As globalisation extends and deepens, branding is an essential business tool. A company's brand image distinguishes its products and services from those of its competitors, and informs actual and potential customers about the promises which a company makes and the level of services which they should expect. By simply making reference to a brand, take for example BMW, images and expectations about the products and/or services are put into the mind of the reader/viewer.
Brands cultivate customer loyalty and in turn boost revenue. However, when developing and creating new market strategies, owners should be conscious of the issues concerning brand protection to avoid potential issues and conflicts. This article provides top tips on ways to avoid potential branding pitfalls.
Is your brand free to use and register?
Brands can be sophisticated in design and expression and can take a wide variety of forms such as words, symbols, slogans, designs, letters, and use of shapes or domain names. Importantly, the registration of a trade mark gives the owner exclusive right to use the mark in connection with the goods or services for which it is registered. Therefore, whether you are an established business or an entrepreneur developing a proposed brand for the first time, it is worth conducting a clearance search to identify any identical or similar marks which have already been registered or used. This diligence exercise is recommended even when an existing brand is expanded to include new goods or services in a new industry or geographical region.
A search of every relevant national and foreign register where you intend to sell your products and/or provide your services should be conducted which will alert you to any potential conflicts. Not only will this save your business the long term cost of re-branding, but might also avoid potentially infringing the rights of third parties.
It is worth ensuring that a proposed brand carries the right connotations for the relevant products and/or services. For instance, check that the slogan works on all occasions. This consideration is particularly relevant where your business intends to provide goods and/or services overseas. For example, is the symbol, slogan or name deemed to be culturally offensive or inauspicious in the local dialect?
It is vital to check the ownership of the copyright of any logo before launching a new brand. Ownership of copyright is often overlooked, particularly when the design and development of a logo or image is sub-contracted to a third party. A key tip is to secure in writing the ownership of any copyright to works created or published in pursuit of your proposed brand.
There is a general assumption by businesses that they automatically own the copyright to works developed by sub-contractors. As such, works which are commissioned by a third party provider will belong to the contractor, unless ownership is clearly assigned to the commissioner.
Skipping over this step could lead to a costly nightmare further down the line, as Fresh Trading Ltd (creators of Innocent Smoothies) nearly found out. The legal battle over the ownership of the INNOCENT logo highlights the importance of determining copyright ownership from the onset. In Fresh Trading Ltd v Deepend Fresh Recovery Ltd and another  EWHC 52, the agency who was commissioned to design the INNOCENT logo went into liquidation, and their purported interests were subsequently assigned to a third party company who sought to invalidate Fresh Trading Ltd’s trade mark (as the commissioner). In the absence of a legal assignment, the High Court ruled that an equitable assignment arose in favour of Fresh Trading Ltd. Crucially, the judge found that the Head of Agreement included a provision that ownership would pass on approval of the designs by the commissioner, although this obligation was not conditional on remuneration being paid (in this case, the remuneration was the allotment of shares to the design company).
The courts have historically made clear that as a principle, whether beneficial ownership is to be implied will be assessed on a case-by-case basis.
Aside from being free and available to use, a potential brand/trade mark must also be valid and registrable in itself. This means that a trade mark must fit the definition of a trade mark and must be capable of distinguishing goods or services of one undertaking from those of other undertakings as required under the Trade Marks Act 1994.
As a golden rule, a proposed brand must not be the same as, or cause a likelihood of confusion or association with another registered mark. It is important to consider the level of similarities in terms of appearance, sound and conceptual meaning of a proposed mark against a registered brand. One must also consider if a consumer is likely to associate the origin of the goods or services with an already registered mark.
A trade mark must also not be too descriptive. For example, SOAP cannot be registered for soap products – if it was, any other business selling soap would likely be liable for infringement. As such, intellectual property law cannot allow one to gain a monopoly for a generic term which should be free for use by competing traders.
It is possible to obtain a registration for an inherently non-distinctive mark if it has acquired distinctiveness through use. An example of this would be the Nike “swoosh” tick logo. Prior to Nike’s use, a tick would likely to have been found non-distinctive for clothing, footwear etc. However, as a result of Nike’s extensive use of the mark over a number of years, the public have come to recognise products bearing this mark as originating from Nike.
The acquired distinctiveness of a brand is enhanced by consistent and agreed use. Marketing teams looking at new styles and branding initiatives need to engage with internal and external advisors to ensure use of the brand is consistent across the whole business. If you are committed to the brand, you should document, collate and save any of the evidence of use of the brand, which will ensure that when you come to apply to register the brand/trade mark you have a bank of evidence which can be submitted to the trade mark registry.
Similarly, if you do not police the use of your brand, it may become generic and liable to revocation by a third party. For instance, sellotape, escalator and thermos were all registered trade marks before being revoked for becoming generic.
When using a brand, consistency is key. As well as helping increase the distinctive character of an unregistered brand, consistency ensures that your registered trade mark will become less vulnerable to third party attacks. If you do not use the brand consistent with what is on the trade mark register, then a third party, such as a competitor can apply for it to be revoked.
Remember if you do not use it you lose it. In most jurisdictions, failure to use a trade mark for more than five years will render it vulnerable to cancellation in respect of the relevant goods and/or services.
A prudent brand owner should also bear in mind the long-term function of brand in parallel with anticipating future markets and trends. When creating a brand, it is important to consider what word, slogan, logo etc. is the easiest type to expand and develop. For instance, will the brand be appropriate when applied to new products? If a product or service is likely to develop and change over time - for example undergo significant re-branding or physical change – the trade mark obtained on commencement of the business may no longer be applicable to the product and a new trade mark may need to be registered.
The concept of brand expansion is also essential if you are contemplating whether to enter into a co-existence agreement with a third party. It is vital for you to consider the future of the brand, as entering into a binding agreement may fence you in and hinder any brand expansion.
An area which is often overlooked is domain names; however in the digital age they can be vital assets to your business and brand. Obtaining a domain name for your brand will help with marketing your products and/or services, as well as preventing any third parties from cyber-squatting by purchasing a domain name for the sole purpose of selling it to the brand owner. If you are committed to the brand, purchasing a domain name will not only enhance your brand portfolio, but help you promote your business.
Finally, it is vital to seek expert advice about trade mark and domain name registration and use from the onset. The complexities of the law in this area and the commercial values attached to branding, it is important to involve specialists and obtain protection and advice as early as possible in order to avoid potential conflicts and issues.