Insurance · 20 February 2017

Overcoming branding issues for a new business

shutterstock_570468415
Creating a strong brand can cause huge headaches if you don’t comply with the law

Up next in his business development series for Business Advice, GridLaw founder David Walker tackles some common branding hurdles for new ventures, and how to get around them.

Creating a brand, particularly coming up with a memorable name for a business, is something  most new business owners can’t wait to get involved with. It can be an enormous task with endless possibilities to consider and this usually leads them down one of three routes. The name is either:

(1) Descriptive of what they do

(2) Inspiring or evocative to reflect their values, or

(3) A completely made up word which they give their own meaning to

The majority of people think of this as a purely creative process, so involving their lawyer is the last thing on their mind, until it is time to protect it.

However, like most aspects of business, trying to create a strong brand can cause you some huge headaches if you don’t comply with the law.

I want to save you from these headaches, so in this article I’m going to look at two important scenarios that I see all too often when people create new brands.

The first scenario was faced by a client of mine, we’ll call her Sarah, when she decided to grow her business. Sarah was doing well, had a business model she could replicate and had built up a good reputation in her brand. She therefore thought it was an ideal business to turn into a franchise.

The trouble was, Sarah’s brand was purely descriptive of what her business did. In some situations, this would have been an advantage because a prospective customer would require little or no explanation to know what they were buying.

However, trade mark law says you cannot register a descriptive name. It must be distinctive. So, although Sarah had a great reputation for what she did, without a trade mark, she couldn’t licence her brand to franchisees.

We talked through the options and because Sarah’s underlying business was good, she decided that she needed to rebrand to something that she could protect. This was an expensive and time consuming process which slowed her plans for expansion quite considerably.

Inspiring and evocative words can also cause headaches for a new business when the chosen name is the same or too similar to an existing brand. This is the second scenario I would like to look at.

Recently, I was advising a client, who we will call Mike, who found himself in this situation. Mike was in the process of launching a new venture and came to me to talk about registering his brand as a trade mark.

I did a quick trade mark search and to my dismay, found another business had already registered the exact name he wanted to use.

When I called Mike to give him the bad news, he went through the usual emotions of terror and then disappointment that he couldn’t use the name he had set his heart on. Then, he took a huge risk and decided he was going to use it anyway.

Mike decided to take a gamble that the existing trade mark owner wouldn’t find out. I strongly advised against this because if he was caught and sued for trade mark infringement, he could have to pay compensation to the trade mark owner and be forced to rebrand.

Mike didn’t like the idea of rebranding, either now or in the future, because this brand was perfect for what he wanted to do. However, we agreed that being forced to rebrand would be really confusing for his clients and could seriously damage his hard-earned reputation. Therefore, we needed another option.

I did some more research and found that in this particular case the existing trade mark wasn’t being used and the company that owned it was dormant.

If a trade mark hasn’t been used for over five years you can apply to the Intellectual Property Office to have it cancelled and then you are free to register it. The trade mark in question wasn’t quite five years old so this wasn’t an option for us, but we were getting close to this time limit.

Rather than waiting, we decided to try a commercial solution to this problem and I approached the trade mark owner and made an offer to buy it off of them. After some negotiations, we agreed a price for the trade mark, the company name and a portfolio of domain names. Mike was thrilled!

This is a risky strategy for a business to take because it alerts the trade mark owner that you exist and there is interest in their brand. This can push the price up, or they could start using the trade mark and then force you to rebrand. In our case, we were lucky the trade mark owner was so reasonable and had no intention of using the brand in the future.

So, if you’re creating a new brand for your business, how can you avoid these issues? First, decide which brand strategy you want to pursue.

Do you want a brand that is descriptive of what you do or do you want a brand that you can protect? If you want a brand you can protect, do you choose a name that represents your values or do you make up a completely new word?

Making up a completely new word is probably the safest route to take because it will certainly be distinctive and there will be very little chance that someone has already come up with it. However, a made-up name is not appropriate for all businesses.

Whichever route you take, as you’re coming up with new ideas for the brand, carry out a thorough search to ensure there are no existing names that are the same or too similar to what you are proposing.

Start by searching for existing trade marks via the Intellectual Property Office website and then search Companies House for any companies that have the same or a confusing similar name. If both of these searches are clear, do a general Google search in case a sole trader or partnership is using your proposed name as a trading name.

If you don’t find anything, great, you can continue developing your brand. However, if you do find an existing trade mark or a company name that may cause you problems, don’t panic. If you are careful, two identical or similar brands can co-exist alongside each other, and I will explain more about this in my next article.

Until then, if you have any questions about creating or protecting a new brand, please feel free to contact me.

Catch up with David’s most recent article for Business Advice, why it makes sense to adopt a limited company structure. 

Sign up to our newsletter to get the latest from Business Advice.


 
TAGS:

ABOUT THE EXPERT

David Walker is the founder of Grid Law, a firm which first targeted the motorsport industry – advising on sponsorship deals, new contracts and building of personal brands. He has now expanded his remit to include entrepreneurs, aiding with contract law, dispute resolution and protecting and defending intellectual property rights.

Q&A

If you’ve found the article above useful, but have a more detailed and bespoke question, then please feel free to submit a query to our expert. We at Business Advice will get in contact with them on your behalf and arrange for a personalised response. These questions and answers will then be collated on the site for any other readers who have similar queries.

Ask a question

On the up

Find out how KPMG Small Business Accounting can really work for you

FIND OUT MORE