Tag Archives: Domain Names

How Agencies Can Protect Their Clients When Branding And New Identity Creation

While every agency understands how to use the creative process to create a brand name, few understand the legal implications of choosing one name over another.

Turning an idea into a business involves creating intangible elements like names. As these are governed by the law of intellectual property it means you are creating intellectual property.

Specifically, trade mark law protects names, and so one implication is that you need to choose a name that meets the requirements of the law.

To fully understand the impact of getting this right on both the agency and client side, it is worth reflecting on what value a brand brings to a business.

Value of a brand

A brand name is of the most valuable assets a business will have.

According to Forbes, the most valuable brand name in the world in 2017 was APPLE. It was worth $170 billion. GOOGLE takes second place, at $101 billion and MICROSOFT in third place, at $87 billion. Three words – APPLE, GOOGLE, MICROSOFT together are worth about $360 billion.

Just think about that for a moment. The world’s top three brands are worth many times the average country’s entire GDP (or annual economic output). That’s the value of a good brand name.

Based on the value of the world’s biggest brands, a good brand name needs to be:easy to pronounce and spell

•    one that works internationally

•    one that copes with business expansion or change of direction.

•    one that is legally available

The final point is most important here.

The trade mark registers are cluttered, and the best .com domains are often already taken. Therefore, choosing a name invariably involves doing some due diligence.

An agency tasked with creating a name should really put forward a shortlist of 3-6 names for full legal clearance if the client is to stand a chance of finding one name that it may use.

Getting this wrong may not just mean the trade mark application is thrown out. The client may find itself on the wrong end of an enforcement action by another business whose trade mark is being infringed.

A name that infringes on someone else’s mark leaves the client with little choice but to rebrand. Some clients might sue an agency that created the identity for them, or require a free rebrand. Quite apart from the reputational damage for the agency, a name that the client can’t use would prove as problematic for the agency as it would for the client.

Not only is it worth getting this right to protect your agency, it also offers you an opportunity to deliver certainty and differentiation from other agencies who are less aware of the consequences.

An agency’s responsibility when creating a brand identity

When a client engages the services of a branding agency to create an identity, that agency is an adviser, and as such, is expected to understand the surrounding law.

While the agency might tell a client that certain actions that are required to clear a name for use should be undertaken by lawyers, it’s not possible to completely absolve itself of responsibility simply because some of the work involved in clearing a name is done by lawyers.

There are two levels of checks for brand names that should be undertaken:

1)     Basic preliminary checks – often these do not require a lawyer and can be done through simple searches

2)     Full clearance searching – in most cases done by lawyers

I’m of the view that while lawyers are always best placed to undertake full clearance and this is clearly the responsibility of the client, basic preliminary checks can and should be performed by the agency as part of the process of developing names.

This seems not to be the prevailing view.

One designer recently said to me that she does not believe she is responsible if a client of hers has problems with a name she selected for the client and the client decided not to register the name as a trade mark. According to this designer, if the client chooses not to trade mark the name then it’s the client’s fault if it later transpires there are problems with the name.

Quite apart from the fact that registering a name as a trade mark in no way helps if the name is not available to use, I have deep problems with this view. Protecting a name isn’t just about registering it as a trade mark. It’s more about checking that the name may be safely claimed.

If an agency is entrusted with creating a new brand identity, it’s reasonable for the client to expect that you will offer up names they have a fighting chance of using. This means doing some of the trade mark searches yourself, albeit leaving the full clearance searching to the lawyers.

While specialist full clearance searches might be left to the client to arrange with its own lawyers, any business choosing a new name for its clients does have a responsibility to ensure the name is legally available.

Understanding the legal requirements is essential if the selected name is to stand up to legal scrutiny. There are a number of searches that agencies should and could perform on a name – beyond a simple Google or .com search, which is often all that is done. If you fail to provide names which don’t even stand up to the most basic legal scrutiny, what is the client paying for when it pays to have a name created?

And, importantly, how does that reflect on your agency if a problem later arises?

The client’s responsibility when protecting their brand identity

Many clients don’t ask lawyers to do full clearance searches before applying for trade mark protection simply because they don’t realise this is an essential step in the process, rather than an optional step.

As clients frequently choose to not do further searches on names, (possibly because they have spent all their available budget on the brand identity work), it’s even more important for branding agencies to do good enough” checks of names before proposing them to clients. Otherwise, what’s the point of branding a name the client can’t own? It would be building their business on a foundation of sand.

