Top 5 Reasons For Registering a Trademark

Your brand is your most valuable asset if you play your cards right

What exactly is a brand? Not easy to say. It’s an airy concept. You can’t touch it, you can’t hold it, but somehow it exists in the aether or rather in people’s minds. Like a scent that triggers memories and feelings and can flood your mind with associations, whether good or bad.

It’s real enough though. The APPLE brand was worth $234 Billion in 2020 – that’s a third of the company’s total value, GOOGLE’s brand was worth 20% of its value, and MERCEDES a whopping 85% of its total value. ¹

A brand that runs with a smart strategy and delivers a great product will grow in value. You build a brand by communicating its unique value offering to excite customers, through advertising, websites, packaging, and sales pitches, and fulfilling that promise through the product and customer experience.

This value must be secured and owned to be protectable. By registering a trade mark, you become its registered owner. Once registered, it can be securitised and it becomes an asset on your balance sheet increasing your company’s total value. The proof of ownership of a registered trade mark is usually required by investors or buyers of your business and for franchising and licensing your brand. If someone infringes your registered brand you can force them to cough up a licensing fee instead of having to prove the damages you suffered in court which is often not possible.

Only with a registered trade mark can you own a brand as an independently saleable asset. When fashion retailer Barneys New York went bankrupt, though otherwise worthless, it was paid $271.4 million for its trademarks.

You could lose the brand that your business is built on if you don’t register

It’s unwise to build a house on land owned by someone else. The house goes with the land if land ownership changes. So why build a business and reputation on a brand you haven’t secured? Think of the Trade Marks Register like the deeds office. Until your brand is registered, you have no proof of ownership and, in fact, may not have ownership at all.

You get Instant Rights (potentially forever), Legal Super Powers and Leverage

By doing a search to check for availability and then filing a trade mark application immediately, you secure exclusive rights to your brand for up to 7 years in the whole of South Africa without even using it. It buys you lots of time to get started so it is good practice to lodge an application for a great concept – to put it on ice. Someone can’t just steal your idea if you let it slip, so you have tangible leverage in negotiations and you can sell it. Another company filed an application to register the META trade mark in the United States a year before Facebook changed its name and might get paid $20 million (300 million Rand).

Once you do use it, you can keep rights to it forever if you do it right. Registering also discourages others from using your brand. Your ownership becomes public record, and anyone conducting due diligence before wanting to start use of a similar or identical brand would become aware of this and go back to the drawing board.

Without going into the technical details (that only get us lawyers excited), let’s just say that a registered trade marks gets you a whole bunch of rights and legal powers provided by the South African Trade Marks Act, which makes it infinitely easier and more cost effective to enforce. Any trade mark attorney would advise an infringer not to ignore the threat of someone backed by a similar or identical registered trade mark – their rights are assumed, and the ball is in the defense’s court to disprove them. 

First to apply usually gets the rights

The date of filing is the most important. Should you file your brand at 11pm today, and someone else files the same brand at 1am, 2 hours could mean the difference between you or them getting to keep the brand and having to rebuild your reputation, customers and existing income stream. If you are the late filer (and haven’t searched) you would only find out about the conflict 7-10 months later (once your application is examined and blocked). If you don’t file or search the register, you may only discover the conflict many years later.

While you can get certain unregistered rights in a brand name through bare use without registration, these only arise once you have a protectable reputation (and become known in your market) which can take a long time. But you only get these rights for the exact goods or services you are using the brand in relation to, in the exact design and geographical area and for the customers that actually recognise you, which is difficult and very expensive to prove in court. 

With registration these rights are instantly upgraded to all goods or services in the application, in every corner of the country, for any conceivable design (if you file a Word Mark), and for all consumers interested and market segments related to the goods or services listed in the application. And if someone else registers first, they could pole-vault over your unregistered rights and either prevent you from expanding beyond the existing rights you can prove (and from expanding your area, customer base, design etc) or at worst, lose the brand completely. Even if you have the funds to fight back, you would be at a serious disadvantage in court, may have to spend 100+ times the amount of the cost of a trade mark application in South Africa, wait a long time and may not even win.

Welcome to the Global Market: get clout on International Platforms like Amazon Marketplace, Facebook, Instagram etc

It goes without saying that the internet has changed the world. Brand names are becoming scarce – there are a finite number of combinations of words and letters that can form a brand name. According to the UN, the world population grew by 30% in two decades and, especially in a post-pandemic world, the marketplace and the Trade Marks Registers are increasingly crowded:  the proverbial Everyone is starting a side-hustle, working remotely while creating multiple income streams and new businesses. They all require a brand that can be heard in an ocean of attention-seeking competitors.

Also, you are no longer just competing with South African businesses. The market has become global. Goods and services are marketed on international platforms like Amazon, Instagram, Facebook and Linkedin to consumers worldwide. Most of these platforms will not act against others that are infringing your brand (whether intentionally or not), counterfeiting your goods or services or pretending to be you, if you cannot show a  trade mark registration number (or sometimes an application) in at least one country.

So you may have to consider the risk of identical international brands encroaching on your customer base or preventing you from expanding further once you are ready. Of course the smartest thing to do would be do conduct searches of trade mark registers in all countries of interest – or at least the big markets like the European Union (and maybe UK) and the United States and filing trade mark applications there too (which will probably set you back at least R25,000 in the EU and around R15,000-R20,000 in the US). 

Filing in South Africa for a start is cost effective (R3,290) and will in many cases give you clout on international platforms instead of just being ignored.

We’re passionate about brands, so if you would like to chat some more about the above or explore how we can help you register your brand, search to see if your trade mark is available, or otherwise protect your brand (your most valuable asset) in South Africa, the EU, US or elsewhere please get in touch! 

– Stephan Viollier

Have any questions? Drop us a message below and we’ll be in touch!

¹https://brandmarketingblog.com/articles/branding-definitions/what-is-brand-equity/

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