By Lynette Stanton
Paper delivered at the Strategic Branding 2002 Conference
13-14 May 2002
Marketing and trade mark law most often come into conflict over the question of what brands can be protected and how. But in reality, there shouldn't really be any conflict. What marketers are trying to do and what lawyers are trying to do ought to be complementary. What's the point of a brand? Why do you brand? You want your product to stand out and to be remembered. And you want to be able to stop other people from piggybacking on your success. And you don't want to be the department that leads your company into court. Well that's what the lawyers are for. Not leading you into Court, but keeping you out.
PROTECTING YOUR BRANDOne of the main legal ways of protecting a brand is by trade mark registration. But not everything you might think of using as a brand is registrable as a trade mark.
The requirements of the current Trade Marks Act 1953 mean that in the right circumstances the shapes of packaging, colours, sounds even smells as well as the more conventional words and logos may be registered as trade marks. This amounts to recognition by the legal system of something you probably knew already - that all of these things can function as brands. But the crucial thing to remember is, the more unusual, the more -in the jargon - distinctive your brand is, the easier it is to legally protect.
But at this point my next question is, why register? What is registration? How does that protect your branding efforts?
Registering a trade mark means going through the formal procedures which result in your trade mark being officially recorded as belonging to your business. Registration gives you the exclusive right to use that mark and to sue someone else who uses that same mark or something similar to it on the same products or similar products.
And yes, I'll readily admit that that word "similar" and the question of "what is or is not similar" are what keep the lawyers in business.
But ultimately, trade mark registration is a public legally protected version of what your branding efforts are all about - recognition and exclusivity. You want a brand which is recognised, and exclusively linked with your product. Legal protection - including through registration, helps you achieve that.
LEGAL POINTSThere are legal points to be considered at two different stages in the brand management process. The first stage is in the process of creation of a new brand, the second is the management of existing brands, especially during company transformations.
From a legal point of view, there are two main questions to ask when a new brand is being created and defined -
!. Can you use it safely?
2. Can you protect it?
These questions are, or should be, central to any brand development. Yet it is surprising how often they seem to get overlooked, especially in the rush of enthusiasm for some new concept.
"Can you use" can be rephrased as "are we going to step on anyone else's toes with this new brand, angle, packaging line, strategy?" This question in itself can rise in two rather different ways:
1. the branding task when you are truly attempting to create a unique, distinctive brand to do what brands are supposed to do, ie. make your product stand out and create a clear position in the market
2. the somewhat different issue when your aim is in fact to latch on to someone else's success.
Naturally, from a legal point of view, the second objective is the more risky.
BRAND VISIONWhen selecting a new brand for yourself, the key word is vision. What is your vision for the brand? Flagship brand or subsidiary category? Wide product range or specific? Local, national, regional or global? And what is the brand anyway - is it a word? Is it a shape? Is it a colour, a smell, a sound, a picture or a combination of one or more of these things? Will you use it always in one particular version or in many variations?
The more clearly that you communicate your future vision for the brand to your legal advisors, the better job we can do for you in answering that first key question - can you use it?
The marketplace and the Trade Marks Register are full of other people's attempts to obtain exclusivity in all kinds of brands and aspects of brands. Because of this, one job that has to be done as part of the brand creation and definition process is searching - seeing what else is protected and making sure you're not too close to it. Because the definition of exclusivity embraces not only identical marks but similar marks and not just the same goods and services but similar ones and because a mark can be registered or at least applied for and yet not be on the market, searching of official records is crucial - and for those of you looking beyond these shores, international searching will be crucial. Incidentally, one useful spin-off of searching the Trade Marks Register will be to give you a handle on what your competitors are doing, or perhaps planning.
PROTECTING YOUR BRAND INVESTMENTIf you've done all your checking and you're as confident as you can be that you're not going to be sued the first week your product hits the market, the next question has to be:
Can you put yourself in a position to protect that investment that you're going to put into the brand? Or, what can you do to stop your competitors from ripping off the look, the sound, the smell, the colour, the theme or the language of your branding strategy.
Broadly speaking, you get rights in your brand, that is, the power to use the law to stop someone else from getting too close to it, in two main ways.
