More than a name or logo: the legal and economic value of a trademark

These investment companies do not acquire the business itself, but rather the intellectual property, such as the name, logo and trademark. These rights are then licensed to producers and retailers, who manufacture and sell products under that once well-known brand. The investment company itself is not involved in the design or production process and therefore has no control over the quality of the products, but merely collects the licensing income.

Yet this model proves to be highly profitable. The explanation is simple: the true value of a business lies in its trademark, the brand awareness and the reputation built up over the years. It is therefore important for every entrepreneur to understand that a trademark can increase the financial value of a business.

What is a trademark?

Trademarks are signs used in trade to indicate the origin of goods and services. A consumer who sees the trademark can immediately associate it with a particular business. A trademark therefore primarily serves to identify a business’s goods and services.

There are various types of signs that can be registered as trademarks: words, logos, three-dimensional signs, slogans, patterns, colours, motion and sounds. The following examples have been registered as trademarks:

• Adidas’s three stripes are registered as a figurative mark,
• Louis Vuitton’s LV pattern enjoys trademark protection for, among other things, handbags and leather goods, and
• the well-known tune of Für Elise is registered as a sound mark.

A trademark is much more than a name or a recognisable logo. It is a legally enforceable right with real economic value. As the story of the investment companies illustrates, that value lies in the recognition, reputation and trust built around the trademark.

Trademark registration

To benefit from trademark protection, trademark registration is required. A trademark application can be filed for specific geographical regions, for example protection within the European Union or within Belgium, the Netherlands and Luxembourg.

Trademark registration provides concrete legal protection for the efforts you have made as an entrepreneur. The time, energy and resources you have invested in building your business and the recognition of your trademark are thus shielded against unlawful use by third parties. More specifically, trademark registration prevents others from using an identical or similar sign for the same or similar goods and services and gives you the right to take action against such use.

Licence

Once a trademark has been registered, the trademark owner may choose to grant third parties a right to use that trademark. This is done through a licence agreement, whereby the trademark owner authorises a third party to use the trademark under specific conditions, including within a certain territory, for a certain duration and in exchange for an agreed fee. This is precisely the model used by investment companies: they acquire trademark rights and then grant licences to producers, who develop and market products under that trademark.

At the same time, a licence also involves risks. A poorly drafted or insufficiently detailed licence agreement may result in the trademark owner losing control over the way the trademark is positioned on the market. This not only affects the reputation of the trademark, but may also undermine its legal protection. A carefully drafted licence agreement is therefore of crucial importance.

Conclusion

The trend of investment companies acquiring well-known brands and licensing them highlights a fundamental point: a trademark has real economic value, regardless of the size or sector of the business. It can be legally protected through registration, assigned or licensed.

Our advice is therefore to register your trademark in a timely manner, actively monitor it and take action when others make unlawful use of it. If you wish to grant a right of use to a third party, make sure that the agreements made are correctly and fully recorded in a written agreement.

Our PKF BOFIDI Legal lawyers are here to help

Do you have any questions about the protection or registration of your trademark or about drafting a licence agreement?

PKF BOFIDI Legal assists you from the availability search to the actual trademark application and the continued monitoring of your intellectual property, and supports you in drafting a licence agreement that protects your interests to the fullest extent possible.

Contact us and we will be happy to assist you further.

This article was written by Jenny Cheung