Ready, Set, Rebrand? Why Trade Mark Strategy Should Come Before Marketing Spend

A new brand rarely starts with a trade mark application. More often, it starts with a marketing idea. A name is brainstormed, a logo is designed, domains and social media handles are secured, a website is built and product packaging is ordered. By the time the business speaks to a Trade Marks Attorney, significant time and money may already have been invested in the brand. This order of business can be an expensive way to discover that the brand cannot be safely used or registered as a trade mark.

For businesses investing heavily into building a brand, trade mark protection should not be an afterthought. The earlier trade mark considerations are brought into the branding process, the greater the opportunity to identify problems before they become expensive legal issues, and the better prospects there are of being able to build a strong brand reputation.

The Hidden Cost of Getting the Trade Mark Wrong

Marketing and associated branding are designed to create consumer recognition. Trade mark law, on the other hand, is concerned with whether that recognition can be associated with a particular trader and protected from competing use. The essence of trade mark protection is not only to grant exclusive rights to a trader to use a certain brand feature – trade mark law, at its core, is built around the principle of avoiding consumer confusion. This means the commercial value created through marketing can quickly become a liability, if the underlying brand is not available for use due to a high risk of such confusion occurring.

Consider a business that spends $50,000 developing a new brand: it engages a designer, develops packaging, commissions photography, launches a website and begins an advertising campaign. Six months later, it discovers that another business has an earlier trade mark for a similar name – and whether this trade mark is registered or not is not necessarily a decisive factor, considering the first trader to use a mark in commerce is recognised by law as the true owner of that trade mark in Australia.

In the above scenario, the problem is no longer simply the cost of a trade mark application. The business may need to replace packaging, change its website and social media accounts, withdraw and destroy promotional material, explain the rebrand to customers and potentially deal with legal allegations from the earlier rights holder. The more successful the launch has been, the more expensive the problem can become. For this reason, trade mark clearance and strategy should happen before, rather than after, substantial investment in a new brand.

A Good Brand is Not Necessarily a Good Trade Mark

There can also be a disconnect between what makes a brand attractive from a marketing perspective and what makes it strong from a legal perspective. Marketing teams may understandably favour names that immediately communicate what a product does or evoke a particular quality, experience or lifestyle. From a legal perspective, however, descriptive or highly suggestive names are often difficult to protect as trade marks. A distinctive trade mark on the other hand can provide a business with a much stronger legal asset than a name that simply describes its products or services. As an additional benefit, it is easier to enforce the rights in a distinctive trade mark when a competitor adopts a confusingly similar mark.

This is particularly important for businesses that intend to invest significantly in building consumer recognition. If a business is going to spend years teaching consumers to associate a particular name with its products or services, it makes sense to choose a name over which it can obtain meaningful proprietary rights. In other words, the best outcome is one where commercial and legal considerations are addressed together.

Distinctive vs Descriptive Trade Marks

Whether a trade mark is distinctive depends on the relationship between the mark and the goods or services for which protection is sought. Consider for example the trade mark “Apple.” The word is entirely descriptive when used for fruit, but it has no descriptive connection with computers or smartphones. In that context, it functions as a distinctive badge of origin for the promotion and sale of tech products. A business selling apples could not realistically expect to monopolise the word “apple” for fruit. For a technology business, however, the same word can become a highly distinctive and valuable brand.

Unlike “Apple”, KODAK was created as a brand rather than taken from an ordinary word with an existing meaning. Invented or highly distinctive names can offer significant legal advantages because competitors are unlikely to have a legitimate need to use the same term to describe their own businesses. Marketing teams may like descriptive names because consumers immediately understand them, but trade mark law often rewards the opposite approach.

At the other end of the spectrum, adopting a name such as PENRITH DRY CLEANERS for dry cleaning services presents obvious legal challenges. “Penrith” merely identifies a geographical location, and “dry cleaners” describes the services. Other businesses offering dry cleaning services in Penrith may legitimately need to use those terms. A business may find the name commercially intuitive and easy for customers to understand, but that same descriptive quality may make it impossible to obtain meaningful exclusive trade mark rights. Should a competitor wish to adopt the same trade mark, it may not be possible to act against them to prevent confusion.

Clearance Before Commitment

A trade mark search is sometimes treated as a final legal check before filing. However, it is much more valuable when treated as part of the brand development process. A preliminary search can identify obvious risks while the business still has alternatives. If five potential names are being considered, it is considerably easier to abandon one of them at the concept stage than after a national advertising campaign has launched.