One is by using it to such an extent that you can convince a court that the bad guy will cause significant confusion, especially amongst consumers. Two, by registration under the Trade Marks Act 1953. The common theme though is that if you hang your hat on a brand which is too commonplace, too descriptive, too much like other brands already in the market, a court is much less likely to listen to an argument from your business that someone else should be stopped from using the same kind of words, picture or package.
Much marketing effort goes into identifying branding strategies which will engage your potential customers on an emotional level, gain their sense of identity with the product, gain their loyalty and so on. But all that will be wasted if the brand features that you have hung all that engagement on, do not stand out from the crowd. If your brand is not sufficiently "distinctive" in a trade mark sense, you can't prevent everyone else going along for the ride.
So my message on legal aspects of creating and defining a new brand are really issues which should concern any marketer. Can you use it? Can you stop other people from using it? It pays to check and get advice before that big launch.
MANAGING EXISTING BRANDSOne particular issue which arises time and time again in brand portfolios where we are dealing with older brands is the issue of ownership. Whose is this brand?
From a marketing point of view, the focus is on connecting the brand with the business in the marketplace. I want to go one step further than that and alert you to the need to make sure that what you are doing, at the sharp end of presenting the product and its proposition to the customer, does not become divorced from the legal background.
Some of the times when this can happen are in nostalgia-based campaigns which hark back to older brands, when somebody comes back with a bright idea from overseas they think they can borrow, when companies form alliances through licences, distribution agreements or franchises, and when companies break up and companies merge. In the following paragraphs I will discuss an example of the latter.
PATIENCE & NICHOLSON CASEThis case goes back a long way. The original company, Patience & Nicholson, was established in Australia in 1924. It established a wholly-owned New Zealand subsidiary in 1961. The business was cutting tools. Initially, the two companies made the same products with the same manufacturing techniques, but over time they diverged. The New Zealand company introduced new manufacturing techniques. Both businesses used the brand P&N.
In 1961, at the same time as the New Zealand subsidiary was established, the Australian parent company registered the trade mark P&N in New Zealand.
In 1982, both of the Patience & Nicholson companies were taken over by another group, McPhersons. The New Zealand company continued to use P&N under an agreement.
In 1987, McPhersons sold the business and assets of Patience & Nicholson Australia into an Australian group, Boral Cyclone. Patience & Nicholson New Zealand was not sold, and neither was the New Zealand registered trade mark.
As well as diversifying its products and its manufacturing, the New Zealand company diversified its branding, introducing a new brand, EVACUT, but continuing to sell old stocks with the P&N brand and using the old company name and livery.
So the situation was that P&N Australia was operating in Australia with P&N, and the New Zealand company was operating in New Zealand with a new brand and some historical attachment to P&N.
With 20/20 hindsight, the eventual conflict looks inevitable. The New Zealand business was sold on to yet another group of companies, Sutton, who turned out to be the main competitor for the Australian owner of the Australian P&N business. In the course of all this, whatever assumptions were made, the New Zealand P&N trade mark was not legally transferred. Probably as a result, no one renewed the trade mark registration, which was not being currently used to any great extent, and it lapsed.
The Australian owners of Patience & Nicholson jumped in, applied for registration and began using P&N in New Zealand. Inevitably, Patience & Nicholson in New Zealand sued, relying on the common law of passing off and the Fair Trading Act 1986.
The judge concluded that the Australian company could not come into New Zealand under the P&N brand.
What the case illustrates for marketers is the way in which marketing strategies, particularly those which rely on history, can come badly unstuck when no firm attention is paid to the legal ownership issues. Especially when, as in this case, the trade mark registration itself was not maintained, there are considerable difficulties in controlling the ownership of the rights which remain in the trade mark, loosely described as "goodwill", through such a series of mergers, sales, acquisitions and changes in trading activities.
More attention to legal aspects would have saved all the companies a lot of legal fees and time in Court and at the end of the day, communication between marketing and lawyers will get each of you what you want - a powerful, defendable brand.
This is a general summary only and should not be taken as a substitute for specific advice.
Baldwin Shelston Waters
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Baldwin Shelston Waters