Kirsten Coetzee: IP could be your single most valuable asset
Trade marks, being a form of intellectual property, allow a business not only to establish a reputation and goodwill in a brand, company name or logo, but also to protect that reputation and goodwill by means of trade mark registration.
In addition to the legal benefit of a registered trade mark, such a right is also an intangible asset with a real monetary value. Your intellectual property may be as valuable as your premises or your stock, and in many instances, far more valuable. That might seem like an unlikely statement when comparing something that is intangible to the assets that make up the physical footprint of a business, but it’s true.
Over time, IP could even be your single most valuable asset, which is the case for many leading brands. Therefore, successfully marketing your product, while in turn boosting your reputation, could ensure that your trade mark continues to gain value as it becomes better known.
Once protected as a registered trade mark, it becomes an asset that can be licensed or sold, providing value beyond your core business. Effectively, a registered trade mark should be thought of as an asset that can be monetised in its own right.
So how do they gain in value? Trade marks and brand identity are how you get recognised in the market, so over time, they are likely to accumulate worth from increased recognition and loyalty, boosted by your exclusive ability to use them in relation to the relevant goods and services in respect of which they are registered.
Consumers’ purchasing decisions are often influenced by the reputation that a brand commands, and that essentially means that consumers are influenced by a trade mark. For this reason, consideration should be given to protecting your brand, and the goodwill and reputation that vest therein, by means of trade mark registration.
An effective trade mark makes it easier for you to be found in a crowded marketplace – and that can have a significant knock-on effect for value. Higher web traffic that results from being easily located can in turn translate into higher rankings and thus more traffic, more customers and more brand recognition.
Think of a successful brand and you think of a successful communication tool. Within a brand name or logo, the associated trade mark conveys intellectual and emotional attributes that are associated with reputation, products and services. A unique, distinguishable logo can also transcend linguistic barriers, while it could be the critical factor in driving consumers’ purchasing decisions, thus allowing the trade mark to gain even more value.
Essentially, the more you are able to differentiate your brand, the more value it will command and the easier it will be to protect. Furthermore, your trade mark allows you to expand your presence in the market without having to be omnipresent. If you want to enter a new geographic market without necessarily moving physically into it, you can licence the right to use your trade mark to others, further adding to its value in the process. This is assuming your trade mark is protected within the relevant geographic territory of interest.
There may also come a time when you want to sell your business, or even only part of the business, and in such circumstances, you could look to sell off relevant trade marks to others. Trade marks can also significantly affect balance sheets when companies come to be sold. If a third party is considering buying your business due to the goodwill and reputation that you have built up, they are highly likely to expect that goodwill and reputation to be protected by means of the brand or business name being registered as a trade mark.
Ultimately, the benefits derived from securing trade marks that produce such long-term protection and value are difficult to ignore. For what is often a relatively small investment, businesses can realise a much bigger return further down the line – and for those planning seriously for the future, they may prove to be the true mark of success.
Kirsten Coetzee is a Trade Mark Attorney (UK and European) for Marks & Clerk LLP