with it a shift in focus from registering brand intellectual property to maximising their commercial value through protection.
The importance of protection.
The commercial value gained from brand portfolios highlights the importance that brand protection can provide. Companies can protect and maximise the value gained from their intellectual property by implementing several legal and commercial mechanisms including registration, enforcement and commercialisation.
The basics – what is a brand?
A brand is the distinguishing trade feature of a product or service that allows the origin to be identified through the use of words, signs, symbols, colours and smells. This is regulated by intellectual property laws, which outline that for a brand to be registered as a trademark, it must uniquely identify the product or service and not be identical or deceptively similar to previous marks or similar products or services.
The value of a brand.
Many businesses invest significant resources towards creating and developing a brand, which will grab the attention of consumers and distinguish their goods and services from those of its competitors. According to recent research conducted by the brand valuation agency Interbrand, the four most valuable brands are Apple, Google, Coca-Cola, McDonalds, with the brand value of Apple estimated to be US$98 billion. It is estimated that 75% of a business’ market value consists of its intangible assets, of which brand value is a significant constituent. This marks a huge shift in value – in the 1980’s this percentage was estimated to be closer to 25%. This trend sends a powerful message to the marketplace of the importance and value of brand protection and brand management.
Types of intellectual property and protection mechanisms.
Registering a trademark is often a simple and cost effective mechanism that is the first step in brand protection. Companies who have registered a trademark need to ensure that they use their trademark within three years, so as to not have their trademark registration revoked. It is essential that companies monitor and control the use of their trademarks and take immediate action against any unauthorised use of their trademarks. This will ensure that the value of their brand is maintained and the brand is not consequently tarnished by unauthorised use. Another critical process that companies need to remember is to renew their trademarks before they expire.
Registering a domain name is relatively inexpensive is another factor that companies should consider to protecti their brand. However, unlike registered trademarks, domain names do not have intellectual property rights associated.
Rather than the options for domain names being limited to ‘.com,’ ‘.net,’ ‘.org,’ and a handful of other generic top level domain names (gTLDs), there could soon be hundreds or even thousands of arbitrary gTLDs available (such as ‘.movie’, ‘.food’ and ‘.lawyer’). This brings the potential not only for a ‘gold rush’ on valuable domain names, but also a renewed threat of cybersquatting.
Copyright ownership is achieved when a brand idea is transformed into written form and protection only lasts for a defined period of time. Companies need to be aware that the creator of copyrights will have the vested ownership in them, which will be an issue when companies retain third parties to create the particular copyrighted material. In this situation, the third party will have ownership of the copyrighted material and will be entitled to royalties stemming from the use of this material. Therefore, companies in this situation need to have the rights of the copyright material transferred to the company form the third party through a written copyright assignment.
A further way to protect a stylised brand is through registered design rights. Registering a product design will grand a monopoly in it and allow the owner to prevent others from making, selling or using a product which incorporates the design. However, a registered design right will only last for up to twenty five years.
Living and breathing the brand.
The legal protection associated with the intellectual property rights of a company’s brand is only the beginning of the brand’s life cycle and companies need to communicate to the public that their brand is protected in order to prevent third party infringement. Companies can implement various strategies to ensure that their brand is well-known to the marketplace through the philosophy of ‘living and breathing’ their brand. Companies can start by implementing branding and marketing guidelines in senior management to ensure that there is a strong trickle-down emphasis on brand protection within the company. Furthermore, this will ensure that employees of the company appreciate the importance of attaching the © and TM symbols to all relevant brand material.
Lost in translation.
Occasionally marketing and branding can get lost in translation, even to amusing effect. In 2001, Honda introduced their latest car, the Fitta, to the Nordic countries only to discover that ‘fitta’ is a vulgar slang word that refers to a woman’s genitals in several Nordic languages. This was compounded by Japanese ads highlighting the vehicle’s attributes as ‘small on the outside, but large on the inside’. The Fitta was promptly renamed the Jazz.
Online brand issues.
Online squatter tactics are another issue that companies need to consider for brand protection. Cybersquatting involves registering a domain name with the intention of profiting from the goodwill of another party’s trade mark. Typosquatters register domain names with slight spelling differences to actual domain names used by other companies, which is used to exploit internet users who make punctuation errors when entering a domain name into a web browser. The internet provides cybersquatters and typosquatters with a place to hide, due to the enormity and complexity of the internet. Companies tend to resolve these issues out of court and the sale of Vacationrentals.com for US$35 million in 2007 by HomeAway LLC illustrates the high cost that can be associated. CEO Brian Sharples commented ‘The only reason we bought it was so Expedia couldn’t have that URL’. The US$2.00 domain name application fee is a worthwhile investment when considered in this context.
Other avenues for online brand infringement include social media, blogs and micro-blogs. This ‘wild west’ area of the web is hard to both monitor and police, Companies can minimise the misuse of their brands online by actively monitoring publications, communications and metatags to ensure that their brands are not used without authority. A fine line is needed between using company resources to pursue legal remedies and doing nothing at all.
Exploiting the full potential of a brand.
Brand registration and protection should also open the door for numerous commercial opportunities. A brand can be used in the areas of licensing, franchising, distribution and sponsorship. Each of these forms of exploitation can utilise a company’s brand as a means of generating income, thereby extracting maximum brand value.
Jump on the brand wagon.
Protecting a company’s brand is more important than ever and the value of a brand will not be maximised by lying dormant on a trade mark register. Companies should acknowledge the value of their brands and proactively take measures to ensure vigilant brand enforcement and management.