The value of trade marks – in good times and bad

Despite the economic downturn, brands are as vital now as they have ever been. With consumers being cautious over where they spend their money, they need to feel confident about what they are buying, and brands are an important part of this process.

A walk down the aisles of a supermarket shows just how important brands are, not only to traders, but to the consumers who have to make a choice between products. They are ubiquitous; everywhere you go there will be branded products jostling for attention and it’s the strong brands that are robust enough to stand out amongst the competition.

Considering that brands can be the factor that has most impact on a consumers’ choice, it’s the prudent businesses which invest in protecting them, especially in recessionary times. Yet, I see businesses, both well-established and new, which have invested heavily in promotion of their brand with shop signs, labels, websites and business cards, yet put off registering their trade mark. A brand is one of the most valuable assets on the balance sheet, and protection by registration as a trade mark is an essential long-term investment.

In monetary terms, brands can become extremely valuable assets. Interbrand, an international brand consultancy firm, recently released its annual Best Global Brands list. The Coca-Cola brand topped the list, with a value of US$66.7 billion. It was followed by the IBM and Microsoft brands which were each valued at US$59 billion. Consider the implications if these trade marks were not legally protected from others wanting to play off their successes?

It is worth noting that the whole purpose of the trade mark registration system was to make it cheaper and easier for the genuine trader to protect its trade mark. A trade mark registration, if valid, is proof of ownership. Before a trade mark registration system was introduced (in the late nineteenth century) a trader had to rely on costly and time-consuming court cases to prove it was the true owner of its trade mark. A registered trade mark gives you a monopoly to use that trade mark for the registered goods and/or services, it’s current for 10 years and renewable indefinitely for further periods of 10 years. For this reason, a trade mark registration should be seen as a long-term strategic investment rather than a cost.

Some of the most enduring trade marks, such as “Cerebos” and “Dunlop”, have been registered in New Zealand since the turn of last century and have been continually renewed ever since – through good times and through bad. Longstanding registrations for iconic New Zealand brands include the “Speight’s” trade mark and the Swanndri “swan” logo which date back to 1901 and 1913 respectively.

Newer local traders have also turned to trade mark registration for protection. The “icebreaker” trade mark has been registered since 1995 and the “42 Below” logo since 1997 – before either had made an impact on the international stage. Having a registration in New Zealand can help in obtaining a corresponding registration overseas.

As well as being a protective mechanism for a brand, a registered trade mark can also be used in the same way as other assets. It can be bought and sold, and licensed for use by others. Trade marks can also be used as securities.

Obtaining advice from a trade mark professional at an early stage is always the best option to prevent potential losses, such as developing a company and a brand only to find some years down the track that someone else has been using the same or similar trade mark or name and wants to sue you. Take the example of one of Australia's most successful beauty industry exports, the Melbourne-based Aesop, founded in 1987 under the name Emeis Cosmetics. In 1994, a British company with a similar name threatened action and Emeis was faced with spending more than AU$150,000 registering the new Aesop trade mark and changing labels.

A trade mark professional can also assist in the choice of a trade mark. Some businesses invest large amounts on designer’s fees and promotion of words and word-combinations they cannot register as trade marks because they are generic or non-distinctive terms. Take the example of Pasta Fresca. That means “fresh pasta” in Italian, and registration was refused. The trade mark was changed to Frescarini.

In more than 30 years working in the area of trade marks in several countries, good times and bad, I’ve seen that it’s the prudent traders who protect their brands. So even if you are cutting costs, do not put off registering your brand as a trade mark.

Barbara Sullivan - March 2009.