On one occasion when we were provided with a shortlist of six names by a designer, we found that the most basic search of the trade mark registers knocked out four of the names immediately. So, effectively, the client only had two names to choose from, and they were not the first choices on the list.

I hate to think what might have happened if the client hadn’t asked us to do clearance searches on the names. It might have gone with one of the names that were infringing with all the associated problems and risks.

This is why I would urge agencies to learn how to do some basic checks of the trade mark registers whenever they are creating a new identity for their clients. Indeed, a good agency should also perform its own checks on a name the client proposes using, even if the agency didn’t choose the name.

Again, it’s important to remember you’re not protected simply by virtue of registering a trade mark.

Taking steps to protect intellectual property

The identity of any well-known brand comprises a variety of elements. Trade mark law encompasses the name, and also any taglines, slogans, logos, designs, product shapes, sounds, smells, colours, and other features that distinguish a product or service from its competitors.

Bear in mind that whenever you turn an idea into a product or service you’re also creating intellectual property assets. Copyright law is highly relevant in brand creation. Therefore, copyright and other intellectual property issues need to be top of mind in the early stages of identity creation.

However, the primary identity of any successful brand is inevitably in its name. Protecting the future value of a business involves protecting the name, and also taking account of IP as a whole.

An agency should create internal processes to ensure names are properly checked out before any short list of names is offered to the client.

There are three steps that any business should take to protect its intellectual property if it is to build value, and avoid disasters such as the need to change its identity.

Imagine having to rebrand due to problems with a name or copyright work. While this might seem unimaginable for the likes of the world’s top brands, problems around names and IP can affect even them.

For example, Microsoft had to rebrand after being ordered to do so by a UK court for infringing on a trade mark owned by British Sky Broadcasting Group (BSkyB).

”Changing the name of a product as loved as SkyDrive wasn’t easy,” Microsoft’s Ryan Gavin reportedly told a journalist.

The value and safety of your own and your client’s intellectual property is more important than ever before. Do it right and the intangible assets you create could be worth far more than the cost of producing them. Do it wrong and you could miss vital opportunities, have your true value stolen or find yourself on the wrong side of an intellectual property dispute.

To find out how to protect your own agency’s intellectual property and that of your clients register your interest to learn about IP Fundamentals including the Azrights Naming course.

 

Register Your Interest Here

How To Legally Protect Your Domain Name

The first thing you need to do when you have an idea for a new product, service, or business is to find a name for it.

It’s well worth consulting an expert in trademarks to help you choose a name, and to establish whether your proposed name is legally available to use, and most importantly, whether it is distinctive enough to function as a trademark.

Descriptive names are not capable of trademark protection. Think of Tesco’s Clubcard for example. Tesco has been unsuccessful in its bid to register Clubcard as a trademark for its loyalty card scheme because the registry considered Clubcard too descriptive. That means any business is free to use the name Clubcard for its loyalty card program.  

If a name isn’t descriptive, then the next thing is to do some full clearance searches to make sure the name is legally available. At the least do these checks to cover your home market in the UK.

If the name is legally available it means you can protect it and have exclusive rights over it. However, registration alone is not enough because trade mark registrations can be cancelled if someone with better rights over the name objects to your registration.

Once it’s clear the name is legally available, it means you can have a unique online brand. If others are “passing off” your brand by registering your name as a domain, you are in a strong position to recover it from them.  

What if you haven’t taken advice. What if you find you can’t use the name you’ve been using for the past 10 years for your company’s successful service, or brilliant product? Your business could suffer a substantial drop in revenues overnight.

When a business is unlucky enough to be required to rebrand the costs can be significant. You could potentially suffer a substantial drop in revenues, as it is not always feasible to redirect the old domain name to your new domain. That makes it more difficult for your former customers or potential new ones to find you when searching online. .

Trademarks reduce the risk of consumers being confused about the source or origin of goods or services they buy. So, be sure to get good advice before you start using a new name. Here at Azrights we have substantial experience in all things trademark related, so do contact us if you have a trademark issue you would like help with.

What Impact Will Brexit Have On Your Trademarks?

How to be prepared and make the correct moves to protect your intellectual property position

The media is abuzz with talk and comment on the ramifications Brexit will have on commerce.   Much relates to transport, travel and currency with the impact this will have on the marketplace.   A vital area, not to be overlooked, is the effect Brexit will have on intellectual property rights, such as trademarks, from a business perspective.  It is important for businesses, including small-to-medium-sized enterprises (SMEs), to have some understanding, and strategy, that copes with the certainty, and uncertainty associated with its consequences.

