Tag Archives: Brands and Trademarks

Want To Avoid The Need To Rebrand? Find Out The Pitfalls Before You Choose A Name

Picking a name for your business isn’t always straightforward.

An obvious first step for entrepreneurs embarking on a naming project is to pick some names and do a search engine check to assess whether anyone else is using the name. If there’s no sign of a domain with that name, that might mean no one else is using the name, but not necessarily.

Unfortunately, too many business owners fall into the trap of not doing any further checks. They secure the domain name of their choice, and set about commissioning logo designs and business cards.

With almost 130 million .com domains and nearly 11 million .uk domains in use, it’s fair nowadays to assume that most brands have an internet presence – but that’s not always the case. Also, if a brand name is being used as a product name, it may not necessarily show up in the search engines. Alternatively, someone may have registered the name pending creation of a new brand.

The Problem With Not Doing Adequate Checks

The real problems come when an eager business owner doesn’t commission professional searches and just adopts the name, whether or not they file an application for a trademark.

All too often, time and money has to be written off when the inevitable cease and desist letter arrives because someone else has a better claim to the name.

Worse, this can all happen years later. Someone who owns a conflicting trade mark doesn’t have to oppose your application at the time you submit it, and if they simply haven’t registered their trademark you would have a messy passing off dispute on your hands.

(When you see the symbol, it means the business owner is claiming trademark rights in the name. It doesn’t necessarily mean the name is capable of being trademarked, or that they haven’t trademarked it yet. They may simply have not changed the symbol to ® to indicate the mark is registered.)

You might have traded happily for a few years, building up significant goodwill and reputation in your brand name… only to find you have to rebrand. So, it’s a false economy to not.

The Thinking Behind Rebranding

A trademark conflict is only one reason why a business might need to rebrand.

Another common reason is when a business has a name that is too descriptive to qualify for trade mark protection. That’s because a brand name must be sufficiently distinctive to qualify as a trade mark.

Two big rebrands many of us remember were when British Telecom became BT and Norwich Union evolved into Aviva. There are countless other examples, including BNI (formerly Business Network International) and HSBC (formerly, Hong Kong and Shanghai Bank).

A look at Interbrand’s Best Global Brands report demonstrates that every company has to have a distinctive name or – like IBM, HSBC and KFC – use initials that originally began as a descriptive name.

But even opting for initials doesn’t always work.

In 2000 the World Wide Fund for Nature (“WWF” to most Britons) sued the owners of the World Wrestling Federation (“WWF” to most Americans) for trade mark infringement – and won.

In 2002, the men in tights therefore rebranded as “WWE”, the World Wrestling Entertainment – and even had to give up the WWF.com domain.

With the spread of globalisation, another common reason for rebranding is to have a consistent brand internationally.

So, while many Brits still think of them as Opal Fruits, Marathon bars and Jif floor cleaner, their names were changed to the globally-used Starburst, Snickers and Cif.

And sometimes it proves necessary to rebrand to shake off negative associations with a previous name.

Entire towns and cities have rebranded for this reason – Windscale in Cumbria became Sellafield in 1981, while Bombay in India became Mumbai in 1995.

However, rebranding in this way doesn’t always work. Ask Gerald Ratner.

After the CEO of the Ratner jewellery chain was recorded in 1992 describing the jewellery sold in his stores as “total crap” and unfavourably comparing the company’s earrings with a 99p prawn sandwich, £500 million was wiped off the company’s value and 300 of its stores closed after customers gave the Ratner brand the cold shoulder. In 1993 the Ratner Group rebranded as Signet and moved its HQ from the UK to America. Signet, however, died a retail death in Britain and the group’s stores quickly rebranded to the existing H Samuel, Leslie Davis and Ernest Jones brands that remained largely untainted by Mr. Ratner’s words.

Rebranding – whether forced or voluntary – is not without risks, quite part from the costs.

Before you make a change, think about the following:

  1. Consult your customers first

Customers often don’t like name or logo changes. When Gap redesigned its logo in 2010, it was unprepared for extreme backlash its new logo evoked. Twitter exploded and more than 2,000 comments were posted on the company’s Facebook page, mostly demanding the return of the traditional logo. The online outcry led to Gap scrapping its very expensive new logo after less than a week, saying “the company’s customers always come first”.

