Brands are often seriously under-valued by the organisations that own them, says Eric Ziehlke. Here’s some legal considerations for better understanding the value of your brand and protecting its worth.

One of the most important functions of a marketing manager is to create brands. Brands can consist of company names, logos and livery. Brands encapsulate all that distinguishes a company’s products and services from those of its competitors. Marketing managers should treat the brands they create as a legal asset to be treasured and nurtured as a primary source of their company’s revenue and profit. Marketing managers therefore have a solemn duty to identify, value, protect and exploit the brand portfolios they create.

Identification

It is important to carry out a regular stocktake of your brands. All your brands should be exhaustively listed and their ownership verified. It may be that some of your brands are owned by now defunct companies. It may be that the copyright in devices and images contained in your brands actually vest in the advertising or design agency who created them. If you are using any brands under licence to third parties, you should ensure that you are complying with the licence terms.

Valuation

Brands are often seriously under-valued by the companies that own them. It is important to remember that brands not only provide increased sales, they can also deliver those sales at a premium price. The effect of a strong brand on your company’s profitability can be crucial. For this reason, the best way of valuing a brand is to assess the long term effect on company profitability should that brand be lost.

Protection

The essential way to protect brands is to register them as trade marks. All distinctive brands should be registered for all the goods and services for which they are used or likely to be used. Brands should be registered as trade marks in all countries in which your company operates or intends to operate. Many people believe that the registration of company names and business names on the relevant registers provides them with effective ownership and protection of those names.

This is not the case.

Company and business name registrations provide no proprietary ownership of those names. The only way to obtain proprietorship in company and business names is to register them as trade marks. It is strongly advisable to set up a brand book specifying the layout, font and content of your brands.

In this way, you can ensure that your brands are consistently represented to your market. You should regularly monitor your brands to ensure that your trade mark registrations are updated and renewed.

Exploitation

Once you have identified, valued and protected your brands, you are then in a position to exploit the potential in those brands. Here are a few examples of how you may gain real benefit from your brand portfolio:

• Advertising: treat your brand advertising as an investment rather than an expense. A brand actually increases in value through use. The major world brands have achieved their commercial value through prolonged, consistent and extensive advertising.
• Pricing: if your brand is valuable, ensure that your customers pay a premium for that branded product or service. You should never compete on price with your brand against a generic product. The fundamental value in a brand lies in the price premium and image it commands.
• Brand strategy: you should devise a brand strategy for your portfolio of brands. For example, if you own a well-known brand, this can be used as an umbrella for a series of sub-brands which draw off the perceived market value of the main brand.
• Licensing: you might consider licensing your brand to third parties who may be in a better position to exploit your brand in certain markets. All such licensing arrangements should be the subject of strictly worded legal agreements.

The legal dimension

The first step in developing a comprehensive brand strategy is to consult your intellectual property lawyer to assist you in identifying and protecting the intellectual property in your brands. Once these safeguards are in place, you can set forth to exploit your brands to the full.

Eric Ziehlke is partner at Swaab Attorneys.