THE BRAND LAWYER

The Business and Law of Brands and Branding from Steven Weinberg of Holmes Weinberg. PC

BRAND INNOVATION AND EXTENSION: LESSONS ON HOW TO MAKE IT WORK

There are a number of ways to grow a brand from its core product or service (for brevity’s sake, throughout this blog, I refer to both as “products”). Two prevalent forms are licensing the brand and brand extension. In licensing, the brand owner gives permission to third parties to make and market products under the brand in categories not necessarily related to the category(ies) in which the brand is established. Success for the licensing model depends in large part on the third party’s expertise and reach in sourcing and merchandising in specific products categories and often in specific channels in specific countries. The entertainment, art and fashion (designer) industries employ licensing extensively, which is how one gets, for example, Mickey Mouse® toothbrushes and Ralph Lauren® just about anything lifestyle. Iconic consumer brands also have used licensing to move into new categories where they can rely on their brand strength. Two great examples are Arm & Hammer® air filters and Tide® dry cleaning establishments. (I’ve been involved in licensing for 30 years, as lawyer, brander and agent, and will have a lot to say about it in a future post.)

The subject of today’s post is the other major model – brand extension. Unlike licensing, which usually takes brands into new categories, brand extension occurs when a brand with success in a category is extended to a new product or product line within that category or to an entirely new product that expands the category (the latter called “brand expansion”). Not a “new and improved” version of an existing product, but a new product that is designed to meet or create a new consumer driven need or a perceived new need. A successful example of brand extension is Reese’s® Minis — moving from full size to a mini size.

There are dozens of books and even more blogs about how one successfully can expand a brand, but there’s probably no better way of doing it than studying how others have done it well, or not, and then integrating those learnings into one’s own innovation process. Starting with basic notions, such as branding guru Marty Neumeier’s brand strategy of “zagging” when others are zigging (his book “Zag” is a must read), is of course necessary to innovating, but taking away the learnings from real examples helps to frame a collaborative process that is likely to lead to marketplace success. And of course there are the important legal considerations as well – starting with determining whether the name for the extended product is available for use and subject to trademark protection in all of the countries where it will be marketed. Or deciding not to seek protection for the extension name. For example, when DuPont invented what became popularly known as “polyester” it decided to give that word away to the public so that the new brand name Dacron® would not become generic for this new invention.

The Nielsen company, the same folks who bring us TV ratings, has been publishing very useful reports related to brands and consumers. In its recently published 2014 “Breakthrough Innovation Report,” ( to download, go to: http://www.nielsen.com/content/corporate/us/en/insights/reports/2014/breakthrough-innovation-report.html) it tells the stories and analyzes the teachings of what it characterizes as “Breakthough Winners” — 14 of 3463 consumer products launched in 2012 that “delivered a new value proposition to the market,” “generated a minimum of $50 million in year-one U.S. sales” and “achieved at least 90% of year-one sales in year two.” One of the more important lessons to emerge from this report, combined with the results of earlier studies, is the conclusion that real extension/expansion innovation is defined by consumers. As Nielsen concluded: “We have found a consumer-centered behavioral definition of innovation turns out to be the only really reliable one when establishing criteria, beliefs, and mental models about what is and what is not ‘innovation.’ The right question and the trustworthy guide is ‘does the brand offer a benefit bundle that brilliantly performs an important job in consumers’ lives for circumstances in which previously available solutions were unsatisfactory or nonexistent?’ When consumers discover brands that reliably perform important jobs for them, they pull these brands into their lives again and again.” Wherever Steve Jobs may be, he’s certainly smiling.

