Investment to create wealth through ownership of a brand is wasted if there is ignorance of intellectual property law (“IP”), IP search procedure, and IP protection tasks.

This is illustrated by probably the most common of all IP risks – legal issues arising from poorly selected brands and poor product identification.

Consider this scenario – Company A names a product and releases it . Assume the product name has IP rights. Some time later Company B launches a product with a similar name and for the same market.

Company B will be in trouble. Its product may be shot down by law if Company A is able to prove its legal rights and the similarity of Company B’s product identification. It may be similarity in a brand name, domain name, package design, package shape, or other product features or identifications.

In this scenario, Company A’s brand was an IP asset and Company B’s brand was an IP risk.

These types of identification disputes are very common. Product name and other identification similarities trigger a great many legal disputes. It is bread and butter work for IP lawyers. The cause of these disputes is ignorance of law and failure by businesses to seek experienced legal advice.

Company B’s legal risk and legal costs could have been avoided, or at least minimised, by engaging experienced counsel to conduct a professional name availability search. It would have been best to do this at the point of product conceptualisation.

Company B’s wasted expenditure can be measured. Failing to spend say $550 on a professional trade mark search may result in Company B spending thousands of dollars on legal costs and even more on pulping its product. All this because it adopted a product brand which can’t be owned by Company B because it breaches the legal rights of Company A.

For a minimum fee of $550 name availability advice is available from our firm to cover the trade marks register, company and business names registers, domain names, use of names on the web, and several other places where names can be searched.

Now consider an alternative scenario. This time Company A is in trouble. Company A releases a product which has a name or other identification that is almost completely descriptive of its product or features of its product.  Assume Company A’s product is bread and its brand name is “Bread”. Accordingly that name has no IP monopoly rights.

Yes it is a dumb brand, in marketing and legal terms. Dumb brands are quite common. Company directors and product managers are often guilty of avoiding common sense in their desire to own a product description (eg bread), rather than a novel, undescriptive or simply suggestive name (eg Buttercup, Tip Top, Riga etc). The more that is invested in a dumb brand the bigger the risk of potential losses. This fate for descriptive brands is avoided in only rare cases, eg The Australian Financial Review.

Now in Company A’s “Bread” scenario, Company A would be unable to prove legal IP monopoly rights to the brand “Bread”, even if it used the name Bread for its product for months or years and sold millions of loaves.

Accordingly, Company B will be able to trade under the identical name (ie “Bread”) or with a similar name (eg “Bready” or “myBread”).

In this scenario, Company A’s brand was an IP risk, not an IP asset.

The principle to understand is simple. In law as in business good brands or names should differentiate the associated product from others in the market or from brands or names other traders are likely to want to use.

It is preferable to seek an IP monopoly over a novel name. They are worth having, eg “Google” which before its adoption was a word not found in the dictionary. Another example of a name highly adapted for gaining a legal monopoly is Kodak, it is an invented word. On adoption it did not describe “photography”. Also avoiding common IP traps, it was not a geographic name (eg Kodak Sydney) and it was not someone’s common surname (eg Mrs Kodak).

Directors should not invest dollars and years of effort on generic or descriptive product names. When they do, they are investing in assumed IP, legal fiction, not fact. These investments fail to secure any intellectual property rights worth having.

The solution for both start-ups and established companies is this – obtain experienced intellectual property law advice before investing in product names or major ventures. Call us or send an email if you want your names tested, improved or legally protected.

Contact us with any questions or requests.

Noric Dilanchian