Brand Audits: Is your house in order?
The value of most businesses lies in their brand. However, with busy managers having to juggle an overwhelming number of priorities, it is often the case that the maintenance of the brand can become a secondary priority.
Whilst this is understandable, it is imperative that regular ‘health checks’ are conducted. Failure to do so can lead to dilution or tarnishment of the brand, it can allow competitors to encroach on your space (and take revenue that should be yours) and can expose your customers or potential customers to substandard goods or services. The ultimate result can be an irreversible devaluation of the brand.
So, what sort of things should people be looking at:
A trade mark is any ‘sign’ that consumers recognise as identifying you as the provider of your products or services. They are probably the most valuable tool in your brand protection arsenal and, unlike most rights, they can last forever.
Trade marks can be both unregistered and registered. There are huge advantages to registering your marks, and this is the best way of preventing copycats, but if you have not, a certain level of protection exists in the unregistered signs you use (at least in the UK) – so long as you can show you are conducting a business by reference to them.
It doesn’t just need to be a word, or a logo, the general rule of thumb is that if you consider something a part of your brand (whether it be a word, a logo, a colour, a pattern, a shape or even a sound) you should consider obtaining a trade mark registration for it. Not surprisingly, elements of a brand which might be seen as decorative will require proof that it really does identify your goods or services only before it can be registered – the colour green for BP for example.
Things to consider as part of a brand audit include:
- Are all brands and sub brands registered?
Many business prioritise obtaining protection for their ‘house mark’, but neglect to obtain adequate protection for their sub-brands. For example, APPLE is a trade mark, but so is MAC and IPHONE…
Marketing or advertising slogans can also be protected (as long as they are not descriptive or common expressions), as can distinctive packaging, indeed wherever a ‘thing’ forms a part of your brand identity, you should consider whether it would be possible to register it.
In the UK, you need to have an intention to use trade mark registrations, and it is worth taking advice on what should be covered by your trade mark specification (i.e. the list of goods and services for which you seek exclusivity). Overly broad specifications in particular can cause issues for trade mark owners.
- Have you registered the appropriate domain names?
Domain names are issued on a ‘first come first served’ basis. In order to avoid domain squatters, it is generally advisable to own the ‘.com’ and the corresponding country domain for your key territories (‘.co.uk’ for example) for all of your brands and sub-brands – even if the domain simply re-directs visitors to your main site.
There is a risk that, when you apply for a trade mark, a squatter will see this and buy up all of the domains – so it is best practice to acquire both at the same time.
- Are your marks registered in respect of the correct goods and services?
For example if you have recently expanded into providing new products or services, it is possible that your old marks are not sufficient because someone else might have the mark for those goods or services in that region.
Recent judgments in the UK and EU have cast doubt on the scope of protection given by broad, uncertain, or terms that you cannot show a bona fide intention to use. It is worth reviewing old marks to look at whether these terms can be refined.
- Are your marks held by the correct entity?
Complex internal structures often lead to rights being owned by several different entities, and you should consider whether this is the most efficient way to hold the rights. Particularly when it comes to enforcement, matters can become unduly complicated by split brands. It could be worth incorporating a general IP holding company.
Even where it does make sense for brand rights to be split across corporate entities, it is advisable to have a licensing structure in place to ensure the rights accrue to, and can be forced by, the correct entity.
- Are your marks registered in the correct territories?
Trade marks are national (or regional in the case of the EUTM) rights. If you have expanded (or have an intention to expand) into new territories, your UK marks won’t be sufficient to provide cover outside of the UK.
It is also advisable to conduct ‘brand clearance’ before moving into new geographic regions, to check that you won’t be infringing any third party rights there.
- Are you still using the mark in the way in which it is registered?
If you cease using a mark, or cease using it in the way it has been registered, then it may become vulnerable to cancellation. Any changes to branding, including a change of colour scheme or updates to a logo, should prompt a review of registered protection to ensure you are adequately covered.
- Are you properly monitoring and policing your brand, to protect it from a revocation claim?
In certain circumstances, the way that you, or others, are using the brand, can lead to you losing your rights.