There are a series of headings that need to be reviewed apart from trademarks so that the many businesses that rely on other types of intellectual property can prepare themselves.  The main elements that SMEs may encounter are:

Trade marks

Any person or company holding an EU Trademark (EUTM) must review its position in light of the UK exit. It may lose its protection in that market and may have to reapply.  Of course, the UK government might agree to some arrangement whereby existing rights will automatically transfer, with or without the payment of a fee, but that’s by no means a certainty.

Sufficient use

One aspect of this relates to the “use” requirement for trademark protection.  It has been the practice that, if a mark was used in, say, the UK and Ireland, that this should constitute sufficient use to enjoy protection in all member states.  When the UK leaves the EU, a business may have insufficient use of its EUTM elsewhere in the EU to meet the threshold requirement.  In such a case EU-wide protection could be lost.

Registered Community Design:

Like the EUTM, a Registered Community Design (RCD) provides design protection across the EU. That which can be protected is very wide-ranging indeed.  It includes furniture, bicycles, chocolates and, for example, decoration applied to such items or clothing and fashion items. After the UK leaves the EU, however, the RCD will no longer be enforceable in the UK. If an SME designs and markets any product – from high fashion to bathroom fittings – it will need to know how to protect the designs in the UK post-Brexit.

Domain names: .eu designation

If you are a corporate owner of .eu domain names, you need to review your domain name portfolio to ensure it is Brexit-proof. After the UK leaves the EU, it is not clear whether a UK entity will still be permitted to own a .eu domain name.  Busineses and companies with .eu domain names will need to identify such domain names in their portfolio and decide whether it will be necessary to transfer ownership into an entity placed within the EEA.

Contractual agreements:

 While the effect of Brexit on contracts generally is likely to be dealt with in the UK/EU Brexit agreement(s), in the context of IP, SMEs will need to know what effect Brexit will have on IP licences and agreements. For example, will a trademark licence for “the territory of the EU” include the UK after Brexit? If a settlement agreement with a competitor provides that they agree not to use brand X in the EU, will they be permitted to use it in the UK post-Brexit? It will also be important to ensure that any agreements or licences which are negotiated in the period leading up to March 2019 properly address the effect of the UK’s departure from the EU to minimize trading uncertainty.

Geographical Indications and Appellations of Origin

These terms relate to the geographic location used to designate the goods or services which originate from a particular region or place.  Champagne must come from that region in France while Feta cheese must come from Greece. It is not yet clear what effect Brexit is going to have on the extensive scheme of EU protections for geographical indications, which include Protected Designations of Origin and Protected Geographical Indications. Although some of these EU schemes are open to non-EU applicants, the “home” country must provide reciprocal recognition (we will protect your name if you protect ours). In the absence of mutual recognition, food producers could face competition from cheaper versions of protected names. That said, the law of passing off will still be available post-Brexit and the UK Courts are extremely unlikely to allow SMEs to use famous names like champagne or Feta in the UK after Brexit.

Patents

While Brexit presents a particular level of uncertainty in respect to some aspects of patent law, others remain unchanged.  Indeed, the good news for inventors seeking to protect their inventions in Europe, is that they may not need to adjust their filing strategies because of Brexit. Even after the UK leaves the EU, it will still be possible for inventors to obtain protection for their inventions in the UK by filing patent applications directly at the UK Intellectual Property Office. Because these patent applications (and eventual patents) are governed by UK national patent law, Brexit will have no effect on UK patents granted by the UK Intellectual Property Office.

Similarly, inventors will still be able to obtain protection for their inventions in other European countries by filing European Patent Applications at the European Patent Office, because the European Patent Convention (EPC) is not a piece of EU legislation and will be unaffected when the UK leaves the EU.  Existing European patents covering the UK are also unaffected by the Brexit decision.

 

Necessary Actions

There has been a huge increase in the number of UK trademark filings. For example, UK trademark filings by US applicants have jumped by over 150%, filings from China by over 175% and filings from Canada by about 100%.

Clearly, businesses are taking action now to protect their intellectual property (IP) rights rather than awaiting the outcome of the divorce talks between the remaining EU states and the UK. Many are pro-actively ‘Brexit-proofing’ their IP rights.

Although it is hoped that the divorce settlement will make provision for the re-registration of European Union Trade Marks (EUTMs) and of Registered Community Designs (RCDs) before the UKIPO, if the UK and EU were to fail to reach agreement all EUTMs and all RCDs would simply cease to have effect in the UK after 29 March 2019 (the day that the UK will leave the EU).