FACEBOOK, BRANDS AND PROMOTION – A WHOLE NEW SET OF CHALLENGES

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I recently searched the phrase “social media marketing challenges” on Google® and Bing® and got back a low of 44 million hits (Bing®) and 99 million hits (Google®). These results are not at all surprising given the constantly changing social media environment, the diversity of consumers using these platforms, and the overwhelming clutter in this space. There is strenuous debate about which forms of advertising and promotion work best, for example, banners vs. contests vs. native, and how to determine if all of the effort is even working – there are constant changes in measurement and standards to be measured. One of the constants over the last few years is that Facebook® is by far the largest social network and, according to at least one source, is the most popular social media platform in the U.S. with nearly 60% of all visits to social media sites being to Facebook.® (Statista – chart of most popular social media websites in the US in September 2014 based on share of visits http://www.statista.com/statistics/265773/market-share-of-the-most-popular-social-media-websites-in-the-us/).

Given these numbers, branders share the need to be successful on Facebook®, both for building brand awareness and for sales. And for years, Facebook® has been holding out the torch to marketers, urging them to abandon ads in favor of content, especially native/organic sponsored stories. And so followed the faithful, with lots of sponsored stories filling the pages. We’ve all seen them and debated both the ethics and the legality of these sponsored videos and stories, but overall we came to accept them.

Starting in January, we may see some dramatic changes. Two weeks ago, Facebook® announced that it would decrease the effectiveness of brand posts it decides are “too promotional.”  And how is that to be defined? We are given some clues based on the results of “people” Facebook® surveyed (https://www.facebook.com/business/news/update-to-facebook-news-feed):

1. Posts that solely push people to buy a product or install an app
2. Posts that push people to enter promotions and sweepstakes with no real context
3. Posts that reuse the exact same content from ads

While these seem fairly obvious, our friends at Facebook® don’t tell us more, other than giving us the ominous line that “All of this means that Pages that post promotional creative should expect their organic distribution to fall significantly over time.” Note the absence of the word “too” in this warning. While lawyers make their livings arguing over the meaning of words, and mind you I’m not complaining, brands investing in social media marketing on this leading platform need to have more definition. Especially since the arbiter of what is or is not too promotional is an algorithmic exercise. And some marketers are reading this message from Facebook® as telling them that they will have to abandon all of the fans they have been building over the last few years using the kind of content Facebook® is now saying they can’t use. And what about the real consumers who “liked” the kinds of organic stories they were getting from these brands? On the other hand, will this lead, as Facebook® claims it will, to better quality ads and happier consumers or, as others believe, merely to more paid promotion to Facebook® by brands that can’t afford the expense of producing acceptable ads? I’m frankly not advocating one approach or the other; what I do know (see my next post) is that brands need to satisfy consumer demands to be successful, and having a middleperson censor ultimately may not be a win-win-win.

THE SECRET(S) OF CHOOSING A GREAT BRAND NAME

There are many ways to describe what makes a great brand. Being a sailor, I often think in terms of sailing imagery. In that context, imagine the marketplace as a dense fog, filled with names, logos, messages, information, content, and massive overload. A deep, dense, grey fog, where nothing is delineated clearly, and everything blends into everything else, and there’s no way to determine where you are in it. Just dark, damp, wet and cold. A great brand is the bright, constant, clear laser-like light from a lighthouse, cutting deftly and purposely through the fog. Creating an unmistakable path of safety. Creating in the beholder feelings of joy and relief, knowing that following that light will lead out of the dread of the fog to a place of happiness, safety and security.

So now that we know the vision and the mission, how does one create a great brand name that generates such clarity and joy? This is the subject of great debate, and the answer(s) sit at the intersection of branding business and law.

There are marketing professionals who believe that names that describe some aspect or quality of a new product are the best because it takes less time to explain to prospective customers what the product does or the need it fulfills. They may play with the spelling to try to add a distinctive flavor to the word, or add a gTLD like “.com,” but the result is still a descriptive name. Examples are: After Tan (after sun lotion), Beer Nuts (salted nuts), Computerland (computer store), Frosty Treats (frozen desserts), Tender Vittles (cat food) and Tintz (hair coloring). Words of puffery like “Premier,” “Best” and “First” also are considered descriptive.

