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Commercial Question

Getting a Handle on Brand Power

updated on 18 January 2005

Question

Is it true that the most valuable asset of many businesses is their brand? If so, how are such brands protected?

Answer

Yes, it is true! Time and again, Pepsi wins blind taste trials over Coca-Cola but, despite the use by Pepsi of high-profile celebrities such as Britney Spears, Christina Aguilera and Michael Jackson (perhaps not such a good association anymore!) in marketing campaigns, Coke continues to win the "battle of the brands". This is because customers perceive Coke to be the better product. Such perception results in more sales and therefore higher income for the brand owner.

A good brand name guarantees the quality and origin of a product or service. Once customers believe (often an emotional rather than an intellectual judgement) that your brand imports a stamp of high and reliable quality, then they will be tempted to buy products sold under that brand name in preference to others; it gives a real competitive edge. Customers may be prepared to pay above the odds for a branded product, and they will be more likely to try out new products sold under the same name. This is called 'brand stretching' and helps create new revenue streams for a business.

A business can protect its brands by registering its trademarks, thereby preventing third parties from benefiting from the value built up in the reputation of the brand. It should police the use of the brand (by preventing incorrect or unlicensed use), and even if it can’t register a trademark, it may still have rights in the brand that can be asserted by bringing an action for 'passing off'. However, this is a more expensive, lengthy and uncertain method of protection than challenging the use of a registered trademark.

Sally Shorthose is a partner in Eversheds' intellectual property department, specialising in brand management and the life sciences sector.