  1. Check the translation

We live in the age of globalisation. If you sell your goods or services abroad, you need to think about what your brand name means in the native languages in your overseas markets. Some brand names are ill-advised because they have unintentionally unfortunate – and sometimes hilarious – connotations. A name like Pocari Sweat means it’s unlikely that particular Japanese sports drink will ever make much headway in the USA or Britain.

  1. Don’t act in haste

If you have to rebrand because of a trade mark conflict, don’t panic and trip yourself up by acting too quickly. See if you can negotiate a little extra time so you have some breathing space to run down existing stocks and to choose the right new name.

  1. Timing is everything

If you decide to rebrand, the best time to do so is once your business concept is proven and you know your business is viable. It’s not a good idea to continue with a descriptive name beyond that point as doing so will hold your business back in the long run.

Customers and clients identify and choose products and services by name. It’s therefore important to build up recognition in your name as early as possible, otherwise your business may miss out on the potential to increase revenue and all the earlier goodwill generated may be lost.

Conclusion

It’s important to think about choosing a relevant and distinctive brand name in the very early stages of planning a business.

A well-considered name can be an important factor in building a valuable, successful business – and it can save you a lot of money and effort that is needed to rebrand at a later stage.

If you’re thinking about names for your business idea and want expert advice on trade marks and branding, do get in touch.

Trademark protection in China

While the Chinese system of trademark registration shares many common elements with the European regime there are subtle differences that present a trap for the unwary.

Even Donald Trump had a long standing battle with a Chinese businessman, who registered the name ‘Trump’ in China preventing the US billionaire from using his own name for construction services.

That battle is now over, thanks to a recent ruling of the Chinese authorities which recognized the US President as the legal owner of the ‘Trump’ brand. Chinese intellectual property legislation has been notoriously difficult for Western companies to deal with.

Chinese trademark problems

In 2012, the tech giant Apple Inc. had to settle a $60 million lawsuit with a Chinese firm, Proview, in order to use the ‘iPad’ name. A steep price for not getting in early, and, one which is set to be even steeper for the new Apple iWatch as we wrote in our blog “iWatch Trade mark – Apple In Multimillion Dispute”.

However, Apple is not the only company to fall on the wrong side of Chinese trademark issues. Pfizer had not registered the Chinese equivalent for the name ‘Viagra’ and consequently ended up losing the name to a local Chinese company that had claimed ownership over it. Luxury fashion brands Burberry and Hermes have also run into trademark problems. The importance of your company’s name has never been as critical as it is today.

In 2015, a New Balance affiliate was ordered to pay $16 million in compensation to a Chinese show manufacturer who had registered the Chinese brand name “Xin Bai Lun.” New Balance knew about the trademark but continued to operate under the impression that there would be no consequences.

If you are manufacturing or selling in China, undertaking the correct international searches and working with intellectual property lawyers and translators is crucial.

Our Intellectual Property Advice

  1. Know Your Name

While in the UK, and Europe generally, you often only need to consider the English language trademarks that you use with your products, there are other dimensions to consider when securing trademark protection in China. The original brand name may be a priority, but your business, products or services will also become known by a name in a local dialect. Unless you develop a strategy early on, you may find that the market has chosen a brand name for you. This is what happened in the early 1990s, when Chinese businesses began using Chinese characters to approximate the sound “Coca-Cola”. Unfortunately, though the wording used may have had a similar pronunciation, actual translations of the text included “female horse fastened with wax” and “bite the wax tadpole”.

Well in advance of taking steps to extend your brand into China, you should decide how you would like to be known. Beyond your domestic branding, you will need to consider translation or transliteration of your name, whereby you either use words in a local dialect to approximate the sound, or translate the meaning of your trademark into Chinese. Coca-Cola were lucky to find a Mandarin pronunciation which had a positive meaning (“Ke Kou Ke Le”, roughly “permitting the mouth to rejoice”), but you may not find it so easy. You will also need to consider registering your trademark in Chinese characters, and the position is further complicated by the fact that may different characters have the same pronunciation, so the best approach will depend on the particular name you choose.

