Insurance · 20 February 2017

Overcoming branding issues for a new business

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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 aroundthem.

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 Im 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, well 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 couldnt 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 couldnt 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 wouldnt 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 didnt 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 wasnt 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 wasnt quite five years old so this wasnt 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!


 
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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.

Business development