To do brand governance, we need our legal team’s help!
This article is not meant to be legal advice. It is written for brand professionals from the perspective of brand strategy and brand management and is aimed to be used as a working tool for developing effective solutions for brand governance. It is currently being shared among branding, advertising and PR professionals. The author is not a lawyer. She has attained GDL (qualifying law degree, equivalent to LLB in England and Wales, for non-law graduates to qualify as lawyers).
Update: a follow-up to this article can be found here.
A quick search on “brand governance” gives me a glimpse into the current “top topics” in the insights, brand and communications industry. The top result comes from a brand agency (I am not naming name but you may google the cited text to find out who they are):
The role of brand governance is to ensure that brands are presented consistently, that guidelines are properly executed, that rules are followed. … That role is now changing dramatically. … We found that the key factor differentiating top-performing brands is agility — the ability to remain true to the brand while adapting to a rapidly evolving environment. Agility requires embracing a greater degree of risk, tolerating more failure, and ceding control — all behaviors that fly in the face of conventional branding wisdom. How, then, do you manage an agile brand? … Our goal: to establish a new model of brand governance — one as resilient and flexible as the brands it serves.
When explaining how they would answer the above question, the brand agency wrote, “Brand management has traditionally been occupied with constructing rigid edifices — polished logos, perfected environments, and carefully scripted experiences. But in today’s complex, fast-moving marketplace, the concept of control is a fallacy” (emphasis added). The rest of the article emphasised the need for flexibility and embracing changes, transparency, engaging all stakeholders (not just customers) and allowing them to play a role in your brand. To achieve these, the brand agency recommended the Brand Community Model: “Communities are the linchpin of our new approach to brand governance. If brands must adapt continuously to remain vital, then we must encourage the involvement of those who know them best and care most about them”.
Despite mentioning risks in a volatile environment, the article quickly drifted to brand management. While it was not brand management in the traditional sense of top-down control following a rigid rule book, they could have simply said the old model of brand management would not work anymore and we needed a new one! There must be a reason for using “governance” instead of “management”.
The core of governance is risk management. The above article did mention “embracing risks” as a key requirement for agile brands but failed short of explaining how. Most importantly, it did not tell us how to protect brands from risks. The recommended model was simply old wine in a new bottle.
The closest to “brand governance” is Interbrand’s Brand Strength Model* (“BSM”). BSM is a core component for evaluating brand values–the backbone behind their annual Best X Brands. Of the ten Brand Strength metrics is “Governance” which Interbrand defines as “The degree to which the organization has the required skills and an operating model for the brand that enables effective and efficient deployment of the brand strategy”. While this definition seems to be another brand management-focused explanation of governance, Interbrand’s brand strategists do have risk management in mind when assessing each brand’s score on the metric. For example, one of the elements strategists will look for is the extend of trade mark registration a brand has across all its markets per key category. Indeed, the predecessor to the “Governance” metric is called “Protection”, defined as “How secure the brand is across a number of dimensions: legal protection, proprietary ingredients or design, scale or geographical spread” (emphases added).
However, due to the lack of legal knowledge and risk management among most brand strategists and the tendency to only engaging their legal departments on contract matters or when shit hits the fan, the idea of protecting a brand’s most valuable asset and managing risks in an ultra competitive, and in some markets “unpredictable” (I am of course using euphemism here), environment falls to the background. Instead, strategists and clients alike tend to focus on the other nine Brand Strength metrics: Clarity, Commitment, Responsiveness, Consistency, Presence, Engagement, Authenticity, Relevance and Differentiation.
The importance of engaging our legal teams
Statutory Protection in the U.K.
Brand strategists and clients will gain so much more if we have the true meaning of “governance” in mind–i.e., protection and risk management–and engage our (and clients’) legal teams throughout the process. I will use trade mark protection in the U.K. for illustration. The relevant legislation is the Trade Marks Act (“TMA”) 1994. Section 9 stipulates that a trade mark proprietor has the statutory right to the exclusive use of the mark in connection with the goods or services for which it is registered. But such right is not a positive right to use the mark. Intellectual property rights are negative rights that exclude others from using the mark (Pinterest Inc v Premium Interest Ltd & Anor  EWHC 857 (Ch)). This means that the trade mark proprietor has the right to sue any person for using their registered trade mark through an action for the tort of trade mark infringement.
Registration of trade marks may take different forms, such as word marks, logos, slogans, tones, smells, etc. The circumstances that constitute grounds for bringing a claim are set out in TMA 1994, sections 9 and 10: without the proprietor’s consent (section 9), a person uses in the course of trade a sign–
1) Section 10(1): “which is identical with the trade mark in relation to goods or services which are identical with those for which it is registered”.
