In brief, could you explain the premise of brand protection?
A brand is often the most valuable asset that a business owns, although it rarely appears on the balance sheet.
A business’s brand is really a trademark (which is identifiable and capable of being registered in respect of named goods or services) combined with the ‘goodwill’ that has been generated by that business. Goodwill is difficult to define, but put simply it is a combination of what a business says about itself and what others say about the business. It can be created by the exclusivity of goods, or how cheap they are, by luxury service or by a ‘no frills’ service. Gucci has goodwill, but so does Primark. In practice, goodwill is a crucial revenue driver because it draws consumers to a business, and this is what lends a brand value.
A brand is also one of only a few assets that can increase in value the longer it is used, provided that its owner invests in protection. Brand protection consists of the varied steps that should be taken to maintain the value of that asset. Practical steps would typically include registering your trademarks and paying subsequent renewal fees, taking action to prevent third parties from using a potentially conflicting trademark or seeking to take advantage of the associated goodwill, and ensuring that your trademarks are used in accordance with the registration. However, a key component of brand protection is ensuring that everyone in a business truly understands the importance of the brand to the success of that business.
A brand is often the most valuable asset that a business owns, although it rarely appears on the balance sheet.
How is IP law essential to this?
In the UK, a strong legal framework provides for the protection of your brands; it provides for the registration of trademarks and recognises unregistered trademark rights. Unregistered trademark rights are acquired as a result of the use made of it in the marketplace, but they are uncertain in that a business cannot be sure that they exist before it needs to rely on them. If a business wants to assert unregistered rights, perhaps to prevent a third party from using a similar trademark, it must first demonstrate to the satisfaction of a court or tribunal that those rights exist. To do this, a business must present detailed evidence of use of the trademark over a long period of time that demonstrates that it has educated the public to recognise a particular sign as a trademark – as an indicator of the origin of your goods or services.
However, if a trademark is registered, its owner has already satisfied the technical requirements of ownership. A trademark registration is also incredibly powerful; it provides the owner with exclusive rights to use that trademark and the ability to stop third parties from using a conflicting trademark quickly and cost-effectively. Trademark registration provides businesses with the strongest platform from which to protect their brands, and whilst every case is different I very rarely recommend that a business should rely upon unregistered rights.
What features of a trademark make it an effective tool for protecting brands?
A trademark is the only form of registrable IP right that can be maintained for an indefinite period of time. Provided that its owner uses the trademark in the right way and pays the renewal fees, that registration will go on serving the business. The protection is not ‘time-limited’ like patents, designs or even copyright.
However, whilst a trademark registration is an effective tool in terms of protecting a brand, a business can boost that effectiveness by choosing a strong trademark. I spend a lot of time working with clients who are looking for new trademarks, whether it is a house mark or a product mark, and my message is always ‘pick a strong mark and you will rarely have to talk to me’! A ‘strong’ trademark is one that has a high level of inherently distinctive character. Avoid using a mark that is not descriptive of the relevant goods or services in any way. One should also avoid invented words, or words that are meaningless. The scope of protection for a distinctive trademark is broader than it is for a less distinct mark, even where there is a registration in place.
Whilst a trademark registration is an effective tool in terms of protecting a brand, a business can boost that effectiveness by choosing a strong trademark.
What unique insight can a Chartered trademark attorney offer regarding brand protection?
A Chartered trademark attorney has been specifically trained to a very high standard to work with businesses and organisations to create and protect trademarks and brands and to maintain their value. The life cycle of a brand can include the prosecution of applications to register, contentious proceedings, license agreements, transfer and everything in between. This can be a broad scope of closely inter-related work that requires specialist advice and guidance in order to ensure that the value of the brand is maintained now and in the future. In fact, an important part of our role is to ensure that the protection in place for trademarks and brands is future-proofed insofar as is possible; the applications that a business files today need to be capable of protecting that same business in 5 years’ time and potentially forming the basis of applications filed in other countries.
