Sunday, November 21, 2010

What is branding and how to protect it?

Key to business success often lies in creation of a powerful brand. A brand defines the source of goods and services. The goal is to get customers shopping for a certain type of goods or services to look for your particular brand because they came to identify it with a certain look, feel, quality or another attribute that they prefer. For example, I am currently shopping for a new laptop. I know that I only want to buy a Dell laptop as, in my experience, Dell laptops are the best in terms of durability and quality. Of course, feel free to disagree. The point that I am trying to make is that a powerful brand is what sets you apart from the competition and allows you to establish recognition in this competitive environment.

Creating a brand can be expensive. It is important to first thoroughly research the market to know the competition and determine if someone else is already using the same or similar brand. A brand can include a name and a logo or design, which can be used together or separately. Sometimes, a brand can include a color (like orange for Home Depot) or a slogan.

Protecting the brand is of utmost importance. I recommend that business owners take the following actions to protect it: file federal trademark applications with the US PTO office and enter into non-disclosure agreements (NDAs) with potential investors, partners, licensees, manufacturers, etc. I already discussed the advantages of federal trademark registration in my previous posts (see my posts under Intellectual Property tab). I now want to spend a few minutes discussing the NDAs.

It is important to enter into NDAs to protect the brand name while the brand is being developed. Once the brand is released, NDAs are typically entered into when parties are considering doing business together, either as a collaboration, joint venture, or project outsourcing, - projects that would involve disclosing proprietary information. Proprietary information is defined broadly and is not limited to the brand name (that, once released, is already known to the public at large). It can include information about how you run your business and what makes it successful, such as business plans, financial projects, patents, patent applications, agreements with third parties, trade secrets, designs, licenses, drawings, hardware configurations, technology, research, product plans, products, services, suppliers, customers, prices and costs, etc. The receiving party in an NDA agrees to use such proprietary information only for the purposes specified in the agreement and not disclose it to anyone else (other than employees on an as needed basis). However, there are exceptions to the definition of proprietary information, which include information that is or becomes publicly available without the breach of the agreement; that the receiving party has already known; that the receiving party has already received from someone else or has developed independently; and finally, that the receiving party must disclose to government authorities. Like with trademarks, it is up to the disclosing party to enforce the NDAs. One common method is issuance of an injunction or a restraining order against the receiving party.

A powerful brand must not only be created but also be continuously protected through the use of NDAs, trademark registrations and ongoing vigilance with respect to potential infringements and violations of confidentiality clauses.

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