The potential loss of enforcement of your EUTMs or RCDs in the UK may have very serious consequences, so it may be an idea to review your position sooner rather than later.  The authors, Shireen Smith and Kieran Heneghan would be delighted to assist you with this.

 

 

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.

How To Fight Your Domain Name Disputes. And Win!!

How To Fight Your Domain Name Disputes. And Win!!Facebook and Instagram successfully recovered more than 100 domain names recently from a business that was selling Facebook and Instagram ‘likes’ and ‘followers’.

Social Marketing Madness had registered domain names that included the words Facebook or Instagram along with generic terms like ‘buy cheap likes’.

Facebook brought the complaint before the World Intellectual Property Office’s Arbitration and Mediation Center. WIPO determined that the domains were registered in bad faith, because the domains were being used for commercial gain and there was no other possible reason for their existence than to mislead consumers and take unfair advantage of the goodwill of the marks.

What to do if someone has a domain name incorporating your brand name?

If you discover that someone has registered a domain name incorporating your brand name, you might want to recover the domain. It’s worth noting that if you have a distinctive name that you have registered as a trademark, it will be a lot less costly and much simpler to recover the domains than if you’re relying on unregistered rights. (The below video explains how to choose a name that can function as a trademark)

 

The starting point is to decide whether to use the court system by litigating in the courts or  whether to initiate the dispute-resolution procedure available for the particular domain suffix. Each domain has its own dispute resolution procedure. The Uniform Domain-Name Dispute-Resolution Policy (UDRP) – which for .co.uk domains is Nominet – allows the person claiming rights in a name to apply under the relevant Domain Registrant Scheme, for domains registered in ‘bad faith’ to be transferred or cancelled.

Two of the benefits of arbitration over litigation are that it is generally cheaper and faster. The fees for filing a dispute-resolution claim are lower and you will not need to go to the expense of legal proceedings.

However, the main limitation of using the dispute-resolution scheme is that if you are successful, you can only expect to get the domain name transferred to you. The tribunal does not have the power to award any monetary damages.

One of the benefits of litigation over dispute-resolution is that there are a large number of remedies available, including damages. It’s also possible to get an undertaking from the squatter not to register any names in the future that infringe on your trade mark rights. Additionally, cybersquatters often have to pay your legal fees too in addition to transferring the domains. A few years ago Microsoft took legal action against cyber squatters in the USA, UK and other EU countries, to recover its domains and claim damages.

How to win a domain name dispute?

To win in this type of dispute you will need to prove three elements, namely that:

  • you have prior rights in the name;
  • the owner does not have rights in the name; and
  • the domain name was registered and is being used in bad faith.

To initiate an action, start by collecting evidence. Are there references on the website to you or to your competitors? Check the whois facility to find out who owns the domain name.

Check the date when the domain was registered to the current owner. If they registered the domain name after you began your business, or registered your trademark the case is much easier to prove.

Once you file a dispute-resolution procedure or initiate court proceedings, the domain is locked so that cyberflight (whereby the registrant transfers the domain to a third party) is no longer a serious risk.

As mentioned, to succeed in a domain dispute, it helps to have a trademark registration. This can make short work of the requirement to demonstrate rights in the name. Otherwise, you will need to establish that you have goodwill in the name.

If the domain name you are using for your brand is purely descriptive, there is little you can do to stop others using a similar domain name.

The message to take on board is that having a distinctive name which is protected by a trademark is an absolute essential in the digital economy. If a name isn’t descriptive, and is legally available, it means you can protect it and have exclusive rights over it. This makes it easier to have a unique online brand because if others are “passing off” your brand by registering your name as a domain, you are in a strong position to recover it from them

You don’t have to be a well known mark to be able to take action in the way Facebook has recently done.

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.

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.

Facebook’s Mark Zuckerberg Bites Back In Internet.org India Row

Zuckerberg bites back in Internet.org India rowZuckerberg reportedly argued in a blog post that Internet.org’s basic free services were not incompatible with net neutrality – the principle that all web services should be equally accessible. “We fully support net neutrality,” he wrote. “Universal connectivity and net neutrality can and must co-exist.” But critics were quick to respond. Writing in the Hindustan Times, India’s Save The Internet coalition maintained that Internet.org is “Zuckerberg’s ambitious project to confuse hundreds of millions of emerging market users into thinking that Facebook and the internet are one and the same.”