 

  1. Move fast

Most people tend to see intellectual property as a burdensome cost at the beginning of an entrepreneurial venture. Whilst it is true that intellectual property registration can be a costly exercise, investing in your intellectual property early will save you thousands, if not millions down the line. This is true especially if you intend to take your brand to ‘first-to-file’ jurisdictions like China. There is no end to those who will try to appropriate from you, so make sure they do not appropriate your intellectual property by registering before you do.

IP squatting, whereby trademarks are registered by a local entity which then trades on your success, or which tries to sell the rights back to you, is a problem in China, where it can sometimes be big business. So, timing is  important. If you wait for your plans to mature, you may find  it’s too late, and a local Chinese business has already adopted your branding, as happened to Starbucks. While the coffee giant eventually won its legal battle with the Shanghai coffee corporation, it could have avoided the costly dispute if it had registered its own brand in good time.

It is typical for businesses to outsource manufacturing of their products to China, and in doing so license their Chinese partner to use their trademark for that purpose. In some cases, the Chinese manufacturer, or another entity in China, will hijack the brand, registering it as a trademark and securing ownership of the rights to it in China. Case law on this point is developing, but there is a risk that such a hijacker might bring an action against the manufacturer for trademark infringement, stopping production in its tracks. So, even if you manufacture but don’t sell your products in China, it is crucial to secure local trademark protection.

  1. Have An Intellectual Property Strategy

Throughout much of the world, trademarks are categorised according to the Nice Classification. This system sets out 45 classes of goods and services for which a given trademark will be used, for example class 25 covers clothing, class 9 covers software, and class 41 covers education, among other things. The same trademark name can be registered in different classes by non-competing businesses, and you can find out more about trademark classification here.

Although the Chinese trademark system does make use of the Nice Classification, it further divides these classes into narrower subcategories. This means  the same mark can be registered in the same international class, for similar goods or services, provided that the registrations fall within different subclasses. For example, general footwear, and football boots, would fall in different subclasses, and the same trademark might be registered by different companies in each.

A cost effective, and efficient way to protect trademarks abroad is by using the Madrid Protocol system of international trademark registration. This mechanism lets you extend an existing application or registration into a number of different countries in one go, rather than filing in each individually. However, the international applications must be filed in the same classes, and against the same goods and services. Typically this is not a problem, but in China, while it may be cost effective at first to file using the Madrid system, you may find that you also need to file an application directly to ensure  you are protected in the correct subclasses. In fact, where you have the resources available, registering a national Chinese mark may be the priority.

We are well placed to help you to take control of your intellectual property in China so your business can flourish from a secure foundation. Do get in touch for a no obligation confidential discussion.

What is a trademark and how to register yours correctly

 

What is a trademark and how to register yours correctlyWhat are trademarks?

Trade marks identify your products and services so that customers may find the products and services they like and avoid those they didn’t enjoy. If consumers have had a good experience with a business, or have heard that a particular business provides effective service, they may want to buy from that business. They should be able to reliably do so, without the risk of finding an imposter instead. Trademarks serve this purpose as they are your business’ “badge of origin”.

Signs and other identifiers

The signs that are typically registered are words (that is, names or slogans), and logos. Packaging and design features of a brand, including graphic symbols, are also sometimes registered.

There are other identifiers that are less commonly registered, such as musical jingles, shapes, colors, and smells. A well-known trademark registration of a shape is the Coca-Cola bottle. This is no simple feat to achieve as a registration. However, now that Coca Cola have managed to secure a trademark for this bottle shape, they have exclusive rights over the iconic bottle for as long as they continue to use it.

A registered trademark secures rights over not just the same name, logo, tagline or other sign, but also over confusingly similar ones too.  That’s because the aim behind them is to ensure that buyers can find the products or services they are looking for, and won’t be confused by competing products or services that are branded in a similar way.  So, a registered trademark owner is able to challenge others who use similar branding.

