Friday, 14 June 2013

Virtues of the registered Trade Mark

As a post script to Mabel's post on Dean's inaugural lecture: Deprivation of Trade Marks through State Interference - plain packaging in South Africa, here are some reminders on the value of the trade mark that Afro Leo sent to the accounting folk at Accountancy SA, recently.

To many the registered trade mark is simply a document that records a business name at the local trade mark office. It's not compulsory to do and because it can take years to get registered, it is frequently dismissed as an irritation. So, it's relatively cheap, but why should we be paying close attention to the registered trade mark and those who administers them within a business?

Well, in short, it is the title deed (ie property) to a brand. The brand is, of course, everything that encapsulates and communicates a business, everything that keeps customers coming back. It may be a name, it could be a slogan, it could be colours, it could be three dimensional, it could even be a smell. All of these are capable of being registered as trade marks.

harping on, but still virtuous
So then, what's the fuss? Well, properly obtained, these title deeds can be listed in the asset register. They can be valued, used to raise finance and sold separately from the business. They can be let for cash or be allowed to sit passively, preventing others from communicating their offerings in a confusing manner. They protect the value generated by the brand. They protect market share both actively (in the hands of an attorney) and passively (just by sitting on the register).

But just like a Verimark ad - that's not all! The trade mark can be attached in legal proceedings or they can be used to transport goodwill into a diversified space that may just provide a hedge for a business, or enable it to grow.

They can be transferred to enable efficient tax planning or to reduce the exposure of assets to business risk and creditors. Brand protection using registered trade marks can be over 50% less costly than alternative methods such as passing off, and there is significantly less risk to the proceedings. Obtaining a registered trade mark reduces the risk of the dreaded urgent court order for a product withdrawal, considerably. In the growing social media space, the registered trade mark is frequently the only method of safely removing hijacked or rogue sites aimed at discrediting a business or someone holding a business to ransom for a fee.

Still not convinced?

Consider the recent ISO standard (ISO 10668) for brand valuation, which requires an audit of the legal protection of a brand as a fundamental step in the valuation of the brand. Skype's initial public offering (IPO) in 2010 disclosed an on going legal dispute with BSkyB as a material threat to its brand, which illustrates the correlation between proper trade mark management and the value of the business.

So, the next time a business finds itself assigning a junior administrator to look after a seemingly endless list of trade mark enquiries and small bills, or dismiss them as an irritant, please stop and reconsider. That person guards probably, the most important asset in the business

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