Distorting competition?

At the heart of the row is Internet.org’s policy of “zero-rating”, whereby telecoms providers agree not to pass on the costs of handling the data traffic so that consumers can receive services for free. Critics argue this has a distorting effect on competition, making it difficult for publishers not signed up to Internet.org to reach the hundreds of millions of poorer people in developing economies who have no internet access at all.

Read the full story, reported by the BBC: http://www.bbc.co.uk/news/technology-32349480

Internationalisation of IP

International Business & Globalisation Of IP

International Business & Globalisation Of IPNowadays many businesses are global from day one.

Even though you may just operate out of a bedroom in your home, when you sell online, you are potentially doing business in every country worldwide. That’s because the Internet is borderless.

In contrast, IP laws are territorial. This means your rights only cover the country in which you register or otherwise acquire rights.

So, it’s essential for an online business to adopt a strategic approach to their domains and trademarks.

Resources are bound to be limited because when you start a company it’s difficult to know how successful you’ll be. It makes sense to keep costs down and overheads low.

The Name

Names are an important way in which the law protects a business, so make sure you choose a good one. The name is one of the most valuable IP assets your business has if it is successful, and the choice you make impacts upon the value of the business.

It’s essential not only to find out whether your proposed name is available to use in all your intended markets, but also whether the name is legally effective (that is, whether it can function as a trademark).

The principle of territoriality means that if you register a UK trademark you simply get a right to use the mark in the UK.  If someone in another country uses the same name for a similar business you would not be within your rights to use your brand in their country.

The current international trademark system is designed for a very different business environment, one that’s more suited to the pockets of well-resourced, well-funded multinationals that gradually move into new markets. Nevertheless, if you want to be able to protect your business, using the same brand worldwide, then checking the trademark registers is essential. Then you should consider your strategic approach to registering a trademark, in other countries too.

What you don’t want is to have a local business use your brand to block you from selling to their local market by using their trademark rights against you.

International priority protection

Once you have checked out a name, the next step is to file a trademark. The base application would be filed in the country in which you are based. For UK ecommerce businesses this will typically be an EU registration, although some online businesses prefer to just file a UK trademark.

The way international protection of IP works is that it is possible to secure protection in other countries under the international registration system known as the Madrid system.

You get a priority right for up to six months from the date of the base application. This gives you up to six months to extend your trademark protection to other countries.

Although you can then extend protection to any Madrid Protocol country using a single application, the costs can be high as the official fees are significant. We have a calculator on our website which can give you an idea of the official fees.

A fictional case that illustrates the importance of filing trademark applications in other countries as your business begins to expand is outlined below.

Raxisia

This ecommerce site had been selling its products in the United States for more than 8 years without having registered a trademark there. A competitor then set up a bricks and mortar shop in the United States selling similar products and also called itself Raxisia.

The original Raxisia company was alerted to this when publicity surrounding the new shop was spotted by one of its existing customers who emailed to congratulate it on its new venture in California.

Raxisia was lucky that it had customers in the United States. So, it was able to prevent the local shop from trading off its goodwill. Using lawyers they filed a trademark application in the United States and after much correspondence, the other party decided to rebrand. The legal costs were hefty because among other things the lawyers had to contact the numerous customers that the company had in the United States and in California.

The company could have avoided the hefty legal fees if it had registered its mark in the United States as soon as it began selling its products there.

Domains

Once you’ve settled on a name, a related consideration is what domains to register and when to buy further domains. For example, a UK ecommerce business might typically start by registering a co.uk, .com, and .net. These will be relatively inexpensive. But should you register other CCTLDs – Country Code Top Level Domains? If say France is a market to which you will sell, should you also register a ‘.fr’ name, and if China is important to you should you buy a ‘.cn’ name, too?

As your business grows and you get customers in other countries you’ll need to consider whether to buy your name in other country codes.

There are more than 250 country code domain names. It would be expensive to buy your name in all of them. The strategic considerations will differ for every business. Typically, many wait until their business starts to take off before looking at more extensive domain registrations. The key is always to look at where you are doing business or might be doing business soon.

So, the priority should be to register in those markets in which you have customers or in which you think you will be selling in the near future.

Unlike the GTLDs — generic top-level domain names, – .com, .net, .org – where there’s a lot of uniformity, the rules for country codes are different in every country, as are the prices. Sometimes you need a trademark to get a registration. Other times you need a local business registration. And in some cases you may need a local presence or a local address. So, the CCTLDs usually cost more.

