The terms “brand” and “trade mark” (or trademark) tend, in common parlance, to be used interchangeably. To confuse these concepts with each other is to overlook the essential nature and purpose of each. While one is a protective legal device, the other is a far broader, commercial construct.
This post will help to distinguish between the two.
Trade Marks
A trade mark is a legal device intended to distinguish the goods or services of one business from (similar or identical) goods or services of another.
As such, trade marks function to protect businesses from unauthorised imitation (whether intentional or not), at a marketing level, by third parties. Trade marks are usually visual signifiers and identifiers (either in word or logo format) of an overarching brand, but can also be sound-based (think: MGM lion’s roar or the original Nokia ringtone), or, at least in theory, constituted by a smell (but good luck convincing trade mark examiners or a court of this).
Trade marks, then, are a constituent part of a brand, but hardly the whole story. In essence, they afford the owner a negative right, protecting against possible unwanted behaviour by business rivals.
Brands
The word brand has its origins in either Norse or Anglo-Saxon, and meant (as it still means today, assuming you deal with livestock) to burn.
Advertising mastermind David Ogilvy appropriated the word in the 1950′s (for use in marketing), and with its underlying connotations of burning, his choice of word remains evocatively apt, since what is branding if not a business’s attempt to sear (ideally, for eternity) its marketing message into the minds of existing and potential customers?
A brand is not a single, homogenous entity. Rather, it is a set of (sometimes diffuse) promises made by a business to its target clientele. A brand may imply something bespoke, of high quality, or indeed, high volume at low price. It may include a promise to send you an email or voucher on your birthday, or for staff to deal with you in a certain way within a retail setting. The promises a brand can make are limited only by imagination.
Regardless of the content of these promises, it is through their continued fulfilment that a brand attracts, and more importantly, retains custom. One consumer’s loyalty over a lifetime is worth more than hundreds of once-off customers.
How does branding impact IP Value?
From a valuation perspective, it is the how of branding that is of interest. An IP valuation will examine what intangible assets are in place that enable a business to deliver on its brand promises, whatever they may be. For instance, why does Brand A beat Brand B, when they are of similar size and sell an identical product? Does Brand A have systems or algorithms in place that enable it to best its competitor? Is its staff training methodology better? Do its database and data mining systems facilitate knowing its customers better?
These and other questions will be addressed in upcoming posts on this blog.
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