A brand is a name, term, sign, symbol or design, or a combination of these, which is intended to identify the goods or services of one seller or group of sellers, and to differentiate them from competitors.
A trademark is a brand or part of a brand that is given legal protection because it is capable of exclusive appropriation.
A trademark serves the following purposes:
- It indicates the origin of a product
- It is the customer’s guarantee of quality
- It enables the manufacturer to promote a product without fear of having the innovation duplicated by a competitor
Selecting brands and establishing brand policy are important aspects of export marketing. In terms of the latter, the exporter will have to decide how to protect the company’s brands and whether this protection should be national (i.e. within a specific country only) or international (i.e. worldwide). The effects that cultural differences may have on the use of a brand in a particular market should also be determined.
The protection of brand names is complicated by the many difficulties experienced in registering trademarks in certain countries and by the prevalence of brand imitation and brand piracy.
There are two different systems for the national protection of trademarks:
- “Priority registration”, whereby the first to register a trademark within a particular country retains the exclusive use of it in that country. This system is used in code law countries such as France.
- “Priority in use” whereby evidence of sales having been made within the country concerned, is required. Common law countries, such as the UK and the USA, require priority in use.
In the first system, use generally follows registration while in the second system, registration follows use. In some countries, registration is renewable at certain intervals for a fee. Consequently, the costs involved in protecting trademarks can be substantial.
Attempts have also been made to provide international protection of trademarks. The Arrangement of Madrid is an agreement whereby a trademark registered in one subscribing country in the name of a locally domiciled organisation is automatically registered in all other subscribing countries, provided it qualifies for registration in these countries. It should be noted that very few countries subscribe to this agreement.
A trademark is a sign that serves to distinguish goods or services of one enterprise from another. This sign may consist of one or more distinctive words, letters, names, numerals, figures, or colours. To ensure that the distinction remains, most countries have introduced laws to protect trademarks. The WTO realised that the development of world trade can be adversely affected if standards adopted by countries to protect intellectual property rights vary from country to county. For this reason the agreement on Trade-Related Intellectual Property Rights (TRIPS) was negotiated and accepted by all WTO members.
In some markets of the world, there is a tendency for local manufacturers to take advantage of the promotional expenditure and reputation of an international supplier. They do this by producing similar products under the same or a very similar brand name. Often similar packaging and labelling is used as well. The intention is to persuade customers that they are getting the international product. Brand imitation is particularly rife in the fashion (e.g. watch) and drug industries.
Although imitation may be the sincerest form of flattery, the compliment has little appeal when it means lost sales! One of the agreements reached at the Uruguay Round of GATT talks was that governments will now restrict the trade in counterfeit goods, thus protecting legitimate manufacturers.
A ‘brand pirate’ deliberately registers brand names with the intention of selling them back at a profit to the companies in which they originated when these companies eventually wish to enter the market.
Should a company refuse to pay the price asked, it will either have to register and establish another brand, or find another market. In markets where brand name registration is uncomplicated and relatively inexpensive, individuals have been known to make a living from this practice!
Brands and cultural differences
A particular brand name may not be pronounceable in the local language of the foreign market. Usually, the longer the name, the less suitable it is for translation into other languages. In addition, the brand name could be found to have an undesirable or obscene connotation in the foreign language. Although this may be solved by making a small change in spelling, in most cases, a new brand name needs to be found.
Once it has been decided to protect a particular brand, the countries in which the exporter will register the appropriate trademark must be identified. Although it may be tempting to register a particular trademark in all countries, the expense involved will be a strong deterrent. It would be foolish, however, not to register it in those markets targeted for future export sales. In terms of other countries, the following factors should be considered:
- Market potential
- The ease and cost of registration, including legal costs
- The expense and inconvenience of selecting a new brand name in the event of brand piracy or brand imitation
- The relationship between the brand name and product sales – the brand name may be vital in this regard
- The importance and cost savings attached to establishing a single international brand name
” For an excellent source on trade marks, click here http://www.ggmark.com/