For example, just recently we heard that Darryl McDaniels, a member of influential hip hop group Run-DMC, has filed a £40.7 million lawsuit against Amazon, Walmart and other stores for using the  Run-DMC name and logo on clothing they sell. As McDaniel has the name and logo registered, and this makes it easier for him to enforce his rights and prevent competitors from benefiting from his trademark’s reputation. Similarly, McDonald’s was able to prevent the registration for foods or beverages, of trade marks combining the prefix ‘Mac’ or ‘Mc’ with the name of a food stuff or beverage.

Registering trademarks is therefore an essential step to retaining your brand’s distinctiveness, and securing the exclusive rights your business needs over elements of your brand identity.

How to register your trademark correctly

The starting point is to make sure you may legitimately lay claim to the name, tagline or logo you intend to use (or continue to use) and register.

The name of your product or service is the most important right to secure. Under trademark law names may be shared, which means you need to focus on choosing the business categories in which to register your mark. Trademarks are registered by reference to specific ‘classes’ or business categories. This means that if your desired name is already registered but for different business activities, you may still register it, and co-exist with another business who is using the same name for those different purposes.

For example, Automobile Association and American Airlines are both known as AA; similarly POLO is registered by three different businesses who use the name for a car, confectionery, and a line of clothing.

 

So, when you want to put your stake in the ground by claiming the rights to the elements of your identity, such as your name, logo, or strapline, you should be clear about how you’re going to develop your business. Then you can ensure you secure an adequate scope of protection in your  trademark registration. Otherwise, someone else may have rights to use the same or a similar brand element in the business categories you later realise you need. An example may help here. Say you register your name to sell clothing, and then later decide to also sell cosmetics. If someone else is using a similar name to yours for cosmetics, you would infringe on their rights, meaning you’d need to find a different name for your cosmetics. So, don’t ever assume you may just go ahead and use your name for any business activity. First check whether you’ve registered the name for that business category – cosmetics, in this example, and if not, do a search and register in the new business category before embarking on the new use of your name.

Advantages of registering a trademark

The advantages of registering a trademark are significant. Registration considerably reduces the risk of others picking the same brand element for their new products or services because your registration is on the public trademark registers. People are expected to search these registers before choosing names or other brand elements. If you’re not on the register someone else may build rights over the same name or other brand element, and this can lead to messy disputes and unnecessary costs.

Another aspect of registering your trademark properly is to register in other countries in which you do business given that trademarks are territorial. This means your registration only protects you in the UK (or EU, if you’ve registered an EU mark).

A UK trademark registration covers the UK only while an EU trademark registration currently covers all 28 European Union countries in a single application, including the UK.  However, once Brexit kicks in and we leave the EU, this will no longer be the case, and you should be considering your strategy carefully if you’re registering your mark now.

To protect your mark in other countries, it is possible to use your trademark registration in the UK or EU as the basis of wider applications in other countries, either under the Madrid Protocol or directly with an agent if your desired country isn’t party to the Madrid Protocol.

You don’t need to be a household name, or a huge multinational to aspire to be a brand in the sense of becoming a recognised provider of the products and service you sell. Your brand protection is  important.

What JK Rowling Needed To Know About Intellectual Property law

J K Rowling and Intellectual PropertyJK Rowling is now a successful writer with one of the most valuable brands. It’s taken her just 21 years to get there. Initially, when she sent her first manuscript to publishers, she was turned down by more than 12 of them before Bloomsbury, a publishing house in London, accepted her book.

Authors starting out will rarely have an agent to look after their interests.  So it’s important in those early days, for a writer to take advice on the publishing agreement before signing it. It’s the same with any project involving IP – it’s vital to get IP advice before implementing your ideas.

Why a publishing agreement is so critical 

Certainly, JK Rowling’s considerable wealth didn’t result from book sales alone. However, the foundations for that wealth began with her first publishing agreement which is a critical contract.

The publishing agreement determines how the intellectual property arising may be exploited. The rights you give your publisher set out who may control the various rights in the work you create.

As the creator of the work, the writer will own the copyright in it. Therefore, the agreement should protect your copyright, and you should never give it away to the publisher. So, if your publishing agreement has a copyright assignment clause in favour of the publisher, don’t sign it before taking advice.