For example, if the brand has becomes a generic term, you may lose the protection in it – ESCALATOR for example, or TRAMPOLINE used to be protected brands. Care must be taken to educate consumers that the term is a brand. There are many ways to do this, such as always including the TM (if unregistered) or ® (if registered) symbols after the mark.
Similarly, if you or someone with your consent, uses the mark in a misleading way (specifically to the nature, quality or origin of the goods or services), you may lose the mark.
- Is your record keeping comprehensive and up to date?
When it comes to enforcement of brand rights, whether registered or unregistered, it is often necessary to provide detailed information including sales figures, advertising spend and other information that speaks to the reputation of the brand (industry awards, for example). If you need to take urgent action, such as an interim injunction application, you might need to compile this information in a very short space of time.
It is therefore a good idea to ensure you keep comprehensive, dated, records of this information, separated by brand / territory / product or service line, so that this information is easy to pull together in the often tight timescales required for enforcement action.
The law of copyright protects ‘works’ for a limited period of time.
The type of things that are usually protected by copyright are literary works (such as brochures and other marketing materials), artistic works (such as logos, photographs and diagrams), musical works (such as jingles) and dramatic works (such as video advertisements).
Of course, some of these things can (and should) also be protected as trade marks, but the copyright in them should not be forgotten. Perhaps one of the most important things to point out here is, when engaging a design agency to produce any material, you should ensure you also have an assignment of the copyright in it.
Some further things to think about include:
- Does copyright even subsist?
To be protectable, a copyright work must be ‘original’ (in that it is the author’s own intellectual creation and has not been copied from elsewhere). If it is not original, it is not protected.
Copyright in the UK generally lasts for the author’s life plus 70 years. This is rarely an issue for brands who keep updating and changing their materials – but it is something to be aware of.
There are also requirements surrounding the nationality / place of residence of the author for the work to qualify for copyright protection. Generally, if a work was created, or first used in the UK, it should be protected, but if it was created abroad, this should be checked.
- Do you own the rights?
If the work was created by an employee in the course of their employment, then usually the answer is yes, but if it was created by a third party (for instance a brand or other creative agency, or consultants who are not employees) the answer might be no. When it comes to enforcing these rights, it is important that you own the rights (or at least have permission to enforce them).
Whilst you will probably have an implied licence to use protected works you have commissioned, there are many things that might be restricted if you don’t actually own them. For example adapting the work without the permission of the owner is an act restricted by law.
The original author or performer of certain works may have moral or performer’s rights in the work, these cannot be assigned. Care must be taken to ensure they are appropriately dealt with so that you can use these materials in the way that you desire.
It is prudent to review all materials and get confirmatory assignments where necessary, and where you still have contact / good relations with the owners. If you come to enforce this in 5 or 10 years’ time, it might be incredibly difficult.
- Have you incorporated any third party material into your works?
You write a script for an advert and film it yourself, but use music you have downloaded from the internet in the background – you will probably be infringing a third party’s copyright if you don’t have permission to use that music.
Care must be taken when this is done to ensure the appropriate licences or permissions are in place.
- Have you registered, in the territories that require/allow registration?
Whilst copyright arises automatically, on the ‘fixation’ or recording of the work, some countries, such as China and the USA, allow or encourage registration. If you may need to rely on your rights in those countries (this is particularly relevant for video and film content), you should consider registering.
- Is your record keeping comprehensive and up to date?
This is particularly important when it comes to enforcing copyright. You will need to be able to show who created the work, when it was created, and how it now belongs to you – therefore, record keeping is key.
Whilst this can be a detailed set of information to keep on top of, if the records are not up to scratch, it can become difficult to enforce your rights. Therefore as part of a brand audit, this information should be tracked, recorded and safely stored for ease of access in the future (or at the very least, a system to capture this data for future works should be put in place).
Design Right is often forgotten about when considering brand protection, but it is still a very powerful right.
There are many different ‘versions’ of the design right in the UK, and the law can get quite complicated, but in general:
- When you come up with a new product design, consider whether it can be protected as a patent, if it constitutes an ‘invention’ (broadly a new clever solution to a particular problem or issue which is not obvious). Note that this will need to be applied for very early on, as once an invention has been disclosed, it is no longer patentable.