Cybersquatting

Some of the considerations with domains is what happens if someone in another country steals your name and registers your domain with the local CCTLD. This is called cybersquatting. What can you do about it?

It may be difficult to block another person from using your name in another country. So the strategy for registering domains needs to bear this in mind, and be combined with your trademark registration strategy.

You will need access to advice as to the remedies available for the individual CCTLDs. Sometimes your rights may depend on whether or not the name you are using is trademarked. It will also depend on the country’s dispute resolution policies. Each country has different dispute policies, and different procedures for granting relief.

For example, in the UK the dispute resolution body that deals with co.uk issues is Nominet. Nominet will typically consider whether you have trademark rights (which does not necessarily entail having a registered trademark), and whether the registration or the use of the domain name is in “bad faith”. That is, whether the person who registered it likely did it in order to resell it to the person who has the name or in order to divert revenue to themselves for economic gain.

The first step in these administrative style dispute procedures is to file a complaint. There is no court involved as it’s an arbitration.  Once you’ve complained, the other party must answer the complaint and the arbiter then decides whether or not the person who you have complained against should be able to keep the domain name or should release the name into your ownership. The decision is purely based on the pleadings. You don’t have a day in court.

For other domains, such as .com the registry designate groups such as the World Intellectual Property Organization or WIPO or the National Arbitration Forum or other groups to decide the dispute.

These arbitration groups have a lot of experience and history in handling domain disputes.

So in conclusion, it’s essential to get advice, and to set a strategy to determine where you register domains.  This will partly be dependent on the rules of the different countries. For example, if a local business registration is needed in order to register, you might decide the risk of cybersquatting is low risk, and perhaps just register a trademark.

Once you’ve taken all the issues on board you will end up with a priority list based on the intrinsic risks.

Temporary name?

As names involve legal complexity and potential costs it makes sense to have a strategy for the early days if you want to keep your expenses down.

One possibility is to choose a temporary, descriptive name that informs the market what your business does.

This can be useful in the early days when nobody knows you exist and could later become your tagline when you are ready to name the business.

Unless you already have a good understanding of your market and the gap you will fill in it, it could save precious resources in the early days to avoid the expense of naming, design and branding. You will be much better placed to differentiate your business and brand it once you’ve been in business for a while.

Take control of your website, before you lose it

Take Control of Your WebsiteWebsites are absolutely essential to modern marketing.  Some industries are particularly reliant on them, for example travel and hotel businesses, who face fierce competition when their customers can quickly type a destination into Google to find scores of operators vying for attention.  Still, for anyone starting, or buying a business, the website is almost certainly one of the most important assets to consider.

Who, then, could take control of your website? There isn’t always a straightforward answer.  If you have any doubts, you could be in for a shock.

Doone Valley Holidays

That’s what happened to Mr Harman and his wife, who bought a holiday business, Doone Valley Holidays in 2003, based at Cloud Farm, and they invested heavily in developing their online presence.  No attention was given to the fact that the site remained registered to its previous owner, Mr Burge.

Cut to the Harmans 7 years later, when their business moved to a new address.  Despite the considerable financial investment they had made, and the length of time they spent at Cloud Farm, they had not thought to make sure the site was registered in their own names.  So, after they moved on, the former owner, Mr Burge, was able to take control of the site.  Which he did.  The former site content was no longer accessible, and all that remained was a notice:

“Doone Valley Holidays. Announcement. Doone Valley Holidays at Cloud Farm Look forward to seeing you in 2010”.

Imagine Mr Harman’s surprise when he began hearing from potential customers, that they couldn’t access the website.  Perhaps worse, although Mr Harman had taken time to let people know they would be moving, the heading mentioned above made it seem, at first glance, that the business would still be running from Cloud Farm.

Inevitably, these circumstances lead to:

  • lost business
  • considerable time and effort
  • legal costs
  • wasted marketing fees

It could have all been avoided if, at the time of buying the business, ownership of the website was given the attention it called for.

The dispute came to a head, and legal action resulted in an award of damages and interest in July this year, to the tune of £40,000.  Unfortunately, financial compensation is rarely enough to put a business in the position they might have been in, had the disruption, costs, and pressures which accompany litigation not arisen in the first place.  Prevention is better than cure.

Take control of your website

If you know the right questions to ask, a few simple steps can leave you free to build your business without worrying about waking up to find that someone else has taken control of your website.

You can find out more about doing business online, buying a business, website ownership and domain names on our website.  The full report for this case is available online here: Harman v Burge.