Trade Dress

Trade dress is a form of legal protection for a brand. Trade dress is a brand’s distinctive aesthetic design features (package or product design). To be protectable, trade dress must be nonfunctional and distinctive (or have acquired a “secondary meaning,” that is, source-identifying characteristics). The more nonfunctional differentiating features one can build into a product and its packaging, the more likely it will be that infringement can be proved.

It is easy for a competitor to say “I developed this very similar product independently” when it is fairly generic (such as a birthday card with a floral design that says simply “happy birthday”). It is more difficult to convince a courtroom of that claim when your product has many of the same random, nonfunctional elements that a competitor’s product has (e.g., a line of greeting cards of an unusual size that open from the top with rounded edges printed on green-tinted recycled paper, all at 99 cents, and all addressing the theme of friendship). For a competitor to develop a similar line of cards with similar features independently is highly unlikely. It points to copying.

To protect its trademarks and trade dress, a company must constantly be watchful for and strenuously defend against infringement. For instance, Apple has filed several lawsuits to defend its iPhone against knockoffs, winning a major legal battle against Samsung in summer 2013. Trademark rights can be enforced through lawsuits at a state or federal level. Proving infringement requires proof that the infringer had second use of the mark and that the second user’s mark is confusingly similar to the senior party’s mark.

When launching brand extensions, companies should be careful to maintain the same brand identity and trade dress in those new items. If the brand’s name and logo are the only common elements across all of a brand’s products, it weakens the power of the other trade dress elements to differentiate and legally protect the mark.

Excerpted from Legal Issues in Brand Management chapter, Brand Aid, second edition, available here.

Trade Secrets

Don’t overlook trade secrets as a form of protection. Trade secrets are simply information, techniques, procedures, codes, patterns, plans, processes, formula, and prototypes that are developed confidentially and that are kept confidential. Trade secrets even include customer lists and instructional methods. The Coca-Cola syrup formulation is an example of a trade secret. (The added value of this approach from a brand perspective is that it often creates a mystique that has its own cachet.)

Sometimes it is better to keep something a trade secret than to patent it. In some industries, companies routinely watch for competitors’ new patents and then try to design around them. Noncompete and nondisclosure agreements are important, but not infallible, in protecting trade secrets. The Economic Espionage Act of 1996 protects trade secrets against theft. Information is legally considered to be a trade secret if an organization can show that it took reasonable measures to keep the information secret and that there is economic value to the information not

being made public.

A business can protect its trade secrets in the following ways:

• Share confidential information only on a “need to know” basis.
• Limit the number of employees exposed to trade secrets. Always inform employees exposed to those trade secrets a) that they are being exposed to secrets and b) of the importance of keeping the secrets secret.
• Mark all confidential documents CONFIDENTIAL—NO COPIES ALLOWED. For added security, number each copy and keep a log of which numbered copy was given to which employee.
• Use access logs for trade secrets.
• Require anyone (employees, suppliers, customers, consultants, and other business partners) who might come in contact with trade secrets to sign confidentiality and nondisclosure agreements before the relationship begins.
• In consultant contracts, be clear about what intellectual property the consultants are to assign to your company during their assignment.
• Require employees to sign noncompete agreements that prohibit them from working for competitors for a period of time after their employment with you ends. If this is done within an employment contract, present this information to prospective employees well before they commence their employment with you so that the “consideration” is employment.
• Employment contracts can also prohibit moonlighting or consulting for companies in similar lines of business while employed at your company or, less restrictively, while on company time or using company equipment
• (including computers).
• Educate employees about the treatment of proprietary information during and after their employment with you.
• Carefully orchestrate employee terminations so that employees are not able to take proprietary information with them.
• Schedule exit interviews with departing employees. Use those interviews to remind departing employees of their confidentiality obligations.
• Develop, communicate, and enforce security processes—from physical security for the building to security of paper documents and computers. Secure confidential information with electronic and mechanical locks. (Passwords or codes should be changed regularly.)
• Never store or allow transfer of confidential information outside of your company’s firewall.
• Make extensive use of shredders.
• Be especially careful of contract workers. Provide them with a company computer so that they don’t have to use their own on the job.
• Conduct trade secret audits.
• Most important, identify all trade secrets and develop formal protection plans for those secrets

DID YOU KNOW?

Coca-Cola’s syrup formula is kept in a bank vault in Atlanta, and only Coca-Cola’s board of directors has the power to request the vault to be opened. Only two anonymous employees know the formula, they have signed nondisclosure agreements and they are not allowed to fly together on the same plane.

(Source: Stephen Fishman and Rich Stim, Nondisclosure Agreements: Protect Your Trade Secrets and More, Berkeley, CA: Nolo, 2001).

© 2015 Brad VanAuken, Reprinted from Brand Aid, second edition, available here.

Brand Accessibility

Accessibility is one of the five drivers of customer brand insistence in our proprietary BrandInsistence brand equity measurement system.  How does accessibility contribute to customer brand insistence? First, accessible brands insure that brand preference is converted into brand purchase. Why wouldn’t I purchase my preferred brand if it were completely accessible to me? If it were inaccessible, I might purchase a substitute product or brand or perhaps nothing at all. But I am getting ahead of myself. First let’s define accessibility. Accessible brands are brands that are easy to find, purchase and use.

What makes something accessible? Distribution. When a brand has broader distribution, it not only increases its accessibility, it also increases its awareness, one of the other five drivers of customer brand insistence. So increased distribution can increase customer brand insistence in two ways.