Most publishers will let authors keep the copyright, and will insist on having certain rights, such as the exclusive right to print, or to produce translations, licensed to them. Other rights like film, or television rights might well be left entirely to the author, while it will depend on the type of book and the publisher what happens to book club rights or similar.

At the time JK Rowling secured her first publishing deal, who could have known her books would have so much success? Yet if you are someone creating a business, or an artistic work, or piece of music, you need to assume you will be hugely successful, and not give away your rights unthinkingly.

Ownership of copyright underlies JK Rowlng’s wealth

If JK Rowling had assigned her copyright in Harry Potter to the publisher, she would not have achieved the profits and wealth that her writing gave rise to. It’s because she retained ownership of copyright that she was able to licence others to use the name on merchandise, to license the making of films, and to carve out rights to licensees of her work on a geographic basis.

Harry Potter has been registered as a trademark as have other characters, along with many designs produced around the books’ elements. Securing such IP rights or giving others the right to do so plays a crucial role in the income generated by the brand.

Once you own IP rights which are desirable to others to use, you may license a whole host of businesses in exchange for royalties. Licensing increases your  revenues for as long as there is a market for your creations. And unlike physical property there is no natural limit to the number of people to whom you can give a right to use your IP. So the revenues to be earned from IP far exceed what you would be able to earn from investment in physical property like land which may only be let out to one party at a time.

Consequently JK Rowling’s creations have been used on a variety of goods and services. The movie characters have been licensed to theme parks and other organisations, and reproduced on many different merchandise. Licensing agreements are flexible as they allow you to license as much or as little of your IP as you like.  JK Rowling’s creations have made billion dollar profits as a result.

Conclusion

In conclusion, Rowling’s considerable wealth today is all down to her intellectual property, with her biggest source of income being generated from licensing.

So the moral is to protect your IP if you have ideas to bring to the world. Whether you are an author, designer, software developer, or entrepreneur, don’t ignore IP whatever you’re creating. By taking timely advice and setting your IP strategy you will be better placed to secure essential IP assets and build your business on strong foundations. The future growth of any business is based on its IP.

Why not begin by attending my next workshop by following the link on the sidebar of this blog.

 

Court Rules on Playboy Domain Name Dispute

IPEC dismisses Playboy domain name claim

Court Rules on Playboy Domain Name DisputeThe Intellectual Property Enterprise Court has published its judgment in Ross v Playboy Enterprises International, Inc [2016] EWHC 1379 (IPEC). The court dismissed the claimant’s claim for declarations of non-infringement, groundless threats and entitlement to retain a domain name.

The claim arose out of the claimant’s ownership of the playboy.london domain name. The defendant, as owner of the world famous PLAYBOY trade marks, relied on a decision under the Uniform Domain Name Resolution Policy (UDRP) stating the domain should be transferred to it. The court held it did not have the authority to overturn the UDRP decision except in the case of manifest error, which was not relevant to this claim.

Evidence adduced at trial showed the claimant intended to use the domain name to chronicle the childhood and adolescence of his children. Access to the website would be restricted to users who had been given login details by the claimant. Accordingly, the court found there could be no trade mark infringement because the claimant was not selling any goods or services from the website. However, the judge ruled the claimant could not rely on the groundless threats provisions of the Trade Marks Act 1994.

The claimant claimed his use of the word PLAYBOY in the domain name was an ironic reference to himself. The judge concluded this irony relied on the reputation and goodwill in the PLAYBOY mark. Accordingly, the claimant’s use of the domain name would lead to passing off.

The court held it did not have the power to overturn the UDRP decision and the application for a declaration was an attempt to circumvent the court’s lack of jurisdiction. The judge further reasoned that granting a declaration stating there had been no trade mark infringement would not serve any useful purpose, since a similar declaration in relation to passing off could not be made. On this basis the claim was dismissed.

Formula One Trade Mark Dispute IP Licensing

Formula One Trade Mark Dispute underlines need for Careful IP Licensing

Formula One Trade Mark Dispute IP LicensingThe High Court recently published its judgment in a case involving the Marussia Formula One team. The case related to a claim for trade mark infringement and underlined the importance of businesses ensuring they properly manage their IP rights.