- The right known as ‘UK Unregistered Design Right (“UKUDR”)’ protects the appearance of a purely functional product (but not the surface decoration). This right can last for 15 years from creation (or 10 years from first marketing).
- A separate right, known as ‘UK (or EU) Registered or Unregistered Design Right’ protects the appearance (including surface decoration) of the whole or part of a product, in particular the lines, contours, colours, shape, texture or materials of the product, or its ornamentation. This right lasts for three years if not registered or can last for up to 25 years if registered.
- The law of copyright (discussed above) can also be used to protect designs which are also ‘artistic works’ such as patterns, sculptures and even every day articles, if they are ‘Works of Artistic Craftsmanship’.
Things to consider as part of a brand audit include:
- Do you own the designs?
The ‘designer’ owns the design, unless it was created by an employee during the course of their employment. Therefore if your product was created by a contractor, or external agency, you should ensure appropriate assignments are in place. If this was not done, think about getting a confirmatory assignment.
- Have you registered your designs (where possible)?
Whilst in many industries (fashion, for example) the 3 year period is generally considered sufficient to protect the value of a new design, many others (toys, games and tech gadgets, for example) will benefit from registering their rights.
Registration is generally cheap, easy and quick. The various Intellectual Property Offices don’t take nearly as detailed an approach as they do when reviewing trade marks, or patents.
If the designs are not registered within the first 12 months of the product launch, the ability to register them will be lost as they will no longer be ‘original’. This window may have been missed for many designs, but where it hasn’t been, is it worth registering them. This also highlights the importance of ‘getting your ducks in a row’ when it comes to protection prior to launch of a product.
- Have you registered the correct illustrations?
The protection granted is based on the overall impression given by the images filed with the design and various assumptions will be made on the basis of those images.
For example, images which are filed in a particular colour will protect the designs for that colour. Where the image contains a colour contrast, or tonal differences between the various elements of the design – this will form part of the overall impression that the design gives. What you file is therefore of the upmost importance and you should take advice from an expert.
- Do you have the correct territorial coverage?
As with trade marks, registered designs are territorial rights, if your market is global or regional, the protection you have should be similarly broad. The law of design right protection is not as globally harmonised as the law of trade mark protection – which means it is even more important to seek appropriate advice on protection prior to launching a product.
- Have you marked your goods as protected?
Whilst there is no requirement for a product to be marked as protected by design right – if the words ‘Design Right’, the name of the rights owner and the year of first marketing appear on the product or its packaging, this is helpful.
It flags the existence of the right to potential infringers. Not only does this show third parties that you take the protection of your rights seriously, it prevents them from claiming that they did not know that design right exists.
- Have you kept the requite information required when it comes to enforcement?
When the design is not registered (or not capable of being registered), certain information will need to be given when enforcing those rights. This include the details of the creator, the date of creation, the date of publication / first marketing.
As with other rights, it is useful to keep a repository of this information from the time of creation, in case it is needed within a short timescale for the purposes of enforcement.
Monitoring and Enforcement
So your portfolio is in good shape? Great, now you need to make sure you are using it effectively – there is little point in having these rights if you are not going to use them when you are required to. Reluctance to enforce can dilute and harm your brand as much as not having the adequate protection in the first place.
Enforcement through courts is notoriously expensive and can be uncertain, but is not the only way to stop others encroaching on your rights. Sometimes, a cease and desist letter will be sufficient to stop third parties from ripping you off (indeed some ‘infringers’ purposely sail close to the wind to see whether the brand owners will react and if you don’t, they will continue). The strategy here is important, but in the first instance you need to watch out for these infringements:
- Do you have a robust ‘watching service’ in place?
When it comes to trade marks, there are a number of services in the market place, including trade mark and domain name watching services that can be undertaken. These will alert you to application for potentially infringing marks – and you can then decide whether to take further action. Your lawyers will usually run this for you.
- Are you monitoring the marketplace?
Of course, the various registers are only a part of the puzzle, to keep up with what is happening in the market, you should be monitoring more generally. This can be done by staff or even by customers – who are a very valuable asset in alerting brands to the existence of infringing products or services.
There are also services that monitor e-commerce and other online platforms for potentially counterfeit goods. Rights owners should consider whether one of these services should be introduced to offer more robust protection of their brand.