If a brand is ubiquitous, there is no excuse not to purchase it if it is your favorite brand. McDonalds, KFC and HSBC strive to be ubiquitous worldwide.  One of the key pillars of Coca-Cola’s success is distribution. It talks about pervasive penetration and being within an arm’s reach of desire.  And, at least in my town, Dunkin' Donuts seems to be opening locations every few blocks, competing with Starbucks for ubiquity.  Hallmark’s closing stores around the country certainly demonstrates that it is in trouble.

The Internet is changing the importance of physical distribution a bit because it enables people to research and purchase products 24/7 from the comfort of their homes. This works better in some categories than others. For example, physical distribution is still important for many articles of clothing because unless you can try the clothes on and see how they fit, look and feel on you, you don’t really know if you want them. Online retailers have innovated many approaches to overcome this limitation, but it is still a limitation.

But, what other than distribution can increase accessibility? If you think about the two most important scarce resources in people’s lives, they tend to be time and money. So anything that takes less time or costs less money increases accessibility. A somewhat counterintuitive corollary of this is that if you can make the experience more interesting, educational, entertaining, exciting, nurturing or otherwise positive, often people won’t mind spending more time. The same thing goes for money. If the higher price is a signal of social status or good taste or some other positive self-expressive quality, a person may not be as put off by the higher prices.

Time and money also relate to the value brand insistence driver. Value has a numerator and a denominator. In the numerator are all of a brand’s benefits – functional, emotional, experiential and self-expressive together with the values it shares with its customers. In the denominator is how much time, money and perceived effort it takes to purchase and use the brand.

High prices can make brands inaccessible to many people. For instance, not everyone can purchase a Tesla automobile. And even fewer people are able to purchase a Maserati or a Bugatti.

I often use the example of choosing a college or university to illustrate the concept of brand accessibility. If a high school student has a strong preference for a specific college, but that college does not accept him, what is that brand’s accessibility to him? How about if the college puts him on the waiting list? Or, if the college defers his admission for a year? What if he is accepted to the college but, after financial aid, that college will cost him ten thousand dollars more a year than the other colleges to which he got accepted?  So price (or cost to the customer) affects brand value and can affect brand accessibility too.

Limited store hours, nearby road construction, overcrowded parking lots, exceedingly long lines or only accepting cash as a form of payment can also reduce accessibility.

Accessibility helps brands grow through increased sales to existing customers and acquisition of new customers. Research has shown that larger brands have many advantages, even beyond the economies of scale and network effects. They have greater awareness, market penetration, popularity, and perhaps surprisingly, customer loyalty.

Even brands that have exclusivity as part of their mystique must be accessible in some way to their target markets.  For these high-end products and brands, price may be the best accessibility limiter. Price will be an issue for most people but not for the target customers. However, there still needs to be some sort of easy distribution method. The Internet is one option. Rodeo Drive (CA), The Mall at Short Hills (NJ) and other upscale shopping districts and centers is another. But how about selling the products at polo matches, equestrian events, yacht races and other targeted events.

Hopefully, this has shown that accessibility is an important driver of customer brand insistence. The other two drivers I mentioned in this article are awareness and value. The two brand insistence drivers that I did not mention (until now) are relevant differentiation and emotional connection. But, I will talk more about those in other blog posts.

Brand Accessibility

BrandForward's BrandInsistence (SM) brand equity measurement system recognizes that there are five drivers of customer brand insistence - awareness, relevant differentiation, value, accessibility and emotional connection. I talk a lot about relevant differentiation in the context of brand positioning and every brand manager knows that brand awareness is the keystone of brand equity building. I haven't talked much about brand accessibility, however. 

If a person has a preference for a particular brand, he will consistently purchase that brand if it is equally accessible to competitive brands. If it is not, he may forgo the purchase until it is accessible or he may purchase a competitive brand instead. 

I typically use two examples of this. One is someone who slightly prefers Coca-Cola over Pepsi. As long as there is Coca-Cola in the nearby vending machine, he will purchase Coca-Cola. If he encounters an out-of-stock situation for Coca-Cola in that machine on a given day, he has several options - search out another source of Coca-Cola, purchase Pepsi instead or forego a soft drink altogether. 

Another example I use is a high school student choosing a college. If her preference is Rhode Island School of Design (RISD) but that school rejects her, that option is inaccessible to her. If RISD places her on the waiting list, her accessibility to that school is diminished. If she is accepted but with a year's deferral, again her accessibility is diminished. Finally, if she is accepted but that school provides an inferior financial aid package compared to her other options, again her accessibility is diminished. In any of those situations, she may choose to go to her second choice school instead of Rhode Island School of Design.

I recently purchased a Hobie Getaway sailboat. I live in a suburb of Rochester, NY. When I tried to go online to order needed parts for the sailboat, I discovered that Hobie (Hobie.com) does not allow one to order parts directly from them. One must go through an authorized local dealer. Further, I discovered that the nearest two authorized dealers were 67 miles away in Buffalo and 76 miles away in Syracuse. I do not feel like driving an hour and fifteen minutes in each direction paying New York State Thruway tolls to buy a couple of parts. For fun, I looked up the closest Hobie dealer to Yellowknife, Canada. Hobie's dealer locator returned the information that the "nearby dealer" is 616 miles away in Edmonton, AB. I understand the wish to support local dealers, but when there are no local dealers, one should have other options. Mine will be to purchase non-Hobie parts at one of my local marine supply stores (of which there are several in Rochester). 

Also, see this blog post on the Power of Distribution.