TRADE MARKS & PIVOTS
04 Apr '20

Necessity truly is, the mother of all invention. In the current environment it’s inspiring to observe the many positive innovations undertaken by businesses to pivot their commercial offerings; to tap into new revenue streams; to retain and reskill their teams; and to service their customers’ needs. 

Pivots give rise to some fairly predictable, yet important, legal consequences. Updates to terms of service; reviewing insurance policies; updating employment agreements to reflect new duties and compliance with new Awards; new regulatory regimes to be understood etc.

However, what about brand and trade mark issues? 

Well, I’m glad you asked. A new product, service and/or mode of delivery create various trade mark issues requiring careful navigation. 

Brand Extension. 

A few thoughts to consider when pivoting your business under the umbrella of your existing trade mark. 

  • Do my existing registered trade mark rights extend to my new pivot activities? 

The exclusivity granted by a registered trade mark is limited by the claimed goods and services covered by the registration (known as your specification of goods and services). Before you pivot, review your specification to ensure you have adequate IP protection. If not, the door is ajar for competitors to leverage your goodwill. A new trade mark application, covering the new pivot activities may be the easy-fix and will be appropriate where your new goods and services differ materially from your existing activities.

  • Will use of my brand in respect of my new pivot activities infringe the trade mark rights of any existing business operating in this new space?

Think of your pivot as a new business. You wouldn’t start a new business without first checking the trade mark landscape to ensure your brand is given the all-clear. So tread carefully before launching your new activities under your current brand. Clearance and infringement searches are the answer and we can help identify any potential risks which might necessitate a rebrand to avoid exposure to litigation.

  • Like Coke and Coke Zero, my new pivot involves its own sub-brand. Do my existing trade mark rights extend to this new sub-brand or should I separately protect this via a new registration?

If your new brand is more than a mere descriptor of the new pivot product or pivot service then, yes, absolutely consider protecting that new sub-brand as a registered trade mark in its own right. Registration will give you exclusivity to your sub-brand, effectively blocking a competitor. 

There are many industries that successfully use a head-brand and sub-brand architecture to distinguish their products. The motor vehicle industry, for example, features many companies who have successfully created valuable stables of trade marks associated with their individual vehicle models (e.g. in the case of Toyota, think of ‘Land Cruiser’, ‘Camry’, ‘Kluger’, ‘Prius’ etc).

  • To the extent my rights to use a brand in my ‘normal’ business activities are subject to a licence from a registered trade mark owner, will my pivot activities breach that agreement? 

Here the conversation turns to matters of contract. Many businesses operate as a licensee or a franchisee under the direction of another company that owns the trade mark. Business owners need to double-check contracts to ensure they are permitted to pivot their operations independently of the franchisor or licensor (i.e. the trade mark owner).

This question is also relevant to those trade mark owners whose ownership and use is subject to an existing letter of consent or co-existence agreement negotiated with the owner of a similar trade mark. A pivot under your current brand may inadvertently fall foul of a co-existence agreement.  

  • What about my network of licensees who are authorised to use my registered trade mark(s)?

If you own and license your trade marks to others – e.g. to franchisees, merchandisers, retailers, JV parties or other commercial partners, a review of your current licence agreements will be warranted to ensure they address the brand risks associated with your pivot strategy. For example, do the existing trade mark licence rights need to be supplemented with new rights and/or controls? 

New Business, New Brand.

Your pivot strategy might warrant a new brand to ensure your current brand is ‘insulated’ from your new business activities, or where you deliberately want to create different or competing brand values associated with your pivot. Think of Qantas and its ‘two brand’ strategy involving its budget brand, Jetstar. Or Toyota and its luxury brand, Lexus.

The fundamental strategic considerations for your second brand are as follows:

  1. Choose a distinctive brand capable of registration. The less descriptive, the better. To the extent your brand features a logo, ensure you obtain an assignment of copyright from the creator (e.g. your agency).
  2. Search the trade mark landscape (registered and unregistered marks) in your chosen markets – i.e. don’t forget overseas jurisdictions if you are exporting your goods, including via online sales.
  3. Register your trade mark in respect of your chosen goods and services. Again, don’t forget to consider your overseas’ strategy to ensure protection in your intended markets.

 

Pivoting can be positive for your brand. Stay positive everyone. 

 

 

Disclaimer
This article is provided by way of general information only and is not legal advice. Always obtain your own independent legal advice tailored to your business’ particular circumstances before making decisions relating to the legal issues referred to above. In this regard, Buchanan Law Firm is here to help. You can contact us at hello@bchn.com.au or on + 61 (3) 9596 8495.
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