Today’s interconnected and always-on digital culture is bringing brands closer to customers than ever before. But the constant and ubiquitous exchange between companies and customers in global markets is also creating increasing pressure on companies to differentiate, manage, and enhance their brands.
Moreover, companies are coming to the realization that brands are key business assets that can be valued – and are vulnerable unless adequately protected. That’s because although the internet has become a mainstream channel where brands and customers interact, it’s also fraught with hazards for companies that don’t adequately protect their assets.
“Without the internet brand owners wouldn’t have so many headaches and we wouldn’t have so much work protecting them. Some bandit operators copy content from the internet. They can see the trademarks and they start making copies and counterfeit products, particularly in China. You can’t attack the counterfeiters if you don’t have any protection, warns Markku Tuominen, Roschier Partner who heads the firm's Brand Protection practice.According to Erik Ficks, Senior associate specializing in intellectual property (IP) and brand protection at Roschier's Stockholm office, many companies fall short of adequately protecting their brand assets simply because it’s often difficult to distinguish between different types of intellectual property rights (IPR) without specialized expertise.
“The biggest challenge for companies is realizing that if you’ve registered your company name that doesn’t mean you have it protected as a trademark. And if you have a trademarked registration for a word, it doesn’t mean you have it for a logotype or packaging. Even though there’s a broad general understanding of the value of having IPR, you still need a legal advisor to ensure that you have the right sort of IPR for the right purposes and that you don’t confuse them,” Ficks adds.
Brand a key differentiator in a crowded marketplace
Brand is often erroneously equated with the trademarks – recognizable signs, sounds, images or symbols – which quickly became the foundation for companies to claim exclusivity and to differentiate and protect their products and services. However the brand concept has evolved to encompass other intangible assets such as product designs and domain names and lately, customer experience – how customers interact with and experience brands at different touch points.
“Brand is becoming increasingly important because many products nowadays do the same thing. Many have the same attributes, but people still have different feelings and opinions about them. And that’s all about brand. So it’s about how you create a certain perception of your product for consumers to differentiate it from other products,” says Björn Johansson Heigis, Senior associate specializing in intellectual property matters at Roschier’s Stockholm office.
Consumers – and indeed many in the corporate sector – mistakenly believe that differentiation based on brand is relevant mainly in the business-to-consumer (B2C) sector, where companies visibly deploy vast resources to compete for customers, increase market share and turn profits. But that’s not the case, say Roschier’s legal experts.
“Brand is an essential part of intellectual property. Very often industrial clients consider that patents are their most important IP assets. But the importance of brands is increasing all the time, especially in industries where there is no or limited technical innovation. Brand may then become the only asset protected by IP,” Tuominen explains.
Brand matters rising to management agenda
Roschier recently co-hosted seminars with the Helsinki-based consulting firm BrandWorxx, which helps clients measure and manage brand performance as well as maximize brand value via key customer interactions in areas such as sales and marketing.
According to BrandWorxx CEO Jari Taipale, recent surveys indicate that there are twice as many so-called “brand winners” – companies with strong brands in dominant market positions – in Sweden as there are in Finland. Moreover while Finnish companies appear to be holding their own with their Swedish counterparts in the business-to-business (B2B) sector, they clearly lag behind in the B2C sector.
“Differentiation is important, but a brand’s customer touch points increasingly define the customer’s experience of that brand. For example in the B2B sector they may include calls, sales contacts, ease of doing business, products, after-sales service and so on,” Taipale explains.
“So it’s the delivery of the brand that’s important, because this often determines whether or not a company gets repeat business – and whether the customer develops any loyalty to the brand,” he adds.
According to Taipale, the last three to four years have seen a growing recognition of the role of customer-focused brand development in business success – particularly in Sweden, where more than 40 percent of CEOs are taking a lead role on brand issues.
“Nowadays many CEOs are talking about taking brand issues to the board. But management teams and different process leaders must also understand their role in building brand at customer touch points. The companies that understand the power of brand in business success will win,” Taipale declares.
Roschier Sweden’s IP specialist Björn Johansson Heigis concurs that more Swedish so-called C-level managers – such as CEOs or CFOs – are signing up to prioritizing brand matters as part of overall corporate strategy.
“Companies have had IP strategy, for example, for some time. But what is quite new is that they’re beginning to understand that they must combine the IP strategy with the business strategy and the IP strategy should make business strategy work,” Heigis says.
According to Ficks, IP matters may also have progressed to the board agenda partly due to growing shareholder interest driven by the understanding that patents, for example, can be a lucrative asset for some companies.
“We have Ericsson in Sweden, and Nokia in Finland has made a lot of licensing revenue from patents. And companies are realizing more and more that the same applies to other aspects of intellectual property, including everything surrounding the brand. So in general there’s a larger interest in the financial value of intellectual property rights,” Ficks explains.
It’s not difficult for shareholders and board members to understand the monetary value of trademarks and intellectual property, but what about brand as a whole? According to Taipale of BrandWorxx, CEOs traffick in numbers – so brand matters have a better chance of making it to the boardroom if they can be quantified.
Roschier Helsinki Partner Markku Tuominen says the International Organization for Standardization (ISO) has introduced a new brand valuation standard which provides a consistent and transparent framework for determining the monetary value of a brand. In addition, companies like BrandWorxx measure the performance of different brand touch points at regular intervals to help companies determine the payback on brand investments.
“The monetary value is not so relevant in terms of whether or not it’s right or wrong. But the importance is the development – monitoring and controlling the development based on management decisions,” Tuominen notes.
Risk management crucial for brand protection
Roschier’s brand experts point to the importance of risk management programs led by competent professionals to mitigate compromising – and devaluing – brands. Apart from actively managing trademark and IP portfolios to ensure they are current, companies also need to look ahead.
“Think ahead to consider not only markets where you’re doing business today, but also where you’ll be doing business tomorrow. Whether or not you actually have a global reach, think about if you have sufficient trademark protection in all the markets where you operate,” advises Roschier Sweden’s Ficks, adding that failure to register trademarks locally could see companies embroiled in costly litigation to safeguard their trademarks after the fact.
IP audits conducted by trusted advisors will help companies ensure that their trademarks and other intellectual property are registered in every relevant country. According to Tuominen, centralized registration systems like the European Union trademark system allow companies to register their marks in one central office, offering protection in the entire EU.
“It’s important to utilize these systems and also before you start using any trademark it’s vital that you conduct searches before the launch, because someone else may have already registered a similar mark for similar goods or services and then you’ll find yourself in a dispute,” Tuominen cautioned.
Depending on the number of countries, classes of trademarks, number of goods and services requiring protection, the registration process may be costly. But the alternative – expensive trademark infringement litigation or the cost of altering all of the marketing assets related to a product or service launch – could be far worse.