Matthew K. Blackburn
This is Part 2 of a 2-part series. Click here for part 1. Despite all best efforts, brands are imitated which is why taking the proper steps to assure your brand is registered and protected is critical. To build a solid foundation for future legal efforts to protect your brand requires work up front. These initial steps include: • Register trademarks and copyrights (with the Patent Office or the Copyright Office) and record these IP rights (with Customs offices) to solidify your brand rights. • Vigorously publicize your brand to customers and competitors. Creating consumer awareness and loyalty reinforces your rights, strengthens your brand, and dissuades competitors from adopting similar or counterfeit branding. • Establish robust and routine processes to detect threats to your brand. Regularly search B2B (business-to-business) and B2C (business-to-consumer) websites to identify counterfeit products. • Consider employing both overt and covert brand security measures. Use product labels with holographic images for overt brand security measures. This will allow the product owner, distributors, and customers to assist in detecting counterfeit products. Covert measures (e.g., invisible ink on packaging or molecular taggants) can be hard for counterfeiters to replicate, and will allow the product owner to rapidly distinguish between authorized products and fakes. • Engage customers, distributors, and the public. Encourage them to report suspicious products to you. Having taken steps to protect your brand may lead to opportunities to go after copyists and threats to your brand. While it is important to consider carefully where and how to respond, it is equally important to recognize that delays in responding to threats put your brand at risk. Once a potential threat is detected, consult with experts who can help weigh the pros and cons of various strategies and select the most appropriate response. Brand protection litigation in the United States takes many forms, can be quite costly, and may include: • For counterfeit products being imported into the United States, consider submitting an online allegation of infringing shipments to U.S. Customs and Border Protection. This helps border agents locate counterfeit products before they reach the market. There is minimal cost in taking this approach. • For existential threats (e.g., from much larger competitors) an all-out effort, including litigation in court, may be required. Such lawsuits are not without risks, and can drain significant resources and put valuable company assets at risk. • For smaller threats (e.g., niche players), consider commercial litigation, and do not limit yourself to IP litigation. In particular, make sure to consider whether contractual agreements in existence might provide the relief against the litigation target, which you are seeking. Breach of contract litigation in state court tends to be less expensive than IP litigation in federal court, and may move more quickly. • For inferior competitor products, the threat may be met without going to court by reinforcing your brand identity within the market. Technology innovators should employ a multi-layered approach to brand protection at the very earliest stages of commercialization. While true innovators may enjoy a first-mover advantage, that advantage is only temporary and increasingly short-lived. Establishing a strong brand identity and protecting that brand’s integrity is one of the single most important factors that will help in determining a product’s (and a company’s) long-term success.
This is Part 1 of a 2-part series. Click here for part 2. When the first iPhone launched in 2007, many prominent tech CEOs and journalists panned this innovative product. Apple succeeded by creating rapid consumer acceptance of this new device through careful design combining observable product usage advantages, and a less-complex user experience. As a result, the company sold its one-millionth iPhone just three months after its release. However, that is not enough. At the earliest stages of innovative product commercialization, brand protection is essential. Commercial success attracts both legitimate competitors and counterfeiters seeking to take advantage of these fast-growing markets. Strong brand protection can provide important security against would-be competitors, facilitating higher product margins, and creating opportunities for your brand and product extensions. The Honest Co. is an example of a relatively young product innovator. By building a strong brand, it succeeded in a very competitive market for baby-related products against larger and better-established competitors (e.g., Procter & Gamble’s brands such as Pampers, Dreft and Luvs). This innovator carefully and consistently communicates its brand identity to target consumers highlighting safe, healthy, stylish and environmentally friendly products. More importantly, it has delivered products consistent with that branding to achieve consumer buy-in and loyalty. After just six years, Honest Co. commendably yields a 10-digit corporate valuation, confirming the importance of brand protection. To maintain such lofty valuations in highly competitive markets requires a multi-layered brand protection strategy noted below. 1. Proactively maintain maximum control of the product. Understand how the product moves (or will move) through the market from creation to consumption. To ensure a strong brand (one that has a specific and predictable user experience), it is important to control who “touches” the product throughout the entire supply chain. Contractual relationships with suppliers and distributors alike should include clauses that facilitate present and future brand-protection efforts. Maintain control of your product through combinations of consumer and distribution targeted tools. For example, customers’ usage of software products can be tracked and monitored through cloud-based systems to protect the integrity of your brand. However, contractual agreements should be put in place to ensure that such monitoring is permitted. 2. Use contractual provisions to impose intellectual property (IP) use terms and conditions in supplier, distribution and sales agreements if the product is intended to be distributed to a specific customer type (e.g., retail), or within a specific geographical territory (e.g., United States). Impose on distributors the responsibility for providing written notice to customers of these restrictions, as well as for obtaining IP agreements between your company and the customers. Additionally, include terms in all supplier and distributor agreements that provide the right to audit channel partners to ensure compliance with brand standards. 3. Be clear and know which obligations will remain after the contractual relationship has ended when structuring contracts with manufacturing and distribution partners. These contractual agreements seek to control and manage access to products and brands to provide additional avenues for brand protection. Enforcement of contract rights tends to be simpler and less costly than other options. Take note, manufacturing and distribution partners will likely change over time, and today’s partners may become tomorrow’s fierce rivals. 4. Make sure all employees have a thorough understanding of your brand identity and its importance to the business. Once customers no longer associate your brand with a particular experience, your customer relationship has been destroyed. In the age of social media, the devastating effect can propagate across the entire market at an astonishing rate. Encouraging and facilitating employees to remain vigilant and report potential threats to your brand (e.g., counterfeits, negative comparisons in advertisements, social media comments) is imperative. For example, one can consider creating a Slack workspace solely dedicated to your brand and to discussions of any potential threats to it. The cost to do so is minimal and your employees will become more emotionally invested in your company when they are motivated to actively contribute to its success. These steps will greatly enhance brand consistency and continued excellence in your product to avoid copycats.