When starting a new business or running an existing one, there are a million and one things to do and registering your trade mark may not seem like a priority. But, a trade mark registration is an important commercial asset. Getting the right protection in place will not only safeguard your business for the future but can drive revenue, enhance brand recognition and foster growth.
Here are the five key benefits to trade mark registration:
1. Brand exclusivity
A brand identity is how you present your company to the public and distinguishes your company from your competitors. Once you have decided on a brand, it is important you can use it without infringing others’ rights and also have the confidence to build brand equity. A common misconception is that a domain name or registered business name gives you the exclusive right to your brand name. Only a trade mark registration can offer that protection and not just for a name but other types of marks such as logos, stylised words, taglines, colours, sounds and smells.
A trade mark registration gives you exclusive rights in a mark in connection with your nominated goods and services. From the time you file the trade mark application, you can use the TM symbol next to your mark. Once the mark is registered, the R symbol can be used. The TM and R symbols puts others on notice that you are claiming rights in the mark. The combination of having a trade mark registration and using a symbol minimises others using similar marks which could dilute your brand. If there has been misuse by others, having a trade mark registration gives you the best option for enforcing your rights and putting an end to the misuse as quickly as possible.
2. Reputation
Building a brand reputation is essential for startups as the time simply hasn’t been there to build up goodwill. One of the best ways to build brand reputation is to use your registered trade mark consistently and in all aspects of your business- on the product itself, on your website, in marketing and by putting controls in place for authorised users. When seeing your brand, customers will then associate it with quality and reliability which in turn will generate customer loyalty.
Having a registered trade mark will differentiate your business from others. This can be particularly important if you operate in a crowded market or in an industry where there are a lot of low quality or low-cost substitutes.
3. Increase revenue through licensing
A registered trade mark is a valuable asset which can be bought, sold or licensed to others. You can license your trade mark to others in return for a licensing fee, which can be in the form of a fixed fee or royalty. The more equity you have in a brand, the higher the licensing fee. Commercialising a trade mark registration through licensing can work in a number of ways. For example, you can license your names and operational methods to franchisees (McDonalds), through limited collaborations (Cookie Time x Krispy Kreme doughnuts) or for long term partnerships (Disney’s successful partnership with Lego for Star Wars sets). In each case, it is the registered trade mark which is being used as leverage to drive high engagement, innovate and broaden market reach, all of which can increase your revenue.
4. Securing capital
If you need capital to scale operations, hire more staff or increase marketing, then you will need to attract investments and investors. A registered trade mark will appeal to investors. It demonstrates business acumen by having a robust intellectual property strategy in place which experienced investors will look for. It also gives confidence to investors because the right protections are in place and any legal risks around ownership have been mitigated.
5. An essential part of your exit strategy
For many founders, selling the business is considered the ultimate goal for building a valuable and sustainable company. Similar to investors, having registered trade marks will be very attractive to potential buyers and can significantly boost the sale price. In an increasing digital world, what is being sold is no longer a bricks and mortar business. In most cases, it is the goodwill and equity in a brand that is being acquired. Famously, when Volkswagen acquired Rolls Royce in 1998, it initially only acquired the factory and not the trade mark rights. It meant that it could manufacture the cars but not brand them because it was BMW who owned the rights for the name ROLLS ROYCE (which it had previously acquired from Rolls Royce). Volkswagen then subsequently purchased the trade mark rights for the name and logo for £40 million.
A successful future
While not all brands are valued at £40 million, what remains the same for all is that a brand’s value is driven by its goodwill and equity. Registering your trade mark means that your goodwill is tangible and the brand is protected from dilution and customer confusion. We can help you register your brand to ensure the reputational and financial success of your business.
Get in touch with our experts John Hackett and Amanda Griffiths for leading advice and insights.