2) Section 10(2): where —
- 10(2)(a): “the sign is identical with the trade mark and is used in relation to goods or services similar to those for which the trade mark is registered”, or
- 10(2)(b): “the sign is similar to the trade mark and is used in relation to goods or services identical with or similar to those for which the trade mark is registered, there exists a likelihood of confusion on the part of the public, which includes the likelihood of association with the trade mark”.
3) Section 10(3): “which —
- 10(3)(a): “is identical with or similar to the trade mark”
- 10(3)(b): “where the trade mark has a reputation in the United Kingdom and the use of the sign, being without due cause, takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the trade mark”.
Of particular interest to brand professionals is the statue’s references to “likelihood of confusion on the part of the public” (section 10(2)(b)), “the [registered] trade mark has a reputation in the United Kingdom” and “distinctive character or the repute of the trade mark” (section 10(3)(b)) which the courts will consider in trade mark infringement claims. These factors align with some of the brand metrics that brand professionals often use, such as: presence, familiarity, differentiation, distinctiveness, clarity, relevance, engagement, etc.
To establish infringement under TMA 1994, section 10(2), the proprietor of the trade mark will need to demonstrate that the offending use of the sign would lead to some confusion on the part of the public, thereby misleading them into believing that the two marks/signs are associated or connected in some way. This means that brand professionals and clients will need to pre-empt such scenarios at the beginning of brand creation and throughout the entire process of brand management/governance by ensuring that the brands’ positionings and images in the relevant markets are clear and distinct. To further protect the brands from possible risks of confusion, brands will also need to have a deep and solid presence in their target customers’ mind which can be achieved through relevance and engagement. This concept is similar to “reputation” or “repute” while distinctive positioning and image is “distinctive character”(section 10(3)(b)) in branding-speak.
Common Law Protection
In cases of unregistered marks, the brand owners will rely on passing off actions at common law for protection. They must produce evidence, such as ownership of goodwill or reputation of the marks. They must also prove that unauthorised use of the marks has amounted to misrepresentation that has caused or is likely to cause damages to the brand owners. This process is notoriously time-consuming, labour intensive and costly.
I will not go into too much details but the key takeaway is for clients/brand owners to keep consistent track records of their brands in the markets and to constantly pre-empt various risk scenarios.
How can we help clients to fend off possible defences that may be raised by the offending party?
The offending party would most likely seek to invalidate the brand owners’ marks by arguing to the courts that the marks or signs are:
- Lack of distinctive character; or
- Merely commonly-used words/phrases/images, etc.; or
- Designations of the kind, quality, quantity or intended purpose of the goods or services.
Here, I will use an EU example** to explain. In a blog post on the registrability of the slogan “It’s like milk but made for humans” for Oatly AB (Swedish brand of dairy substitutes), Maren Wilke of the law firm, Bird & Bird, explained that the General Court (a constituent court of the Court of Justice of the European Union) ruled that “the slogan conveys a message that is capable of initiating a cognitive process within the reader’s mind and therefore fulfilled the minimum requirements of distinctiveness”. On this, Wilke commented that “[s]logans may be original and creative; they may provoke or surprise. These are, however, not the factors that help the registration process. It is the art of arguing that a cognitive process is provoked, and the correct assessment of the relevant public’s view, that helps slogans to become registered trade marks”. (Emphases added)
What does it all mean for brand professionals?
This article shows that brand strategists and other creative professionals will have a tougher job (and higher expectation) to ensure that the brand positionings or models we develop, the stories or promises of our clients’ brands, and the messaging or slogans the brands seek to convey will be distinctive in the minds of the public (and target customers). The courts will need evidences, therefore a holistic programme of continuous and consistent customer and market research is key (e.g., brand tracking)^. Collaboration with legal and other professionals is a must. Brand governance in the 21st century means we can no longer work in silos.
* These metrics have been explained in the presentations of Interbrand’s annual Best Brands so they are not confidential information. The metrics have been updated again in 2020.
** This EU example is for illustrating what is required of a slogan (trade mark) in order to be deemed distinctive in a legal sense. The objective of this article is to explain to brand professionals in as few legal jargons as possible the importance of incorporating legal principles and considerations early in the brand strategy development and brand management process, thus the mix of jurisdictions. Note: EU judgments will no longer apply to the U.K. after Brexit.
^ Disclaimer: This is an initial thought for brainstorming. We will need to work with lawyers to ensure that the evidence will be admissible in courts — thereby the suggestion that immediately follows.