Is Your Brand at Risk?
In August 1998, Apple Computer launched the iMac, a compact, all-in-one computer clad in translucent blue plastic. It immediately became a huge hit with consumers, due in large part to its distinctive design. Its robust sales spurred a dramatic turnaround at Apple. Exactly one year later, eMachines introduced the eOne, a compact, all-in-one computer clad in translucent blue plastic. Apple sued eMachines, claiming the company had illegally copied the iMac’s design. “We’ve invested a lot of money and effort to create and market our award-winning computer designs,” said Apple CEO Steve Jobs, “and we intend to protect them under the law.”
Brand builders beware. More and more companies are facing attacks from competitors with copycat products. And when they go to court to defend their brands, as Apple has done, they are often frustrated by the results. Protecting a brand has become increasingly difficult as the elements that make up a brand have become more complex, according to Alex Simonson, professor of marketing at Georgetown University’s Robert Emmett McDonough School of Business, and Frederick Mostert, intellectual property counsel for Switzerland-based Richemont Group and a past president of the International Trademark Association.
Brands today are defined not only by traditional “trade dress” criteria, such as the look of the labels and packaging, but also by other factors including touch, scent, and—the current rage—“experience,” Simonson says. Companies rely on their brands to communicate increasingly complex sets of messages and associations to customers, often across different product categories and different regions of the globe.
As the definition of brands expands, the boundaries between brands become more fuzzy—and more difficult to defend legally. So what’s to be done? Simonson and Mostert urge companies to take preventative measures. They say that by carefully analyzing and documenting all the distinctive elements of their brands, companies can often avoid a costly—and unpredictable—court battle.
That means beginning with the basics. First, Mostert says, “Return to the first principle of marketing and trademark law: make sure your trade dress is truly distinctive and unique. Then, and only then, should you move on to consider the complexities of your product. That will allow the product to stand out from the market clutter and will strengthen your trademark rights.”
Second, inform yourself about the law. Companies need to be clear about which elements of their brands are covered by which kinds of legal protection. Three kinds of protection are available. The first is trademark protection, which can last forever. To qualify as a trademark, a brand element must serve to clearly distinguish a company or a product from its competitors. The second is copyright protection, which for U.S. corporations lasts 75 years from the date of publication or 100 years from the time of creation, whichever comes first. Copyrights cover the original artistic or creative work embodied in a product, such as a unique design. The third is design patent protection, which lasts 14 years in the United States. These patents cover any original ornamental, nonfunctional designs that are part of a product. Simonson and Mostert note that lawsuits filed to protect original designs from being copied are often incorrectly analyzed by the courts as trademark infringement, which protects brands from consumer confusion or dilution. That results in inconsistent court decisions.
Whatever types of protection are employed, Simonson and Mostert suggest keeping a meticulous paper trail and documenting any of the original thinking or design effort that differentiates your brand. That could strengthen your case considerably.
Once you know which elements of your brand you can defend and how to defend them, the challenge is to keep the brand’s identity clear and distinct. What does the brand stand for? What image does it promote?
Hundreds of cases are brought each year worldwide, the researchers note, in which companies battle to retain control over a brand image. They suggest that many of the cases could be avoided if the parties had not let their brands become diluted or generic over time.
Maintaining a clear brand identity is particularly difficult during a merger. The traditional identities of merged companies are often very different. One business, for instance, may stress “reliability” while the other communicates “innovativeness.” During the period when the companies are integrating, there may be gaps in the continuity of the brand messages. That can provide openings for competitors to intrude on both of the old brand identities.
Similar trade dress and even brand experiences can sometimes coexist when they are offered in different markets. But such situations are becoming more rare as companies try to use their brands to span ever-larger sets of product categories. Harley-Davidson, for example, now uses its brand to promote watches, cafés, and deodorants, in addition to motorcycles.
As a cautionary tale, Simonson and Mostert point to a recent battle between two famous corporate felines. Tony the Tiger, the mascot of Kellogg’s Frosted Flakes, is featured in the breakfast cereal’s advertising, promotions, Web sites, and the like. He is central to the entire brand experience Kellogg’s has developed. But Exxon, too, uses a tiger as the icon of its brand. Because cereal and gasoline are such radically different products, the two tigers coexisted peacefully for a long time. Then, in 1997, Exxon used the tiger image to launch its own brand of coffee and soft drinks to sell at its gas station minimarts. Kellogg’s filed suit to protect the “tiger experience” under the broad food category. Kellogg’s lost the suit at the lower court level, but the company has appealed the decision. Whatever the ultimate outcome, both companies are sure to incur big legal bills.
The researchers note that while the terms “brands” and “brand experiences” may not appear on the balance sheet, the stakes involved in protecting brands are the highest imaginable. A legal defeat can mean the death of a brand and the loss of a critical corporate asset. And even a victory can entail big costs and distractions. Consider this a heads up.
Is Your Brand at Risk?
Research & References of Is Your Brand at Risk?|A&C Accounting And Tax Services
Source