Protecting the company’s trademark? That’s not my job! (39.985Kb) - DOWNLOAD

In today’s global economy, trademark rights have become valuable business assets.  Consumers pay more for a product bearing a trademark that they recognise and which meets their expectations.  Estimates of the value of some of the world’s most famous trademarks, such as Coca-Cola or IBM, exceed 50 billion dollars each.  As a result, loss or dilution of the company’s trademark translates into serious money.  Channel managers play a vital frontline role in the protection and promotion of the company’s trademark values.  How so?

First, what actually constitutes a trademark?  A trademark is a sign capable of distinguishing the goods or services produced or provided by one enterprise from those of another. Any distinctive word, letter, numeral, drawing, picture, shape, colour, logotype, label or combinations used to distinguish goods or services may be considered a trademark; even sounds and smells may be considered a trademark and protected.

A company that has not protected its trademarks will not be able to take advantage of the rights that a validly registered trademark provides.  Many companies confuse trademarks with company names and believe that by registering their business and trade names at Companies House (for the UK) this name would also be automatically protected as a trademark.

Not having protected a trademark can have terrible consequences. A specialty beer importer client of ours based in the United States found themselves in an unusually strong position when one of the largest breweries in the world (EU based) acquired one of the American’s strongest products and terminated its import/distribution agreement.  Unbeknown to us, our client had registered its supplier's trademark in the US.

The brewery announced at a press conference following the acquisition that they intended to develop a direct sales force in the US.  The importer/distributor advised the brewery that such a plan would be unwise!  Not only did the Americans have a valid distribution agreement, but they "owned" the brewery’s trademark in the U.S.!  Without the right to use the trademark in the US, neither the brewery nor any distributor could sell the beer.

The Americans suggested that the Europeans should check out their trademark rights.  It goes without saying that the brewery’s accountants and lawyers hadn’t reviewed this important issue in their due diligence.  Hasty and lucrative offers were received from the brewery.  It was obliged to indemnify the distributor - not for the termination of the contract - but rather to buy back the trademark.

Trademark protection can be obtained through registration or, in some countries, also through use.

Where must your trademark be protected? It is important to make sure that you are registering your trademark in all the countries where you are commercialising your products or your services.  One of our clients, against our advice, decided to postpone the registration of his trademark in Korea in order to cut down on costs, and to register it only in those countries where they were already doing business.  Not long afterwards, he found out that his distributor had already done it for him. Imagine how much leverage the distributor had when it came time to renegotiate the distribution agreement or when he missed his sales targets.

In general, the cost of registration of your trademark will depend on the strategy adopted. For that, the advice of a trademark specialist is advisable.  Companies that start the registration of their trademarks on their own may discover all too late that they could have protected their trademarks in both a stronger and more cost-effective way.  That means that they might have done it quicker and a lot cheaper by doing a bit of investigation before jumping in.

There are national, regional (like the European Union or the Benelux) and international registrations (where you decide in which particular countries you wish to register).

International registrations are very cost effective for companies that are operating in several countries, especially if they are operating both inside and outside of the European Union. This is truer than ever due to the fact that since October 1, 2004, it is possible to register your trademark in EU, as well as non-EU countries, by following a single procedure!

Management of your trademark portfolio is an issue that is frequently overlooked. Trademarks commonly last for just ten years. Make sure a suitable system is in place so that you are reminded before they expire.

So what conclusions can we draw?  As channel managers, it’s your job to ask the right questions before penetrating new territory – or even changing distributors.  If you are involved in negotiating a distribution agreement – or a renewal – make sure trademark protections are built in.  Why invite problems, or give the distributor a gift that will ultimately make your life miserable, or worse, put your bonus in jeopardy?