AJPark

You’ve spent time creating a name for your store. KNIBBLE is your creation and you love it. You’ve also developed a tagline NOSH THE LOT.  You hope your customers do just that and then come back for more!  You’re convinced the name and tagline will appeal to customers.

You’ve also drawn a chef caricature to use with your name and tagline.  The caricature looks a bit like you.  Customers will recognise your passion for good food in your well-fed belly you say.

You want the shop to be bright and colourful.  Your favourite colour is orange and you plan to paint the walls orange and use it wherever else you can as your signature colour.

You have attended a business course to help prepare for your new venture.  One tutor told you that all retail businesses need to protect their intellectual property.  He mentions branding.  You are keen on this as you don’t want someone else piggybacking on your efforts.  And if they do, you want to be in a position to take action.

What are some of the issues you need to consider?

Name selection
An important aspect of any retail business is the name of the store.   Your name is how customers distinguish your store from your competition.

Choosing a unique and memorable name is important because it will set you apart from your competitors - even if you are selling the same products.  Too often, little thought is given to this unique marketing opportunity. Retailers simply choose names that directly describe their business or their geographic location. Such names can be difficult to register as trade marks.

The more creative and abstract your name, the better able you will be to distinguish yourself from competitors and be remembered by your customers. 

There are many considerations to be aware of when choosing a name.  A key factor to consider is there should be no immediate connection between the name of your store and the products you sell.

Can you use your name?
Once you have chosen a unique and memorable name, you need to make sure you can use it. 

If another retailer has registered or is already using the same or a similar name, you may not be able to use it, even if your business is in a different place.

If you adopt the same name as another retailer, there is a real risk that you will face legal action.  Before you commit to a name, have a trade mark specialist make the necessary clearance searches.

Similar comments apply to logos, taglines, and colours that you may want to use in your store.  All of these elements should be cleared before you start using them.  Registration as a trade mark should also be considered.

Registration of your name, logo, tagline and colour scheme
Trade mark protection isn’t restricted to words – logos, taglines, and colours can also be registered as trade marks.   But they must meet certain criteria to be registrable. 

If your name or tagline describes a characteristic or feature of your business it won’t be registrable as a trade mark.  This is because a trade mark registration gives you the exclusive right to use what you have registered and that right lasts forever if renewal fees are paid.  It is seen as unfair to give one retailer a monopoly over terms that others in the same industry would reasonably want to use to describe what they do or sell.

Registration grants the owner the exclusive right to use its name for the goods or services covered by the registration throughout New Zealand. It is important to think carefully about the services (and any products) that you offer (or propose to offer) to ensure the rights you seek are broad enough to cover your current and future interests.  As well as running a store, you may sell online.  If you intend to make your own food, then food production should also be covered.  And because you are also looking at franchising your business, then franchising services should also be covered.

With your plan to franchise the business in the future, having your name and other aspects of your store livery protected is vital.  

If you have a registered trade mark, you can identify your rights by using the ® symbol next to your name.  This symbol acts as a way of telling your competitors and others that your name is a registered trade mark.

So how do your choices fare?
KNIBBLE is the phonetic equivalent of ‘nibble’ which means ‘to take small repeated bites’.  Nibble is a word often used with food and will be considered non distinctive.  NOSH THE LOT also conjures up images of eating, food and food retail services and is likely to be considered descriptive. Descriptive and non distinctive marks are usually not registrable as trade marks.

The caricature could be registrable if is visually striking and does not resemble any other logos.

Combining the word KNIBBLE, the tagline NOSH THE LOT and the caricature could be registrable as one combined mark but any rights gained would be limited to that combination. 

Colours are difficult to register as trade marks but registration may be possible if the colour has been used by a retailer for some time and is recognised by customers as signalling that retailer and its goods or services.  As you will not have been using the colour orange, it may be best to park seeking registration on your ‘to do’ list and revisit this in say, 18 months once you have started trading.

Relying on use rights
Some retailers question the need to register a trade mark because they think using a name (or other branding element) and building a reputation in the market will give them enough protection.  But there are limits to the rights gained through mere use and reputation. Many do not realise these limits until it is too late.

A reputation is built up by using a name, logo and tagline (and a colour) for the goods or services provided.  It can take much time to prove a reputation. Usually many years of consistent and extensive use are needed before customers will immediately associate a particular name or other branding element with the goods or services they seek to buy.  But it takes little time to destroy or damage a good reputation.

Examples of damage to the reputation of a business occur often but unless you have a strong reputation there may be little you can do about it.  These comments also apply to other branding elements used by a retailer.   Of course if you had a registered trade mark the situation would be different.

A further complication is how far your reputation extends.  Except for national retailers, most retailers are based in a single geographic location and may have one or two satellite shops.  If you only trade in a particular geographic location, any reputation you have earned will likely be restricted to that area. 

Not all plain sailing
Sometimes problems arise even when you have taken prudent steps to protect your retail name and other brand features.  Another retailer may not have checked the availability of their brand before they adopted the same, or a similar name or tagline or colour scheme, to that used or registered by you.  But tempting as it is to hit the (alleged) infringer with a well-crafted ‘cease and desist’ letter, there are some checks to make before threatening letters are sent, let alone proceedings started.

You need to check the following first:

• Find out exactly what the infringer is doing.
• Find out all you can about the infringer’s services. Relevant considerations could be: Who is behind the business? When did the business start to operate? What services are they offering? Are they selling goods branded under the same name? How are they using their brand? Get examples, photographs of brand use. These issues are not only relevant to the relief sought, they may dictate whether there is a claim at all.  A retail store that entered the market before your retail store was started business is unlikely to have been copied from yours.  A brand in use before your own registration or use should not be said to be confusingly similar to your own brand.
• Check to make sure you own the rights you think you do.  It is necessary to check there is a clear chain of title in the intellectual property rights at issue.
• Assess whether there is an infringement.  This will usually need much input from an intellectual property expert.  They will need all the information you can gather and should bring the necessary informed objectivity to the questions at issue.
• Check to make sure it is all commercially worthwhile.  Once on board it is difficult to get off a litigation path.  The cost may not justify the result.

If the decision is made to warn the infringer, select the best choice.  Often a strongly worded cease and desist letter is the best approach but consider other choices.  Is there a commercial relationship which can be exploited to bring pressure to bear?

If there is an imminent threat to your rights that may permanently damage your business then you have to act urgently and enforce those rights.  However, time spent quickly gathering the available information, checking matters are in order, getting informed expert advice and preparing a strategy to resolve the problem will always pay dividends.

Go forth and good luck!

An edited version of this article was published in NZRetail magazine October 2007

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  Corinne Blumsky

  Partner