I presented this presentation at Triumphant Event’s one day ‘Make it BIG in 2013’ event on November 24. For those who missed it, here is a transcript of my speech along with the accompanying slides.
To thrive in a crowded market, a business has to be clear about its niche, positioning, brand values – its whole identity – which should then be reflected in appropriate designs. This is essential if you’re to become a brand in the sense of having pre-sold clients who want to do business with you. That’s how you stop having to compete on price. However, what is less well-known is that there are fundamental Intellectual Property issues that must be addressed if you’re to reap the benefits of your success. I’ll be discussing some of these IP issues in the next 20 minutes as they’re important if you’re aiming to make it big in 2013.
I’ll just say a few words about my background before I begin. I’ve practised IP law for nearly 15 years, having qualified as a solicitor more than 25 years ago. I worked at Coopers & Lybrand, Reuters, and Eversheds before setting up my own law firm 8 years ago. Going into business on my own made the legal work really enjoyable in a way it had never been before. I love helping businesses to bring their ideas to life and one area of my focus is on names, as they raise a number of legal issues, some of which I’ll touch on here.
Inevitably when you work in an area you spot problems, and one I’ve noticed is the widespread confusion about what ‘branding’ actually is. To a designer a brand is the logo. A marketer may emphasise the niche, and positioning, while a communications professional will stress the importance of consistent messages, and an IP lawyer will emphasise trademarks and copyright. The fact is that the skills of many different professionals are relevant to branding. So it’s not surprising that people don’t really know who to turn to, and in what order when they brand new products and services. And that includes people in the branding industry. A very experienced and well-educated marketing director contact confessed that he didn’t really know in what order to do things when he wanted to create a new brand.
This explains why companies so often make mistakes with branding. In practice, they’ll pick a name they like, see if the domain is available and buy it, then they’ll commission someone to produce a brand identity. At the very end of the process they may or may not turn to a lawyer to protect the brand. Some people do nothing at all, while others might register a trademark themselves. This puts a business at great risk of either using a name which infringes on someone else’s rights or of using a name that’s inadequate to meet the wider long term business objectives. The reason the risk of infringing a name is quite high is that the trademark registers are cluttered with registrations so that it can be difficult to find names that are available to use for the various purposes for which you may need to use the name. Also, using similar names to those which someone else has already trademarked is an infringement, so it’s not just the exact same names that are out of bounds.
It’s worth knowing that if someone else has a better right to a name you’re using, you would be infringing on their rights whether or not you may have registered a domain, a company or even a trade mark. Registrations can be and are cancelled. The owner of a similar trademark may not be aware of you or may not be concerned while you’re a small scale operation. It may be a different story though if you make it big. Imagine what it would feel like to receive a cease and desist letter requiring you to change your name immediately, to provide a list of your customers, sign an undertaking and pay damages. From the perspective of the trademark owner, you only achieved your success because you were riding off the back of their brand, so it’s fair enough to ask you to account for the profits you made during the time you used their brand name.
A name is where your brand both begins and ends. It’s the first thing customers hear when they discover your business, and the last thing they remember at the end, so it’s vital to own the rights in your brand name. Intellectual property law is similar to the law of physical property. If you were developing a plot of land you’d be sure to buy the land first before investing in building on it. The last thing you’d want would be to run the risk that someone else had better title to it. It’s the same with intellectual property rights over a brand name. Don’t assume the professionals who may have helped you to brand your business must have taken care of the IP aspects because it’s unlikely they’ll have done so. Their expertise is not in IP law. I wrote my book Legally Branded, because of the widespread lack of accessible information on the IP aspects of branding.
It’s not possible to have copyright in a name, no matter how much money you may have invested in creating a name. Trademarks are the only way to stake your claim to a name. Trademarks are tools to capture the economic potential in your business, and are central to how the law protects a business against unfair competition. Trademarks give you legal title to a name, and exclusive right to use it for your business. This makes it easier to enforce licensing and other agreements. Some entrepreneurs assume trademarks are just about protecting goodwill, but they’re much more than that. The reason a trademark is desirable is to monetise your business. You don’t need to be intending to be the next Coca-Cola for trademarking to be relevant to your plans. If you have a big vision you’ll need trademarks to grow the business, both nationally and internationally. The right strategy for registration will differ depending on your business plans and the type of business you’re in. With some niches you are very vulnerable unless you are quick to register your mark in other countries once your concept takes off.
Trademark infringement is something I come across a lot because it’s quite common given the way in which business owners pick names. So, it’s a real risk not just a theoretical one. Having the distractions of potential litigation and rebranding is not a risk any sensible business owner should run. I don’t want to depress you, but it’s important to realise that you could be sitting on a time bomb.
