Almost all businesses have one or more brands, but they are often inadequately protected and their potential for providing opportunities for future profit is widely underestimated. Brands, through promotion and use, acquire significance in distinguishing the source or origin of goods or services from others in the marketplace, says Irshaad Mohideen of the Durban law firm Garlicke & Bousfield.
Mohideen says: "Brands may generate an income for your business through licensing, sale or commercialisation.
"Brands in essence are intellectual property and are part of the assets or goodwill of a company and may be bought and sold like any other asset or property. The value of a brand is often defined as the amount of money another party is prepared to pay for it and is often the most important asset of a business.
"Increasingly, some of the world's largest and most powerful companies are paying large sums of money for the acquisition of established brands. This can be illustrated by the recent acquisition of the Danish owned Botswana based chewing gum company Dan Products, which manufacture the gum brands Stimorol and Dirol, by Cadbury Schweppes for £33 million (R352 million)."
The first step is ensuring that your brand is legally secure: "In this regard, registration of a brand in terms of the Trade Marks Act affords you the best possible security needed to avoid free riding by third parties based on the reputation attached to the product eg: the use of the Nike tick on a t-shirt.
"An additional advantage of registration is protection against the risk of infringement by a competitor and possible counterfeiting by third parties."
The second step is to value the brand and in this regard an IP audit ought to be done annually to determine this. This entails identifying, monitoring and valuing of all the brands currently in use or proposed to be used against that which has been registered or protected. Finally, the reflection of the value of your brand on the balance sheet enhances the value of your business.
"As an owner/manager of a business, it is essential that you ensure that your brands are sufficiently protected. Consulting with an Intellectual Property attorney ought to lead you in the right direction," Mohideen says.