 

The court heard how the claimant had licensed its trade mark to the defendant Formula One team, but that the defendant team had continued to use the trade mark after the licence term had expired. The team was refused permission by Formula One’s governing body to change its name during the course of a season, leaving them with little option but to continue racing and infringe the claimant’s trade mark as a result. Refusing to race would mean forfeiting the team’s entitlement to a substantial amount of money due to it.

 

The court held that the defendant therefore had no real prospect of proving, as it had asserted, that the use of the claimant’s trade mark had occurred with the claimant’s consent. It further held that the defences advanced by the defendant were unlikely to succeed and that the defendant would need to provide £1.75 million by way of security for costs if it wished to proceed to trial.

 

The case shows the importance of considering IP rights at an early stage and ensuring any agreements entered into properly reflect the needs of the parties and protect their interests. In particular, the defendant in this case would have benefitted from ensuring the licence was not timed to expire part way through a season. The facts of the case show the balance of power was strongly weighted in the trade mark owner’s favour, since the licensee was heavily dependent on the owner providing the funds which would allow it to participate in the Formula One season.

 

Many SMEs could potentially benefit by holding their IP in a separate IP company and having the holding company licence that IP to the company through which the business is operated. This has the benefit of protecting a business’ investment in its IP by ring-fencing its intangible assets. This will be particularly important if the main business falls into difficulties and should be considered at an early stage.

 

Marussia Communications Ireland Ltd v Manor Grand Prix Racing Ltd & Anor [2016] EWHC 809 (Ch)

High Court rules Cadbury’s purple trade mark is not a series mark

TMThe judgment in the case of Cadbury UK Ltd v The Comptroller General of Patents Designs and Trade Marks [2016] EWHC 796 (Ch), 18 April 2016 has been published, in which Cadbury’s appeal against a decision of the UK Intellectual Property Office was dismissed by the High Court. The decision marks the latest in a line of cases which have passed through the senior courts in relation to the shade of purple used in Cadbury’s Dairy Milk line of chocolate, namely Pantone 2685C.

Cadbury and market rival Nestlé were previously engaged in a legal battle after the UK Intellectual Property Office’s decision to reject Nestlé’s opposition against Cadbury’s application to register the colour purple as a trade mark. This decision was upheld by the High Court but subsequently overturned in the Court of Appeal.

The latest claim relates to the colour purple, with the mark being described as follows:

The colour purple… applied to the whole visible surface, or being the predominant colour applied to the whole visible surface, of the packaging of the goods.The mark consists of the colour purple (Pantone 2685C)… applied to the whole visible surface, or being the predominant colour applied to the whole visible surface, of the packaging of the goods.

Following the Court of Appeal’s judgment in Société Des Produits Nestlé S.A v Cadbury UK Ltd [2013] EWCA Civ 1174, Cadbury sought to have the description of its mark interpreted as two marks within a series and to have the second mark in the series (if the mark could indeed be interpreted as such) deleted. The judgment of the Court of Appeal raised the point of whether Cadbury’s mark could be interpreted as a sign within the meaning of section 1 of the Trade Marks Act 1994, so as to give rise to the possibility of an application being filed for invalidation under section 3 of the Act.

In an effort to prevent the possibility of such an attack against its mark, Cadbury attempted to have the mark interpreted as a series mark pursuant to section 41 of the Act so that the more general description could be deleted, thereby leaving the more specific phrase intact and defending against any subsequent application for invalidity. Mr John Baldwin QC, sitting as a Judge of the Chancery Division, held that the registration was not a series mark within the meaning of section 41 of the Act.

He drew upon the judgment of the Court of Appeal and in particular the judgment of Sir John Mummery, stating that the description accompanying the mark was “of an unknown number of signs including not just the colour purple but other in which the colour purple predominates. I do not think [Sir John] is coming close to suggesting that the description is of two marks or of a series of marks”.

The judge accordingly upheld the hearing officer’s decision and dismissed Cadbury’s appeal.