Clearance searches should also be considered in the context of the business’s actual plans. The relevant question is not only whether an identical trade mark exists: a proper assessment should consider potentially similar marks, the relevant goods and services, the strength of earlier rights, the channels through which the respective products or services are offered, and the markets in which the business intends to operate.

This is particularly important where a business has ambitions to expand overseas, as trade mark rights are territorial. An Australian registration does not automatically protect a brand in the United States, the United Kingdom, Europe, China or elsewhere. As a business expands, its trade mark strategy should expand with it.

This does not necessarily mean filing everywhere from day one, which is often not feasible. For businesses with limited budgets, a more practical approach may be to identify the jurisdictions that matter most to the business’s current operations and its realistic growth plans.

Those jurisdictions might include:

1. the country where the business is based;
2. countries where products are manufactured;
3. important export markets;
4. jurisdictions in which significant sales occur; and
5. markets in which the business expects to launch soon.

The key is to make those strategy decisions deliberately, and early. A business that waits until a brand has become successful internationally before considering its trade mark strategy may find that someone else has already secured the relevant trade mark in an important market, which may expose the business to significant risks in that market.

Ensure Trade Mark Ownership is Clear

Another issue that is often overlooked during the excitement of a new brand launch is ownership. Who actually owns the trade mark?

This can become complicated where several entities are involved, such as a founder, operating company, holding company, franchisees and distributors. The entity applying for trade mark registration should generally be the entity that is entitled to own and control the trade mark. Where multiple parties will use the trade mark, the appropriate commercial arrangements should be put in place.

The same applies to logos and other creative assets. A business may assume that because it paid a designer to create a logo, it automatically owns all intellectual property in that work. That assumption should not be made without checking the contractual arrangements. Trade mark strategy therefore sits within a broader IP and commercial framework.

Consider Both Word and Logo Trade Marks in Branding

Businesses sometimes place considerable emphasis on registering their logo while leaving the underlying brand name unprotected. Such an approach can be risky, as a logo may change over time: a business may refresh its branding, redesign its packaging or adopt a simplified version of its visual identity. In these circumstances, the word element of the brand may be the asset that remains constant. Many business owners do not realise that plain word text and stylised logos are considered two different trade marks, and obtaining a trade mark registration for one does not protect the other.

Where appropriate, businesses should therefore consider whether protection is required for both the word mark and the stylised or logo version. The right strategy will depend on many factors – including the brand presence as a whole, budget and intended use – but relying exclusively on a particular visual representation of a trade mark alone may negatively impact a business’s brand protection over time.

Brand Protection as an Investment in Future Flexibility

The purpose of trade mark protection is not simply to prevent someone else from copying a brand. A well-planned trade mark portfolio can give a business greater freedom to operate and grow. It can support expansion into new products and services, licensing arrangements, franchising, investment and international markets. It can also provide greater certainty when the business is considering spending more money on marketing.

These considerations are particularly relevant for emerging businesses. A start-up may initially view a trade mark application as an expense that can be deferred until the business is established. The reality however is that the earlier stages of a business may be when trade mark clearance searches and strategy building is most important, because at this stage the business has the greatest flexibility to change its branding. Once customers know and trust a name, changing it becomes much harder.

A Practical Trade Mark Launch Checklist

Before committing substantial resources to a new brand, businesses should consider:

1. Is the proposed name sufficiently distinctive?
2. Has a trade mark clearance search been undertaken?
3. Is the proposed mark available for the goods or services the business intends to offer?
4. Who will own the trade mark?
5. Should both the word mark and logo be protected?
6. Which countries are commercially important now?
7. Which countries are likely to become important in the next few years?
8. Should any manufacturing, distribution or licensing arrangements be considered?
9. Has the business considered whether its marketing and branding plans are consistent with the scope of its proposed trade mark protection?

These considerations do not need to slow down the branding process – done early, and properly, they can actually make it more efficient.

Final Thoughts

Building a brand is an investment. The name, logo, packaging, website, social media presence and advertising that surround a brand can take years to develop and significant amounts of money to establish. Trade mark protection should therefore form part of that investment from the beginning. The most expensive time to discover a trade mark problem is usually after the brand has become successful.

A better approach is to involve a Trade Marks Attorney while the brand is still being developed. Early clearance, thoughtful filing and a strategy aligned with the business’s commercial plans can help ensure that the brand being built is one the business can continue to own, use and grow. After all, there is little value in building a brand that you later need to change.

To ensure you can build brands that can be marketed confidently, MBIP can help. Please reach out via our book a meeting form or by calling our office on 07 3369 2226 to be put in contact with one of our skilled Trade Marks Attorneys.

Featured image by tonodiaz on Magnific