You have been working hard to grow your business and build a positive reputation. Whether you are selling products like BCPWN members Luxx Chocolat or Maya Crafts or services like the Business Doctor of North Jersey or WannaBee Chef, by focusing on your customers’ needs and the benefits they get from your products and services, you are building up the business assets of goodwill and brand recognition for your products and services. Of course, you say, but how do these intangible assets, goodwill and brand recognition, add value to my business?
These intangible business assets fall within the realm of intellectual property or “IP”, where knowledge, ideas, innovations and brands give individuals and your companies a competitive advantage. The main types of intellectual property include patents, trademarks, copyrights, trade secrets and trade dress.
How does intellectual property add value to your business? When your business owns the intellectual property it has created, these IP rights can be sold, licensed to others to use, or can be used as collateral to obtain financing. You can stop others from using your IP rights without your permission. That’s nice, you respond, but how does this relate to adding value to my business? Let’s answer that question in part today by focusing on trademarks and brands. We will discuss other types of IP in future posts.
What is a trademark? A trademark is an identifier of a brand and its source. It can be a word, name, symbol or device, or a combination of these items. Think of the Nike Swoosh, a distinctive symbol that is a trademark for the Nike brand. Your rights in your trademark are based on use of your trademark in connection with your goods or services. Registering a trademark in the U.S. and in other countries where your goods and services are sold provides additional rights and benefits.
Are you limited to one trademark for your business? No, you can have more than one trademark associated with your business. BCPWN member Luxx Chocolat has 5 active trademark registrations: “Luxx Chocolat”, “The Luxx Life”, “Hot Choxx”, “Chocovin Chocolate & Wine Tastings” and “Oh-Inspiring”.
What is the purpose of a trademark? A trademark promotes competition by protecting the trademark owner’s goodwill in his business and by allowing consumers to distinguish the goods of different companies. Look at the trademarks of the different car companies and how these trademarks help distinguish the car companies from each other and to you, the consumer. To protect consumers from confusion, a trademark that is the same or similar to another cannot be registered for the same products or services. Using “Luxx Chocolat” as our example, you can find plenty of trademarks that include the word “Luxx”, and plenty of trademarks that include the word “Chocolat” for different products and services, but you will not find a second company with a trademark registration for Luxx Chocolat for specialty chocolates because it would cause consumer confusion about who is making and selling these specialty candies.
Why register and protect your trademark? You are spending money on advertising and other marketing to build awareness of your branded products and services. You want your customers and future customers to look for your brand name because they will want the expected quality and benefits from using your products and services. So long as you are using your brand-identifying trademark in commerce, your trademark rights may be extended indefinitely. Over time, your investment in your brand and development of goodwill will add substantial value to your business that you can monetize if you decide to sell your business, to generate additional revenue through licensing, or to secure financing to fuel more growth for your business. How much value can you add?
Let’s look at Coca-Cola®, an iconic trademark. The Coca-Cola trademark was created in 1886 and has been in continuous use for over 103 years by The Coca-Cola Company. In 2017, Forbes reported that the brand value of Coca-Cola® is now 56.4 billion dollars. (See https://www.forbes.com/powerful-brands/list/.)
In 1976, three guys in a garage founded a new company to create and sell personal computers. You might have heard of it. That startup company, Apple, Inc., owns Apple®, the world’s most valuable brand with a value of 170 billion dollars. (See https://www.forbes.com/powerful-brands/list/.) It did not happen overnight. It took 40 years of making and selling products and advertising those products with the Apple trademarks to have consumers know that when they see that now famous Apple logo and other Apple trademarks, they are getting products that will have a certain quality from a company they trust.
Want to know more? I am here to answer your questions and help you recognize and protect your company’s valuable IP assets.
Leason Ellis LLP