Conclusions

This case, together with the previous Cadbury litigation, underlines the importance of ensuring trade marks are clearly and precisely defined. This is particularly important in the case of unusual trade marks, such as applications for colours as trade marks. Cadbury’s difficulties, together with the high threshold for registration of colours as trade marks, are by no means a thing of the past, with Tiffany having successfully registered Pantone 1837. This case highlights the need for precision and shows that trade mark law is constantly evolving as new strategies emerge which depart from traditional methods of protecting brand identity.

FTC ruling on blog paid reviews

Intellectual Property Value – Do You Need Specialist Skills to Value IP?

What Is Your IP Worth?As intellectual property (IP) becomes more recognised as an asset class, interest in it is increasing – so much so that apparently according to the IPKAT Hong Kong property surveyors have been trying to break into assessing the intellectual property value in a business.

They recently called upon overseas bodies (for example, the Royal Institution of Chartered Surveyors to promote the virtues of having surveyors perform IP valuations.

As the IPKAT says, the question is whether

  1. IP valuation is a sub-category of business valuations or a self-contained professional endeavor; and
  2. (ii) in either case, to what extent must an IP valuation professional understand the legal context of IP rights?

The starting point is to consider what we mean by IP

What is IP?

The term IP is generally associated with registrable rights like trademarks, patents and designs.  However, SMEs also have many non registrable IP issues to consider, such as copyright, know how, trade secrets, database rights, organisational knowledge and more.

Unless an SME takes advice to identify, manage, and protect its IP assets it could be seriously exposed because intangibles are a poorly understood asset class.

There is no one size fits all when it comes to determining a business’s risks and opportunities. Even  two businesses in the same industry, with similar business model, may have different issues to address depending on how they develop their businesses and what contracts and other arrangements they have in place, For one business copyright may be the critical asset, while for another it may be the database or a patent.

They will not necessarily be equally desirable to an investor as their value on exit would be impacted by a number of factors unique to each business.

Why have an IP valuation?

One issue a valuation will consider is whether there is key IP underpinning a company’s competitive advantage. If so, another question is whether that competitive advantage is adequately protected.

Banks and investors may accept IP assets as valuable security to finance an SME’s growth if the business can demonstrate that those IP assets underpin revenues and forecasts, and impact cash flow.

How the strength of the IP asset is critical

A fictional example may help convey how IP works.

Say a company has developed an innovative solution that becomes well known in its industry. That competitors will copy a good idea is inevitable. So, if a company’s asset isn’t protected with a patent or other barrier to entry, it is more vulnerable to copy cats.

However, where there are no patents to protect the product, it is a mistake to assume there is little you can do to prevent a competitor stealing market share. You may not be able to stop them creating similar products but you may be able to protect your competitive position and create barriers to entry through the name you choose for the product.

The name is a potential barrier to entry because it can stop competitors using similar ones to identify their offerings – but only if it is a name that the business can uniquely use.

If the business chooses a generic name (that is, one that describes what the product does, rather than an actual name), the name will not be capable of protecting the company’s asset. This is so even if the company registers that name as a trademark combined with a logo. Such a registration would effectively only protect the logo where the name is generic.

So the upshot is that the business has a product that gives it a competitive advantage. It has a valuable asset, but not as valuable as it would be if the name was capable of stopping competitors stealing market share when providing ‘me too’ solutions.

That not all names are equally effective at containing IP value is not generally well understood

Shifting value of IP

IP value is rarely static. Intellectual property rights can change in value over time for a variety of reasons. For example, when you first patent something, it’s possible you have a unique solution to a problem so that your patent provides a strong competitive advantage. But then as other solutions to the problem emerge, the value of your patent may be reduced. On the other hand, if you have successfully marketed your product, despite your patent becoming less critical to your competitive advantage, your trademark may have gained value as your name recognition has increased.

So, failing to give a product a distinctive name that is capable of functioning as a trademark, or not checking whether other people’s rights might prevent use of the chosen name long term impacts the value that is generated, and that would inevitably depress the value of your IP.

IP value is impacted by the choices you make

The above example is designed to illustrate how the IP in question, or the choices you make impact IP value. You need to be ready to make changes if needs be. However, names are not the sum total of IP. There are so many other issues that impact IP value.

There are a number of IP actions required in order to build value and wealth. Implementing effective contracts is a hugely important, but misunderstood aspect of IP protection.

