Taking the example of corporate partnerships, it is quite easy to understand a fundraising team focusing on the fact that a proposal will generate income (which is, after all, their main function), rather than seeing it as a transaction. The transaction view has a charity allowing another party to enhance its own income (and profit) by association with your brand, offering you a slice of that benefit in return: but is your ‘slice’ fair in comparison to the total benefit to the partner? Unless you have a clear and consistent view across the organisation that the brand is of value and needs protection, that question will be very difficult to answer.
Equally, there is a strategic question around the risk to brand value from potential uses. That might come from the realisation that only one partnership can be agreed in a particular sector, and so other opportunities have been cut off by the one that was taken (we might think of this as the bandwidth of a brand). It might also come from the potential for a partnership with another organisation leading to reputational damage: does your agreement allow for termination if the partner’s behaviour is damaging to your organisation, and does the price paid adequately reflect this risk?
Before you can get to a partnership, though, there is also the question of how robustly your brand and name is protected in law. It is difficult to extract value from a brand that is poorly protected. Equally, there is a need to ensure that your brand does not infringe someone else’s rights. Let’s think a bit about how brand value can be measured and the steps you can take to protect it in law.
How is brand value measured?
The methods for valuing brands are many in number, and some are ‘black boxed’ approaches used by consultancies that are not publicly disclosed in full. Generally, there are three broad approaches:
- Historical cost (or cost to replicate): what has been spent on brand development, or what would it cost to develop an equivalent brand from scratch?
- Income/attributable cash flows: what incremental cash flow arises because of the brand? This might be calculated using a number of models, but charities might typically focus on assessing overall project cash flows or using ‘relief from royalty’ to assess the value of royalty payments avoided by owning the brand (as opposed to licencing it);
- Comparable transaction metrics: this would, in theory, involve using metrics derived from the sale of similar brands to assess the value of another. In practice, brands tend to have such unique features and they are so rarely sold in isolation that this is unlikely to be practical in many cases. Even where a (broadly) comparable transaction is found, judgement will be needed to adjust for the differences that would inevitably be identified.
These approaches can be used either to value the whole brand, or to assess the value of an aspect of it. They can also be used to consider questions such as the fairness of licence fee or royalty rate that is offered, or as a means of setting benchmarks against which offers can be judged before further negotiation or acceptance.
How can I ensure that my brand is protected?
There are a number of tools available to help a charity protect its brand.
- Trade mark registration is the strongest, most tangible right available for protecting a name, logo or strapline, and it was a pleasure to see that so many in the seminar audience worked for charities with registered trade marks. Relatively cheap and quick to obtain, registered trade marks have the added advantage of being indefinitely renewable and can easily help define the scope of a licence or commercial participation agreement.
It was also interesting to see that a handful of people in the room worked for charities which had not registered a trade mark for its main brand. This could be for a number of reasons, including the fact that charity names are often fairly descriptive (often being a call to action), and trade mark law prohibits registration of names that describe the nature or purpose of the activities covered. This said, names that describe the organisation, rather than what it does, can be registrable and we at Bates Wells have considerable experience convincing Examiners at the UK and EU Intellectual Property Offices of this.
- If your charity has been operating under a name or logo for a long time, it is possible it has built up goodwill in the name sufficient to prevent others from taking advantage of this under the UK common law of passing-off. Disadvantages of this, however, include the local nature of this right, its fairly narrow scope and the difficulty of proving deliberate misrepresentation by the other party.
- Copyright can be a very helpful tool, particularly as it arises automatically without the need for any registration. However, it will typically not cover names, and will only be useful to protect logos and photos where the copyright has been transferred from the designer/photographer to the charity. Proving chain of title can sometimes be difficult where the logo was created a long time ago and documentary proof of copyright ownership has been lost in the fog of time.
- Design registration and unregistered designs cover the appearance of products, so it usually less relevant for charities. An exception may be where a charity sells badges.
- Ancillary protection tools include brand guidelines, T&C’s, licence agreements and internal guidelines for use of a charity’s own materials as well as others’. Equally, these are no use if they are out-of-date so updates from time-to-time, as well as keeping the trade mark portfolio up-to-date, are important.
And before embarking a rebrand or new campaign, we would always recommend conducting clearance searches to ensure that your brand does not infringe someone else’s rights.
Conversely, if you notice someone else using your brand or a confusingly similar brand, don’t bury your head in the sand. Prompt action usually works best.
An Asset, an Ornament or a Tool?
It was pleasing to see so many organisations actively engaging in the subject of brand protection and value at our seminar. It was equally striking to hear a number talking about how different parts of their organisation view the brand. On one extreme, a brand might be treated as a tool: as any DIYer knows, tools get broken when they are used carelessly or with age. On the other extreme are ornaments: there to be admired but not used.
A more helpful view might be to look at the brand as an income generating asset. If you use a building to deliver services that bring in income, you will invest in its upkeep, you will ensure that it is not damaged by users and you would take action to stop anyone using it for undesirable purposes or without permission. And you would expect to see the entire organisation sharing a common view of what it is there for.
Perhaps now would be a good time to reflect on and refresh how your organisation treats and uses its brand, and whether that view is shared by all?
Talk to us
The team at Bates Wells has in-depth experience of helping organisation to:
- Ensure their brands are effectively protected;
- Take action to prevent infringement;
- Help you to avoid infringing someone else’s brand;
- Value brands (or part of them);
- Develop strategies for brand usage;
- Develop systems for decision-making that build consistency across departments; and
- Negotiate transactions including mergers, acquisitions, sales and licencing/franchising deals that include brands.
If any of the issues raised in this article resonate with you, we’d be delighted to talk with you and to see where we can help.
All content on this page is correct as of September 30, 2019.