After a legal battle over a ‘yellow circle within a blue square’ between Lidl and Tesco, trademark disputes have been at the centre of attention. So has the thought of expensive litigation, which highlights just how important branding decisions have become for a business.
When the topic of branding comes up, it is generally followed with sighs or rolled eyes. It may not be sexy to think about colours and shapes. It is certainly not always on the top of a business endless to-do lists, especially for start-ups when it comes to money.
Rees Hitchcock, co-founder and creative strategy director at amiiigos explained “one of the first things we ask when we kick off an intro meeting with a new client is “do you have brand guidelines?”, and if the answer is “no”, it’s pretty much an immediate red flag.”
Branding is a very important part of a business. As Luz Erhardt, chief client officer at Saffron Brand Consultants suggests, “brand identity and assets are essential components to make a brand memorable and memorable brands are the most successful.”
Marcus Knight, co-founder and marketing director at BE YELLOW noted that “the human brain can process images 60,000 times quicker than text”. He added that “colours create subconscious associations which can impact people’s emotions and behaviour, which impacts consumer decisions.”
“A brand that thinks it can go about setting punchy KPIs or spending their budget on campaigns, activations or content creation without a solid brand strategy or a visual identity is delusional,” Hitchcock stated.
Landing on the right branding is hugely important, noted Jason O’Connor, managing director at Total Merchandise, however, as he pointed out “some don’t always get this right”. He explained “with a supposed limited pallet of colours to choose from, I think we have four social platforms that have chosen blue.”
However, in addition to trying to catch the eye of the consumer – it’s also a legal and finance duty for a business to make sure it has its branding right, or else it may cost the business down the line.
Legal problems
As Jeremy Stern, CEO of PromoVeritas explained, that “businesses starting out should carefully check and then protect their nascent brand as there can be serious legal repercussions for mis-using someone else’s trademark.” He added that “this is because brand names can be trademarked and logos and pack designs can be copyrighted.”
“From an agency perspective, the rush to find a creative solution, and a focus on pitching the brand idea, means the due diligence step all too often gets skipped,” Sholto Lindsay-Smith, director of brand strategy at Industry Partners stated.
Currently, British biggest supermarket Tesco is currently forking out around £7m (not including legal fees) as it was forced to change its ‘Clubcard Prices’ logo across its near 2,500 UK stores. This came after the supermarket lost a headline catching trademark battle against rival supermarket giant Lidl last month.
Lindsay-Smith added that “Mondo’s rebrand to Monzo is another classic example of a response forced by a trademark challenge. It handled the renaming deftly, crowdsourcing new naming ideas, but it had to reissue its cards and it cost it time and effort.”
As Louise Popple, senior counsel at law firm Taylor Wessing stated that “businesses need to make sure that they don’t step on anyone else’s toes when they launch a new brand or change an existing brand in any way.” She added that as it is such a crowded market, with so many brands to navigate around, that it’s easy to slip up.
Now, not only does a business need to make sure it has a branding strategy that works for it, and this doesn’t conflict with other businesses that have theirs legally protected it – if they are wise, they would also make sure to protect their own branding.
As Popple explained, “businesses need to make sure that they apply to register their key brands in their key jurisdictions. If they don’t, they risk not being able to stop others using a conflicting brand and – potentially even – others being able to stop or at least limit their use.”
Branding that has been overlooked can affect any business of any size. Charlotte Duly, head of brand protection at law firm Charles Russell Speechlys noted that “branding issues have hit businesses of all sizes, from a Chinese takeaway in Barrow-in-Furness with customers in a 2-3 miles radius that had to rebrand from China Tang, to Tesco changing their Clubcard Prices branding at a significant cost of around £7m”.
However, bigger businesses such as Apple, Zara, Coco-Cola and even Lidl are well established and global businesses, that have pumped a lot of money into protecting their brands by making sure they are fully registered for trademarks.
Companies that know the value of their branding will make sure their trademarks protection is implemented. Back to the example of Lidl v Tesco, with how positive it turned out for Lidl, in addition with how much media attention it got – it may kick off a trend at the English court.
More cases?
As Elaine O’Hare, partner at law firm Stevens & Bolton stated, the decision in the Tesco case “may give supermarkets more confidence to enforce their brands, and to come up with new ways to protect their brand propositions, leading to more cases like this.”
“However, all supermarkets have own-brand products and are competing hard for business, so the decision will also give them a clearer idea of where the courts are now drawing the line – whether they are seeking to create a look-a-like or prevent a rival doing the same,” she added.
However, as law firm Keystone Law’s IP partner Lucy Harrold explained “there is no doubt that brand litigation in the UK requires a considerable financial commitment from brand owners.”
She explained that “the legal fees to bring a High Court case to trial can exceed £1m. If you lose the case, you are on the hook to pay not only your own fees, but a proportion of those of the winning side.”
An example, Thatchers recently lost its trademark case against Aldi over a cider lemon drink, as it claimed that the German food store infringed on its trademarks by creating and selling its Taurus drink, which was a cloudy cider lemon. However, the court ruled that there is no likelihood of confusion between the brands.
But as Andrew Lomas, barrister at One Essex Court, explained that on that ” it’s always good advice for brand owners to keep their intellectual property portfolio under review and to proactively take the opportunity to fill any gaps before issues arise.”
“The flip side of this is having proper searches done before adopting a new brand and having proper means for tracking customer complaints and confusion of a conflict looks likely. The bottom line is that litigation is expensive, time-consuming, and best avoided where possible: as such, risks should be managed as early as possible, and collecting the right evidence shouldn’t be an afterthought,” he added.
