The Growing Importance of Brands and Trademarks in Today’s Economy

By HunterMaclean Attorneys

Published in Business in Savannah and Elegant Island Living

Jeff Bezos, founder and CEO of Amazon.com, once said, “A brand for a company is like a reputation for a person. You earn reputation by trying to do hard things well.”

Indeed, companies grow by providing quality goods or services to customers and forging a connection in customers’ minds between the company and notions of dependability, comfort, and trust. In sum, they develop goodwill in their brands, which brings customers back and helps to develop new customers.

Such goodwill has an indisputable high value that is represented and protected primarily through trademarks. Given the current economy, it is especially important that businesses understand the value of their brands and trademarks. A study by YouGovPolimetrix, a professional research and polling organization, indicates that some brands, primarily luxury brands, do suffer in an economic crisis, but that in times of crisis consumers tend to gravitate towards familiar, dependable, comfortable brands.

Many businesses, however, fail to recognize the importance of taking the time to select trademarks that can be properly registered and protected, such that the value of the business’ goodwill may be preserved and expanded.

The first thing a business owner should know about selecting a trademark is that trademarks are viewed by the law as having various strengths according to the following classifications, listed in descending order:

Fanciful/Arbitrary – These are the best and strongest marks, and are therefore the easiest trademarks to register and protect. Examples include KODAK, which is fanciful because it does not mean anything, and GREY GOOSE, which is arbitrary because it has nothing to do with vodka.

Suggestive – These marks are still considered relatively strong, but are less strong than fanciful or arbitrary marks because they suggest or allude to a characteristic of the product or service with which they are used. Examples include GREYHOUND for bus services, and COPPERTONE for suntan oil.

Descriptive – These marks are not considered to be strong because they directly describe a feature, function, or characteristic of the product or service with which they are used, and descriptive words should be available for all to use with their products or services. Examples include APPLE PIE for potpourri and MANWARE for men’s clothing. Descriptive marks may become registrable if they acquire “secondary meaning” or distinctiveness in the market.

Generic – These marks are the weakest and are incapable of protection. Examples include BREAD and WINE, as used for bread and wine, respectively.

Note that the strength of a mark is directly related to the goods or services with which it is used. The classic example is APPLE, which would be so weak as to be unprotectable for use by an apple merchant, but is arbitrary, and thus strong, for use by a computer company.

The problem we often see is that business owners want to use descriptive marks because they want the mark to describe the product or service. It is a natural inclination, but it does not work well in trademarks, where the law requires that your trademark be distinguishable from others so consumers know that the goods or services associated with the trademark came from you.

Once a trademark is selected and registered, it is important to protect it from infringement through use by others in the same or related fields of goods or services. Courts use a “likelihood of confusion” test to determine trademark infringement.

With this test, a court must determine whether the alleged infringer’s use of the same or similar mark is likely to cause a consumer to be confused as to the source of the goods or services. In other words, would a consumer wonder whether the goods or services came from the alleged infringer or the owner of the allegedly infringed trademark?

Failure to protect a trademark can weaken the strength of the mark such that it is difficult to protect, even to the point where it winds up in the “trademark graveyard,” where trademarks go when they are allowed to be used by others so much that they become generic (e.g. ZIPPER and THERMOS).

In today’s economy, choosing, registering and protecting trademarks have become increasingly important. Be sure to give your company’s branding strategy and trademarks the attention they deserve.