Let me give a couple of examples. Mcdonald’s takes a somewhat aggressive stance to users of the ‘Mc’ prefix. So Elizabeth McCaughey had to stop using the name McCoffee for her coffee shop even though she had operated for 17 years with that name, and used the name in the first place because it was a play on the word in her own name.
Some businesses that are infringing on the rights of a trademark owner have to rebrand virtually overnight. For example, Scrabulous one of the first Scrabble like games on Facebook was removed by Facebook as soon as Hasbro complained about trademark infringement despite having gone viral. We will never know how big Scrabulous would have been today if it had opted for a better name. The setback cost them dearly as it paved the way for Zynga to enter and dominate the market with its successful Words with Friends app.
A different aspect to consider about the name you’re using is whether it’s capable of taking your business to the heights you envisage for it. For example, using a name that says what your business does on the tin, so to speak, often appeals to people. But there are powerful legal reasons why a descriptive name should be avoided. Descriptive names inevitably limit a business’ potential. They’re only suitable as an option in the early stages of a business that’s testing the waters with a new concept, and wants to avoid trademarking considerations, and to benefit from a name that communicates what it does. However, a better name should be chosen as soon as the concept proves viable. A descriptive name is actually devoid of personality. It’s like calling a dog, dog. You’re not giving that dog its own unique name, and identity, and it’s no different when branding a business. A trademarkable name protects consumers by providing a reliable way for them to find products they’ve bought in the past. If I’ve enjoyed a chocolate called Milky Way, and want to buy another one, I should not be confused by seeing chocolates with names like Mulky Wai. The law will stop other traders calling their chocolates by a name that’s misleadingly similar to Milky Way, but if the chocolate has no name, because it’s simply called chocolate, the law cannot and will not stop other chocolate sellers also calling their chocolate bars ‘chocolate’. So, if a competitor starts using the same name or a similar name to yours, there’s little you can realistically do to stop them if yours is a descriptive name and you inevitably lose some of your potential customers to competitors.
To understand the limiting effect a descriptive name could have on a business let’s use a fictitious example. Say there’s a website which connects dog owners looking to leave their dog with other dog lovers instead of in kennels when they’re away on holiday. If the website were called Dog Vacation it could be deemed descriptive. If the name couldn’t be trademarked, the website’s success couldn’t be fully exploited through licensing others internationally to set up and run similar websites in their home market. In fact, such a niche website has been created just in the past year in the USA, and luckily its name is capable of legal protection because it’s called Dog VACAY, not Dog Vacation. This business currently has a multi-million dollar value mainly due to the lively and active community of dog lovers it has given rise to.
Apart from licensing people in other countries, exploiting the value in an engaged community, such as Dog Vacay could include extending the brand into areas such as pet foods, pet furniture and accessories and so on by licensing others to apply the brand name to their products. So the bottom line is that licensing depends on having a name you can stop other people using. You would register a trademark in your home country and then ultimately in other countries if you’re to avoid seeing your business copied by unlicensed individuals elsewhere who may even use the name Dog Vacay unless the US company has been astute enough to register a trademark in other markets as well as in the USA. It inevitably reduces the value of your business if you can’t properly control use of its name.
There are a number of do’s and don’ts around what makes for a good name, but the most important thing to remember is that a name must be legally effective, and capable of getting you to your destination. It’s not just about whether you like a name or whether it sounds good or even whether it is capable of being trademarked. It needs to be a name that suits your business plan and objectives. One reason businesses have been attracted to descriptive names in the past, is that Google historically looked favourably on domain names that included relevant keywords. For example, dogvacation.com would be likely to come up in a search for “dog vacation”. However, Google discovered that this led many low quality webpages to appear in search results, as marketers were taking advantage of descriptive domain names to increase visibility. In response, in September Google tweaked its algorithm to give less weight to domain names which are an exact match for a search query, so even this limited benefit is no longer a worthwhile reason to use a descriptive rather than distinctive name for your business online.
Zumba the dance is a great example of an effective name for a business that spread like wildfire internationally, as well as extending into all sorts of different categories like DVDs, clothes, and so on. So, make sure you’ve got the right name if you want to make it big because the wrong name will put a ceiling on your ultimate business growth, no matter how good a business you build, and how effective you are as an entrepreneur. Once you have a powerful name, put in place appropriate IP protections and a strategy for international trademarking. That’s the way to bulletproof your brand so there are no limits on how your business can grow once it captures the public’s imagination in 2013. I wish you every success in the upcoming year.
If you’re interested in learning more about this topic, why not buy a copy of Shireen’s book Legally Branded which is available on Amazon? You can download the contents and the first chapter free at www.shireensmith.com.
if you’re interested to understand this topic more why not buy a copy of Shireen’s book Legally Branded which is available on Amazon, and you can download the contents and first chapter free at www.legallybranded.co.uk