How Can a Trade Mark Provide Value to Your Business?
George Raptis
It is easy for business owners to overlook the importance of trade marking features of their business’ brand, given the time and costs involved in registering a trade mark. However, trade marks are a valuable asset and can significantly enhance the value of your business. This article outlines:
- trade mark basics; and
- three reasons why trade marks add value to your business.
What is a Trade Mark?
A trade mark is a type of intellectual property protection that provides you with the exclusive right to use, licence and sell your trade mark. Business owners often assume that a trade mark merely protects their business’ logo. However, trade marks can protect different elements of a business’ brand, from catchphrases to your business’ name. When you market your business’ goods or services, it will be these identifiable features of your business that you will use.
Australian IP law recognises both unregistered and registered trade marks. Unregistered trade marks are commonly identifiable by the ‘™’ symbol, which tells potential infringers that the phrase or logo serves as a unique identifier of the business’ goods or services. However, an unregistered trade mark is not protected as comprehensively under the law as a registered trade mark.
You can apply for a registered trade mark via IP Australia, and these trade marks will carry the symbol ‘®’. Registered trade marks give owners the exclusive right to use, licence, and sell the trade mark for 10 years from the trade mark application’s filing date.
Reason #1: Competitive Advantage
Given the variety of options available to consumers nowadays, your business must stand out in the market. Doing so will help your business achieve a competitive advantage over other businesses. Trade marks often protect the features of your business which make it identifiable. For example, the Nike swoosh symbol is a trade marked logo that is instantly recognisable by consumers.
By undertaking trade mark protection, you protect your brand from being copied or misappropriated by another business. In this sense, you are maintaining your business’ uniqueness in the market. You are also ensuring that the goods or services that your business provides are distinguishable from those provided by your competitors. Therefore, it is important to trade mark features of your business’ brand early on to help establish your good or service in the market.
Reason #2: Brand Value
Since a trade mark can protect the identifiable features of your business’ brand, the value of a trade mark also represents the business’ goodwill. Goodwill refers to its overall reputation and customer loyalty and is an intangible asset to any business.
Generally, you will sell a trade mark alongside the element the trade mark protects. For example, you will usually sell a trade marked business name when you sell your business. In this instance, you should consider the value of your trade mark’s goodwill when determining your business’ market value. You should also consider various other factors, such as the projected future earning power of the business.
Reason #3: Option to Licence
If you do not intend to sell your trade mark, you also have the exclusive right to licence your trade mark. Licensing refers to the process of granting another person the right to use and exploit your trade mark without actually taking ownership of your trade mark.
Trade marks are usually licenced when an independent franchisee of a popular fast-food chain uses the fast-food company’s logo.
When you licence your trade mark, you can determine the:
- conditions of use of the licence (i.e. a set time period); and
- cost of the licence.
Licensing your trade mark can be a useful way for your business to earn an additional income without selling its trade mark. However, as a result of licensing your trade mark, you may not be able to use the trade mark for the time period prescribed in terms of the licensing agreement.
Key Takeaways
Trade mark owners have the exclusive right to use, licence and sell their trade marks. Since trade marks often protect your brand’s identifiable features, trade marks can help build your brand identity and distinguish your products or services from your competitors.
In the instance where you are selling your trade mark and the associated objects that it protects (i.e. selling your business and its trade marked business name), trade marks represent the value of your business’ goodwill. You should consider this when determining the market value of your business. If you need further legal assistance with trade mark protection, our experienced trade mark lawyers can assist. Call us on 1300 657 423 or complete the form on this page.
Frequently Asked Questions
The value of your trade mark largely depends on the value of your brand. In this sense, the stronger the reputation and goodwill of your business, the more value its trade marks will have.
The costs of registering a trade mark with IP Australia depends on how many classes of goods or services you want your trade mark to protect and the method used to register your trade mark. This can range between $250 to $600.
Trade mark protection lasts 10 years from its filing date. However, you can renew your trade mark protection 12 months before its expiry date.