The challenges with using such a name are many. Here are a few: (1) words that are too descriptive may legally be generic and not protectable as a legal trademark – one well known example is pets.com, which cannot be used to stop petco.com or petstore.com, etc. (2) competitors legally are allowed to use descriptive words to describe their product, including words that are being used by another as a brand name – for example, Consumer Reports, the magazine name, couldn’t stop a competitor from using a tagline like “reports for educated consumers” (3) if there are a lot competitive products being sold under brand names, tag lines, domain names, etc. that all use similar words, how are consumers going to figure out which is which? In such a case, the fog remains and envelops the little light that struggles to get through (4) trademark law doesn’t protect descriptive names – one has to spend a lot of marketing dollars to elevate a descriptive name into one that is protectable (this elevation is legally called “acquiring distinctiveness” or “acquiring secondary meaning”) – but even then these names can’t be used to stop others from using the same words to describe their competitive products.

If the idea is to have a unique brand name, then choosing one that describes the product, its function or its purpose won’t do that. It may work for a while if the product is the first of its kind in the market, but smart competitors soon will find a way to use those same words to confuse the marketplace. A fog machine, so to speak.

The lessons to be learned from highly successful, very protectable brands like Nike, Apple, eBay, Google, Yahoo, Tumbl’r, Facebook, Waze, and others are that (1) simplicity, two syllables or three at the most (with a nod to InstaGram, Timberland and others) are easiest to remember and effectively blast through the fog and (2) names that have no relationship to the product and are fun to say (Nike, Yahoo!, Google. eBay) or have a kind of relationship to the product (Facebook, Waze, InstaGram) are easiest to remember, and there is no threat of competitive descriptive use of these names. Combining them with powerful visuals, like logos, or memorable slogans that can be featured as part of an inspiring campaign (“Just Do It”) makes them even better. And legally, these are the easiest to protect. Generally speaking, trademark law rewards brand owners that choose non-descriptive names and make their brands known – the less descriptive and the more well-known the brand, the more protection is granted.

Pre-internet, some believed that these non-descriptive names were more difficult to introduce into the marketplace because it was hard for consumers to remember made-up words. That appears to be true for some names that are completely made up and have syntaxes that are uncommon, since people tend not to easily remember words that have no meaning or context (for more on this, and how people think and understand, a must read is Daniel Kahnemans’ brilliant work, “Thinking, Fast and Slow”). Simple names that are not made up but are used for products they don’t in an way describe (Apple, Nike, Yahoo, Google) or which have a suggestive, but not descriptive relationship to the product (Waze, Facebook) have a good chance of being remembered. And of course really effective pre-Internet, advertising and promotion were a lot less precise and a lot more expensive than today’s creative strategies employing social media with other integrated campaigns to get a brand quickly known and loved (or not loved – the challenge of instant consumer feedback) to a targeted demographic.

So what is the best business and legal choice for a great brand name? Something easy and fun to remember that doesn’t describe the product it’s used for. Boost it with distinctive logos (literacy in the world is decreasing, so powerful symbols may be even more important than brand names – think the Twitter bird, the Nike “swoosh,” the Target “bulls eye”, etc.) and support it with great marketing creative and strategy that drives home the brand message. And most important – integrity and responsiveness (great customer service) is still key since the brand name is the symbol of the reputation of the company and products it represents.

THE FICKLE FINGER OF FANDOM

During my early professional years, a major studio retained me to police counterfeit merchandise featuring IP from its mega-hit space themed film and television series. Research showed that most of illicit merchandise, much of it hand-made, was created, and traded, by fans of the property, often at conventions where stars of the show made appearances and hobnobbed with them. This caused quite a challenge – much of the fan merchandise being traded and sold fell below the studio’s quality standards, and a number of authorized licensees of the property claimed that some of these fan products violated their exclusive license rights. The dilemma should be obvious – on the one hand, fan fanaticism and devotion were deemed important to the ongoing success of the property, so the last thing the brand owners wanted to do was to become aggressive in a legal way against that loving base, but on the other hand there were some very unhappy (and possibly litigious) licensees and a flood of inferior quality merchandise being bought, sold and bartered. Fortunately, the legal and branding teams, over time, with the assistance of fans and licensees, were able to finesse a satisfactory result

