Article By: Catherine Holland
Originally published in the Orange County Business Journal on November 19, 2012
Ms. Juliet Capulet once asked her beloved Romeo, “What’s in a name?” A more business minded Romeo might have replied, “Quite a lot.” His failure to appreciate the importance of names resulted in tragic consequences that have echoed through the ages. Although a failure like Romeo’s rarely leads to such an end for today’s businesses, it could damage their bottom line. Many businesses would find this more alarming than the fate of star-crossed lovers.
Iconic brands such as COCA-COLA, APPLE and LEVI’S are worth billions of dollars, even without any of the accompanying capital assets. Business owners usually take the necessary steps to protect their company name and product brands. If you truly want to maximize the value of your business, however, don’t stop here. All of the nuances that differentiate your products from those of your competitors’ might be capable of monetization.
Trademarks are “source identifiers.” This means that just about anything can be a trademark, so long as it identifies and distinguishes your goods or services from a competitor’s, and so long as consumers identify it with your business. Sounds, smells, shapes of products and even buildings can act as trademarks.
Why does this matter? It matters because once you establish that these things identify your company and its products, you can stop your competitors from using anything that is confusingly similar. The even better news? Trademarks last for as long as you use them. Depending on your business strategy, this could mean forever. Think about the competitive advantage this gives you.
Let’s say you are selling nail polish. Let’s say you are selling lots of nail polish, and beauty salons and department stores across the country stock your product. It dawns on you that consumers selecting their color from the rack on the wall are making their decisions based not only on the color of the polish, but also on the shape of the bottle. They have always liked the polish in the little square bottles, and they prefer to choose their color from that group of bottles. Consumers understand that the bottles themselves identify the maker or source of the polish, without even checking for the brand name. You realize that, in addition to not wanting your competitors to use your brand name, you definitely do not want them to sell polish in little square bottles. Your bottles have become trademarks which identify your products. If you establish the exclusive right to sell nail polish in those bottles, you have cornered the market on consumers who prefer polish sold in those bottles.
The company Essie realized the value in the design of its bottle and obtained a trademark registration for it. Now, Essie can prevent competitors from selling nail polish in bottles that are confusingly similar to its unique design.
Many companies do not realize the value of their packaging, product shape or color scheme until competitors begin to copy them. Without a trademark registration, it can be difficult to stop the copying, and the company must scramble to prove that it owns exclusive rights. In some cases, they may be too late.
Smart companies strategize from the outset. They identify the aspects of their products that create goodwill with consumers, and they consciously develop and protect those attributes. Levi’s is an example of a company that has established an intellectual property perimeter extending far beyond its brand name. The company obtained trademark registrations for both the stitching design on the back pocket of its jeans and the small rectangular label sewn in the seam of the back pocket. The company has been quite aggressive in stopping others from using similar stitching designs and tags, regardless of the competitor’s brand name. As a result, the company has stopped the loss of sales from jeans that look like Levi’s, but do not bear the LEVI’S brand.
So what does this mean for your company? If you want to maximize the value of your company and its products, identify what makes them unique. Look at your products or services from the consumer’s point of view, and try to identify characteristics that might influence their purchasing decision. Once you identify them, evaluate the cost of taking the steps necessary to secure exclusive rights in them. You may decide to make a conscious effort to promote these aspects to your customers, and to file applications to register them as trademarks. This will give you the tools to enforce your rights against competitors, and ensure that what makes you unique stays that way.
Catherine J. Holland is a partner in the Orange County office of Knobbe Martens Olson & Bear LLP. She specializes in all aspects of domestic and international trademark, unfair competition and copyright matters. Her practice includes domestic and foreign trademark selection and searches, trademark procurement and prosecution, inter partes proceedings before the Trademark Trial and Appeal Board, trademark audits, intellectual property licensing, domain name disputes, counterfeit goods and customs, copyrights, entertainment law, rights of publicity, and trademark and copyright enforcement and litigation. For more information visit www.knobbe.com or contact Catherine directly at catherine.holland@knobbe.com or (949) 760-0404.
The author wishes to acknowledge the assistance of Jesse K. Bolling in preparing this article. Mr. Bolling is an associate in the Orange County office of Knobbe Martens Olson & Bear LLP.