Because it is never possible to foresee what problems and scenarios might arise for a business in the future, it is prudent to secure its IP rights to the fullest extent, so the business has adequate protection to protects its position in the market.

Therefore, identifying IP rights, and protecting and managing them, is essential for any ambitious business.

Conclusion

Clearly IP valuation is not an area in which surveyors would have appropriate transferable skills.

IP and business are closely intertwined. In practice, you need to take both into account. That is why it requires the combined skills of business and IP experts to get the most effective IP valuation and strategic advice.

In a future post, I will explore the different methods for valuing IP.

Intellectual Property Revolution – Book Launch – Video Highlights

IP Revolution Book Launch 1

The Intellectual Property Revolution, my second book, was launched with great success on 13 October 2015 at the Institute of Directors in London.

For those of you who were unable to attend the event the next best thing is to watch the videos of the night.

Daniel Priestley of Entrevo, who runs a global entrepreneurship accelerator programme known as Key Person of Influence (that I myself have attended) gave the introductions for the night.

He also took us through the ages pointing out that at one time it was ownership of land that enabled people to build fortunes, these people built themselves a reputation and became influential. Then after this agricultural age came the industrial revolution where people built their fortunes by  owning the means of production. In the digital economy it is intellectual property that is the means to building fortunes. He said millennials would rather spend all their time and money to build start-ups  than purchasing houses or land.

 

Next up was Will Critchlow of Distilled, CEO of a digital marketing agency based in London with offices in the USA. He reinforced the importance of using the right name and protecting intellectual property rights very early on, an issue he himself had encountered at the early stages of his business ventures while at school. Intellectual Property, in particular securing a trade mark helps provide businesses big or small with strong foundations to securely expand and build a reputation they establish. This will strengthen branding strategies becoming real investments rather than failing later on.

 

 

Then finally, I spoke about the importance of taking early IP advice in order to position yourself for maximum value if you succeed, and reduce the risk of disaster. When overlooked, IP can be damaging to the core features of any business. For example, a poor choice of name can be a real set back. This is something I discuss in more detail in my blog Intellectual Property Value – Do You Need Specialist Skills to Value IP?

IP is so important to any business, as the internet now dominates our daily lives, it is the ownership of these intangibles which is so necessary to protect. At Azrights, we offer a fixed price service that provides early stage businesses with comprehensive advice concerning Intellectual Property rights and strategic building of them.

 

There was a chance for guests to mingle over canapes and here are some vox pox and highlights of the event. The vox pox discussions give some insight into why attendees believe IP is so important in today’s society.

While the highlights below will give you a general flavour of the eventful evening.

Since the launch, I have revised the conclusion of the book, as this was a chapter I struggled to write last year. At the time, I wanted to finish the book so I used something. However, having had time to  reflect over the festive period, I have changed the conclusion, and am now very happy that the book will be an easy, insightful read for businesses interested in IP.

The new conclusion fits much better with the book as a whole being a kind of synopsis of the book and summarises the transformative effects of Intellectual Property rights. If you don’t have time to read the whole book, you’d now get a strong indication of what the book is all about by reading just the conclusion and perhaps revisiting the book when time allows.

Trademark Infringement Dispute Over Search Results Won By Amazon

Trademark InfringementThe trademark infringement claim by watchmakers MultiTime Machine (MTM) has been dismissed following a ruling in favour of online retailer Amazon. In our previous blog Trademark Infringement Trial Of Amazon Over Search Results, we commented on the zero success rate of similar disputes and the ruling by the Ninth Circuit Court continues this pattern.

In short, the court held that Amazon does not violate the Lanham Act when, instead of notifying the consumer who is searching for “MTM Special Ops” that those products are not sold, it simply offers competing products sold under different brands.

As the National Law Review reports, the decision in this case weakens the “initial interest confusion” doctrine in the Ninth Circuit and will likely be perceived as a significant victory for online retailers.

MTM Special Ops remains visible within Amazon’s search box and nothing on the page indicates that Amazon does not actually sell the expensive military-style MTM products.

The case is MultiTime Machine, Inc. v. Amazon.com, Inc.

Read the full National Law Review Article here.