Fan use of the internet to show support for their favorite brands initially presented the same kinds of dilemmas faced by my studio client. During the 1990’s and into the 2000’s, many brands really didn’t know what to do about fan sites. The marketeers of course loved that fans were expressing their adoration and devotion on a global network that filled computer screens, but were not pleased when fans starting expressing their unhappiness with new products or corporate behavior. Nor were they happy with fan sites that had multiple misspellings, incorrect facts or just looked bad. And the in-house lawyers were very concerned. Trademark owners are legally bound to stop unauthorized uses of their trademarks (more about this complex area in another post), and fan sites were not authorized. Not to mention that some consumers might mistakenly believe that some of these fan sites were not fan sites but actual brand sites, which creates a host of legal and business headaches – especially if the fan site was poorly done. Various approaches were used to navigate through this mess, and by the mid 2000’s some best practices had emerged.

The appearance and rapid growth of social platforms like Instagram® and Pinterest® and fan use of content such as photographic images and videos to display their feelings, coupled with the importance of being “liked” on Facebook® (still the most important social media platform for brands – to be discussed in another post), has put a whole new face on the way brands view fans. One seismic change is that brand owners have moved 180° from trying to control and restrict fans to giving them incentives to show the love and doing their best to provide interactivity that matches fan expectations. There are many reasons for this shift; one of the more important being the recognition by brands that they can’t control fans, that fans now have the power to make or break new products or brands in hyper-driven ways, and that putting hurdles in the way of expressing their fan-ness was, and is, a very bad strategy.

The challenge for brands in maintaining fan interest these days is much tougher than merely keeping them engaged and happy in a world where fickleness and limited attention span are dominant behaviors. Brands are learning that merely building a place for fans to come home to and keeping the lights on for them is not enough. A recent poll by Hubspot of 569 consumers indicates that fans expect brands to be available for engagement on at least 3 if not more of the major platforms (Facebook® and Twitter® for sure, and depending on the gender and age demographics of the consumer, one or more of Instagram®, Pinterest®, LinkedIn®, YouTube® and Google+). Despite these expectations, however, the poll also showed that while 64% of the respondents expect a brand to be on Twitter®, only 31% actually follow their favorite brands on that platform. This finding more or less held true for each of the platforms – reality of use was far less than the expectation of being there. There’s lots of other good insights and data in the poll, called, “The Social Lifecycle: Consumer Insights to Improve Your Business” ((http://www.slideshare.net/HubSpot/the-social-lifecycle-consumer-insights-to-improve-your-business) with significant teachings of these results being: (1) brands should focus on the right platforms for their consumer demographics (2) content for each platform should contour to the platform and not be serial repetition, and (3) ensure that consumers are greeted with passion and a persona with which they can resonate.

And with all of this while we’re still not sure what the financial ROI is for a brand’s investment in social media, we certainly know what the risks are in not pleasing fans who use social.

MILLENNIALS AND BRANDS — SOME NEW INSIGHTS

One of my favorite sources of information regarding the relationship between social media and branding is Digiday (Digiday.com).  In a recent post with the title “Millennial media-consumption habits explained, in 5 charts,” the author presented a summary of findings from two recent studies, comScore, Noise|The Intelligence Group’s Cassandra Report and nScreenMedia’s report “What Millennials Want from TV,” which provides insights into understanding the media consumption habits of Millennials.  Why is this important?  Millennials, the generation of 18 to 34 year olds, is the largest demographic in the US with significant numbers in other developed countries. For brands, understanding how this digitally native group consumes media provides insight in planning where and how they should be marketing to this very complex and diverse group.  Some of the more important findings are (1) current affairs and news are very important to this group and the majority rely on social media as the source for this information, (2) smartphones and other mobile platforms are the most popular social media sources, with Facebook leading the crowd followed by YouTube and Pandora, with Snapchat growing in importance, and (3) for news, Huffington Post is the leading source relied on, and interestingly Buzzfeed is growing as a news source.  http://digiday.com/brands/millennial-media-consumption-habits-debunked-5-charts.

