The value of your brand – don’t be hit in your back pocket!

Are you thinking about re-branding your business?   If you are, you should be aware that the financial implications of your decision are potentially not limited to the costs of changing your letterhead.   You may actually be under-estimating, and later under-realising, the value of your current brand. 

Take, by way of example, Dave.

Dave is a painter who wanted to jazz up his branding.   He had been trading for a number of years as “Steadfastly” and wanted to change to the more modern “Paint It.”   He rebranded his vehicle, office material and website.   Only then did he decide to register his new brand as a trademark.  

Not all marks are registrable

Unfortunately, upon lodging a trademark application for “Paint It”, Dave found his mark was unregistrable.

Dave didn’t realise that not all marks are ‘registrable’.   To be eligible for registration a mark must be distinctive.   Therefore, generally speaking, words, phrases or images that are descriptive of the type of business which they relate to will be declined.

Dave’s new brand was assessed as being too descriptive of the services he offered and so registration of his new mark was not possible.   Ironically, “Steadfastly” would likely have been more easily registered.

What does it matter?

In some ways it doesn’t matter.   Dave can still treat “Paint It” as a trademark.   He can use the trademark symbol (^TM) after it, as that symbol is available for use without formal registration.   (It is worth remembering however that ® is reserved for use with registered marks only.)

Having said that, non-registration may matter to Dave in the future if he decides to sell or otherwise commercialise his business, for example franchise or license his business systems and intellectual property.

This is because trademark registration provides real evidence of ownership, which is all important if you are expecting someone to pay top dollar or extra for it.   Without registration there is no guarantee of ownership and therefore no guarantee against someone else using it or legally challenging your use following purchase.  Why pay top dollar or a premium for that degree of uncertainty? 

Misappropriation and enforcement

Non-registration may also impact Dave’s back-pocket if he needs to enforce his trademark against misuse.

This is because enforcing a breach of a registered mark is relatively straightforward.  Registered marks are recognised as being personal property.   This means that as soon as misuse occurs, enforcement is possible through simple infringement proceedings.   The law is clearer, the processes are more straight-forward and so enforcement is considerably less costly.   Importantly, you do not have to wait until you can prove damage has occurred to your business.

However, if your mark is unregistered you have two options for enforcement.   The first is a common law cause of action called Passing Off.    (This is a legal action or option created by the courts rather than Parliament.) 

The second enforcement option is to file a complaint under the Fair Trading Act 1986. 

Both options are complicated and address factual situations that overlap with the laws addressing infringements of registered trademarks.   The key difference is that neither Passing Off nor the Fair Trading Act recognise trademarks as personal property.   This means that these enforcement options do not exist to protect an owner from infringement.   They are instead aimed at protecting consumers from being misled. 

So what does that mean?   As a result, a successful action doesn’t point simply to infringement of the mark.   Instead, it points to evidence of consumers being misled and of damage arising from the deception of the consumer.   Court action is therefore usually more lengthy, and costly, and regrettably for a business owner, actual damage must be shown to your business before being able to enforce your rights. 

So what’s the moral of the story?

Although “Paint It” may be a catchier brand, “Steadfastly” may have been better for Dave’s wallet on a number of levels.   What could he have done to avoid this situation?   He could have first obtained professional advice in relation to trademark registrability before rebranding.   At the end of the day, Dave may still have re-branded, but at least he would have done so knowing the full implications of his choice.