You can also provide details of your registration to Border Force agents, to assist in the cessation of products entering the UK / EU that would infringe your rights.
Any audit should include a review of any licences (i.e. using other people’s brands / rights, or allowing others to use yours), it is wise to ensure you have formal agreements in place. Even if you do, you should consider whether your agreements are sufficiently comprehensive, including:
- What are you (or they) allowed to do with the brand?
This includes where the licensee can sell which products or services, and usually incorporates stipulations on quality of products / services / aftercare, in order to maintain brand integrity.
- Are the royalty payments at the correct level?
This is particularly relevant if the arrangement is historic or undocumented.
- Who is responsible for maintaining the registrations? And who is responsible for the cost of doing so?
When it comes to a large portfolio, there can be quite substantial work involved in simply maintaining it (renewing the marks and filing the requisite forms and declarations along the way). The cost of this can be substantial and therefore it is worth considering whether it is appropriate for the licensee to contribute to that cost.
- Who owns the goodwill (or similar rights outside of the UK) attached to the marks?
If the licensee is trading, the position at law (if the agreement is silent) is that the Licensee will accrue the goodwill, but it is in the trade mark owner’s interest for the goodwill to accrue to it.
- Who is authorised to enforce the trade marks, and in what circumstances should they be (or not be) enforced?
Enforcement is key to maintaining a robust brand, but it can also be costly. It is advisable to set out from the beginning who is responsible for the enforcement and in what circumstances they will act. Any agreement should also deal with the cost of enforcement. It is also worth having a co-operation clause in there to ensure that all members of the licence chain play their part when enforcement is necessary.
- How and when can it be terminated?
The world and markets, can change very dramatically and very quickly (as several recent events have shown!). Licence agreements should be comprehensive as to when they can be terminated, for what reasons, and how the termination procedure works.
Consideration should also be given to intra-group licensing, where complex corporate structures are in place, it is important to ensure that the correct entity owns the rights in question.
Brand Use Guidelines / Policies and Employee Training
A company’s employees are often the most valuable asset in the protection and enforcement of a brand, but without the correct tools at their disposal, they can also risk doing the most harm. It is imperative that all staff understand the brand, and what they should and should not be doing to maintain and protect it.
Things to consider include:
- Putting in place a trade mark policy
Such policies can be used to set out which rights to protect, in which territories, and the circumstances in which enforcement action should be taken. They can cover what steps need to be taken when a new product is launched and when such steps should be taken.
If nothing else, trade mark policies can function as useful ‘to do’ lists for employees rolling out new products.
- Brand Guidelines
Many businesses have a set of ‘rules’ for employees – whilst these generally cover what style / colour / font the business uses as part of its marketing – they can also be used to ensure that employees are doing all that they can to maintain the integrity of the brand.
Examples include strict rules on what employees can and cannot do with the brand (i.e. colour differences), warnings not to use trade marks as verbs, to avoid genericism and a reporting mechanism for when employees come across infringements.
This is also a document in which you can set out and remind employees of the importance of record keeping; including sales and marketing data, promotional activities, old versions of packaging and anything else that speaks to the prestige or repute of the brand.
- Employee Training
Employees who are ‘on the front line’ of brand issues (designers, marketing professionals, brand managers) should be fully and regularly trained on the legal issues surrounding the brand.
Employee training should include advice on how to avoiding infringing third party rights (for example ensuring adequate clearance searching is in place before launching new products), identifying and dealing with third party infringements and comprehensive record keeping practices.
Consider whether your external lawyers will provide training – this is something we do (and enjoy doing!) for our clients.
There are a few key things for brand owners to consider in light of Brexit, in particular any pending EU applications at the end of the transition period will not be manually cloned on to the UK register and separate applications will need to be made. Any registered interests against marks (licences, charges etc) will need to be reviewed and re-registered.
It is worth identifying at this stage whether any of your rights are likely to still be pending at this time and whether action will need to be taken.
To conclude, there is a lot to think about when maintaining a brand, and a lot of these points are commonly overlooked. However, as the brand is often the majority of the value of a business – this should not be the case if it can be avoided.
You can listen to our team discuss the importance of brand audits in our podcast on the topic here.