Starbucks spent $387 Million last year alone to create an entire user experience through branding and brand protection. Take away that branding, and the remainder would be nothing but (some would say mediocre) cup of coffee in a paper cup.
Possibly to a lesser extent, every business focuses on creating a brand because it essentially the only way to communicate the unique value and quality of that business’ good or service. Just as we all protect homes, businesses and autos through e.g. insurance., businesses protect brands through documenting their various aspects (e.g. logos, designs, words, color schemes, customer perceptions), persuing trademarks for key logos and brand names, and subsequently policing its protected intellectual property against any potential infringers.
Only Protected Brands Grow in Value
Unike physical assets which actually depreciate, brands generally appreciate in value over time.
Brands start from nothing. As the reputation grows, the relevant market begins to attribute certain (hopefully positive) consistent characteristics, qualities, and feelings of the company and its goods/services. Branding marketers document those elements and create marketing collateral to buildup the brand. The brand grows as the company grows.
But what happens if the process is started on an logo or product name that is suggestive of another company (i.e. infringement)? Or what happens if the company never formally protected the brand and some other company comes along and copies it? The answer is that brand, and most possibly that company is doomed or at the very least, in trouble. Brand protection attorneys are not only suggested but required at that point.
Failure to Protect Brand Hurts Aquistion Potential
And then there is the fact that protection is an obvious aspect of due diligence when a company is going to be acquired. If the answer is “we created the brand but never cleared it or filed formal trademark applications”, from my experience, the aquirer will either walk away or substantially discount the price they will pay. In other words, brand protection is not discretionary, and most successful companies start early and build continuously.
Making Money off Brand Alone
Franchisors are examples of business entities who use the power of brand stored value and goodwill in their brands to license their brand out to other business. For example, Subway is a franchise. The franchisor would not be able to license the franchise if that brand in all of its elements was not heavily protected.
The same is true with merchandising. Some brands such as Nike may allow another company to use their brand on products such as eyewear or clothing through a license. This type of leveraging of a brand can bring in money from industries that have nothing directly to do with current business modeling. However, this strategy is all for naught if it is not protected.
Brand + Protection = $
Respected/protected brands earn more money. Once a brands reaches a certain level of respect in the eyes of the public, the brand owners can charge significant premiums on their products and services. While it can take decades to reach the level of Apple or Google in brand name respect, efforts made to protect brand at an earlier stage can yield significant returns in the future. And in a world that has become increasingly cluttered with brands vying for attention, this added value is important especially to take advantages of a successful exit.
The stronger the brand, the more likely acquisition is possible especially when a strong brand can equal strong profits.
While there is no doubt that emerging companies have an incredible amount of immediate needs, companies should not underestimate the vital importance of protecting brand; the protection secured today should pay off in spades in the not so distant future.
Brand protection is a speciality in the intellectual property legal world. EmergeCounsel attorneys have protected hundreds of brands (as well as their own). We offer free initial consultation to discuss your custom brand strategy needs.