Knowing where Millennials are looking, however, doesn’t necessarily translate into success.  A 2012 survey of 3000 adult consumers across five international markets conducted by Vanson Bourne produced data showing that  only 26% of these consumers use social media to follow brands, and of those that follow a particular brand only 48% are positive when they see brand communications and 40% said that they would be negative to communications from brands they don’t follow.  And a whopping 65% said they would stop using a brand whose social media communications upset or irritated them.  That all being said, one of the more positive results is that adult social media users are swayed by friends and family — 84% responded that they are likely to investigate brands recommended by F&F, and might even make a purchase.  So the good news is that the “social” in social media is working for brands.

And that’s exactly why brands have to be so careful about their messaging and not doing and saying dumb things that will harm their brand identity, reputation and integrity.

BRANDS AND TRADEMARKS: WHAT’S THE DIFFERENCE?

I’ve always been fascinated by the disconnect experienced by so many branding professionals and legal professionals over the term “trademark.”  Many branders and marketers believe that trademark is a verb, as in “can you trademark ….”  Many legal professionals believe that a brand is no different than a strictly legal thing.  So here’s some clarity: a trademark is a noun. It is the legal term for what most people think of as a brand. It can be a word, a design, a combination of a word and design, a slogan, a scent (really!), a sound, a color, a combination of colors and designs and words, and just about anything that is used to identify and distinguish a product or a service from those of others.  The most elegant statement of what a trademark is and its value, in my opinion, was stated by Justice Frankfurter or the Supreme Court in a 1942 case involving a red circle on the bottom of a shoe:

“The protection of trademarks is the law’s recognition of the psychological function of symbols. If it is true that we live by symbols, it is no less true that we purchase goods by them. A trademark is a merchandising shortcut which induces a purchaser to select what he wants, or what he has been led to believe he wants. The owner of a mark exploits this human propensity by making every effort to impregnate the atmosphere of the market with the drawing power of a congenial symbol. Whatever the means employed, the aim is the same — to convey through the mark, in the minds of potential customers, the desirability of the commodity upon which it appears. Once this is attained, the trademark owner has something of value. If another poaches upon the commercial magnetism of the symbol he has created, the owner can obtain legal redress.”

Commercial magnetism.  The drawing power of a congenial symbol.  A merchandising shortcut. These phrases cut to the chase of what every brander and marketer knows: A brand is a symbol, a shortcut, representing all of the imagery, context, messaging, communication, emotions, need fulfillment, and loyalty that the brand wants to represent and be known by.  In the dense fog of a crowded, undefined, constantly shifting marketplace, a brand is the light of the lighthouse and the clear path to the safety it is meant to represent.  A safe harbor for consumers.  A brand is all of these things, and to that extent is broader than the legal trademark, which is the actual word or other symbol that embodies all of these sensations and emotions and memories, etc.

The easiest way to differentiate a brand from a trademark is to think of the trademark as the legal representation of the brand.  It is this legal representation that is protected by trademark law.  It usually consists of a name (sometimes called the “brand name”), such as APPLE, and often a logo such as and often a combination of the word and a logo, and sometimes a slogan too.  A brand is more extensive than this.  It consists of all of the divergent elements that make-up the commercial magnetism of the brand — customer service, the architecture of the stores, its advertising and promotion, online presence, financial reputation, its leadership, its coolness or lack of cool, music and images associated with the brand, quality of its products and services, consumer likes and dislikes, its relevance, its integrity (or lack thereof) and so on.  The trademark is a “merchandising shortcut” for all of these elements.  And all or many of these elements is what a consumer experiences when she or he sees the name or the logo.  A trademark is considered to be a symbol of a brand’s reputation, reputation being the end result of how a consumer who has experienced the many elements of a brand thinks about a brand.  Trademark law protects that reputation, good or bad.