I also think that there is a real benefit to having an experienced external advisor on your team; a business’s relationship with its brand can be quite emotional – which is a very good thing - and sometimes a third party can act as a practical sounding board. This can be particularly relevant for family-owned businesses.
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Are there any particularly common kinds of brand abuse that a growing SME might encounter?
Brand abuse can fall into two categories: harm from third parties, and self-inflicted harm.
As a business grows and becomes more successful, it is almost inevitable that competitors will want to take advantage of that success. The competitor may use similar trademarks in an attempt to benefit in the goodwill that another business has created; they may begin selling counterfeit goods either in the UK or abroad; they may file applications to register the same trademark in non-UK countries in an effort to hinder the success of a business.
Brand abuse can also be self-inflicted, believe it or not. For example, if a business allows its brand to become a generic term for goods or services, it may surrender its exclusive rights to use that trademark. Another key challenge is to ensure that the protection for a trademark matches growth, for instance into new commercial or territorial markets.
As a business grows and becomes more successful, it is almost inevitable that competitors will want to take advantage of that success.
How would you advise your clients to avoid these?
As your business grows, it is likely to become more important to rely on your attorney to ensure the safe management of your brand portfolio, to monitor administrative deadlines and third-party activity. In respect to monitoring their competitors’ activity, I strongly recommend that businesses and organisations make sure that their attorneys put in place a ‘watch’ service. This is designed to monitor applications (in specified territories) to register trademarks similar to their own and provides information that allows the business to take proportionate action, as necessary.
It is critical that brand owners have good protection in place (by way of registration wherever possible) which is regularly reviewed to ensure that the protection is in line with your commercial growth. If the range of goods expands, if the business has plans to trade in a new country, if the brand is re-freshed, some consideration and possible additional protection is required.
I usually review my clients’ portfolios at least twice a year to capture any changes that have occurred in a timely manner. This process also includes a review of the manner in which my clients are using their trademarks in order to ensure that the are being used properly.
Have you observed any emerging trends in this area of IP law over the past few years?
In 2017, academics at George Washington University published a study suggesting that trademark count rather than patent count is a better indicator of innovation. I remember reading the study and being genuinely delighted, because it represented such a shift in thinking. I think that over the last 5 years there has been a real increase in the understanding of how important a brand is to the success of a business, whereas previously that role had been undervalued.
Also, the scope of what can technically constitute a trademark has broadened considerably. Non-traditional trademarks could now include touch (‘tactile’ or ‘texture’) marks, motion marks and holograms and hashtags. In part, this recognises that real commercial value may lie in whatever it is that distinguished your trademark from your competitors’ trademarks, and should be capable of protection, but in some respects it is also due to recognition that trademarks must now be capable of operating in a digital world.
Non-traditional trademarks could now include touch (‘tactile’ or ‘texture’) marks, motion marks and holograms and hashtags.
What legislative developments do you expect to see in IP law and brand protection in the near future?
The UK courts have sometimes struggled to apply the trademark decisions issued by the CJEU with enthusiasm and one of the effects of Brexit is that the UK courts have the opportunity to develop its own body of case law. Another, particularly pressing matter following the UK’s departure from the EU concerns the exhaustion of rights, which underpins parallel trade.
Changes to statutory protection are long overdue and perhaps now can be addressed. The current law was enacted in 1994 and whilst it has been ‘tweaked’ over time, it does not cater for the commercial world that exists today.
Rigel Moss McGrath, Partner
HGF
Address: 4th Floor, Merchant Exchange, 17-19 Whitworth Street West, Manchester, M1 5WG
Tel: +44 (0) 161 247 4900
Email: mcgrath@hgf.com
Website: hgf.com
HGF is one of Europe’s leading Intellectual Property firms, bringing together over 200 patent attorneys, trademark attorneys, design attorneys, IP solicitors and attorneys-at-law across 22 offices in seven European countries to provide a dynamic and complete IP solution.
Rigel Moss McGrath is a Chartered Trademark Attorney and Partner at HGF. She has practiced in the UK for almost 20 years and has particular experience in brand protection and contentious trademark proceedings.