A trademark, the legal noun, unlike a brand, can be registered, which is what most branders and marketers are thinking when they ask if a name or symbol can be “trademarked.”

The actual law of trademarks is quite complex and varies from country to country.  I’ve been a trademark lawyer for 30 years, and find that there’s always something new to learn about and apply.  But here are some basics that will help you safely being to navigate through this legal fog:

1.  You can develop legal rights in a trademark just by using it in a way that people understand to be a trademark use.  Registration is not mandatory for protection in the U.S. But registration is the best way to get national protection and to prevent others from getting those rights before you. A very good primer about trademark registration in the U.S. is on the website for the U.S. Patent and Trademark Office at http://www.uspto.gov/trademarks/basics/BasicFacts.pdf.

2.  Just about every country has its own trademark law, and in most countries outside of the U.S., unless the trademark is registered, it’s not protected.  And in most countries, anyone can register a trademark whether or not they have any intention of using it.  So before you decide to do business with a licensee, distributor, co-marketer or partner, outside the U.S., file an application for the trademark in that person’s country.  If you don’t, they might, and they don’t have to give it back.

3.  Trademark law in the U.S. protects against the use of a similar — not identical — trademark for commercially related products or services.  And similarity can be similarity not just in visual appearance, but in sound or meaning.  For example, in one case, representing PLAY DOH, I was able to prevent FUN DOUGH from being registered  for a competitive product because to a child “fun” and “play” are similar in meaning.  And really well known trademarks get more protection than others, which helped in this case because PLAY DOH was so well known.  There are lots of examples of this.  GALLO wines was able to stop a playing card company from marketing GALLO playing cards, and we recently stopped a company from using EL GALLO for an energy drink.  For AMERICAN IDOL, we have stopped lots of people from using names containing the word IDOL for a wide assortment of products and services. What this means is that searching the Patent and Trademark Office trademark database for identical names is not enough to clear the use of a new trademark.

4.  Owning a domain name does not mean that you have acquired trademark rights in a brand name incorporating the domain name.  In other words, owning ABC.com doesn’t give you trademark rights of any kind in ABC.

5.   Getting state approval to use a name as a corporate name or fictitious name does not give you any trademark rights in the name.  For example, a company in Denver years ago got permission from the Colorado Secretary of State to use the name Haircrafters for its business, but we were able to stop it from using the name because our client owned a federal registration of Haircrafters that predated the Colorado state approval.

6.  The only way to have a high degree of confidence that you can use a name as trademark/brand name in the U.S.  is to obtain a full trademark clearance search.  The same is true in most countries.  There are professional trademark search companies that can be hired to do these searches.

7.  Made up names (XEROX) and names that have no relationship to the product or service they identify (APPLE for computers; GOOGLE for a search engine) get the broadest protection under trademark law.  Names that are descriptive of a quality or characteristic of a product or service are very difficult to protect.  Generic names get no protection.

8.  Having rights in a trademark doesn’t mean you have rights for every kind of product or service.  APPLE for computers and APPLE MUSIC for a music label/publisher have different owners.  Same for DELTA faucets and DELTA airlines, ROLLING STONES rock group and ROLLING STONE magazine, etc.  As a general rule, rights in a trademark extend to those products and services that are commercially related and the rights may be broader or narrower depending upon the type of mark.  For example, celebrity and designer names, which can be used for all kinds of products and services, and famous brand names, like GOOGLE and IDOL have more extensive rights than non-celebrity, non-famous brands.  So the better known you can make your brand known, the stronger the trademark rights.

9.  Trademarks are not copyrights and are not patents.  They all fall under the general heading of “intellectual property,” but they are very different.

As the blogging continues, I’ll delve deeper into the interplay of brands and the laws.  Feel free to post questions.  I can’t give legal advice on a blog (there has to be an attorney-client relationship for me to give legal advice), but I can provide some general guidance.

Happy Halloween.