One of the most vexing issues facing new companies or product developers is whether to protect their brands with trademark registration.
Money is always in short supply; will a trademark really matter at the early stages?
Vancouver-based St. Moritz Watch Corp. learned about the quirks of intellectual property when it encountered trademark opposition from the town of St. Moritz, Switzerland.
St. Moritz founder and president Simon Pennell relates a very modern story.
The 31-year-old Vancouver company earns millions annually by selling Momentum® brand watches in North America, Europe and Asia at hundreds of locations, via distributors and, increasingly, online.
“Money was tight when I started the business,” Pennell said. “Registering trademarks was very expensive then, so I registered in Canada, the U.S.A. and Japan, where we had a big customer.”
Though Pennell considered European protection, it then meant country-by-country registration, which, at $5,000 per country, would have been prohibitively expensive.
The town of St. Moritz, Switzerland, later registered trademarks for virtually every product category, everything from luggage and jewelry to cigars.
About 15 years ago, when Pennell’s company started selling to a large European customer, the “St. Moritz” watch brand came to St. Moritz town’s attention, which sought to block the watch trade.
Despite approaching the town, Pennell couldn’t acquire rights for his watches, so embarked on a dual-brand strategy intended to avoid trademark infringement in Europe while retaining brand value built under “St. Moritz” elsewhere.
About six years ago, this strategy fully migrated to branding watches solely under the “Momentum” label.
Other factors supporting the brand shift included availability of the “Momentum” brand in all relevant geographies, and the “action” appeal of Momentum to the critical, younger demographic.
It wasn’t cheap to shift brand. Directly related legal costs for all countries totalled nearly $100,000. Fifteen years later, it’s still costing the company to change market awareness.
“To this day, we have customers who are surprised that Momentum and St. Moritz are the same company,” said Pennell.
If he were starting his company today, what would Pennell do?
“If you can register your trademark in key markets worldwide, do it. If we could have secured EU registration back then, we would have done it – no question.”
“With the importance of online sales, a powerful URL that links to your brand is almost more important than a trademark registration. “Happily, today’s landscape is different, according to Roger Kuypers, intellectual property lawyer at Fasken Martineau.
For companies considering Europe, there’s a pan-European trademark registration that covers all 27 European Union states – a market of more than 400 million people. It takes less than a year and costs between $3,000 and $5,000 per mark. (It’s worth noting that although there is an EU trademark, national registries trump the more global EU protection.)
North American trademark registration takes between a year and 18 months. The cost of registration is about $5,000 for the U.S.A. and about $2,000 for Canada.
But what’s a new company to do?
At minimum, Kuypers suggests doing free online trademark database searches to see if anyone has registered the mark for similar wares. Still, phonetics or slight variations matter, and online searches would mostly miss these.
Full availability search through a lawyer would cover identical hits, marks that are similar, and “common law” searches. These are especially relevant to Canada, U.S.A. and England, where rights are conferred based on history of trademark use, not simple registration.
“If someone has used a mark for 20 years, but never registered it, you could still be liable for trademark infringement if the original user launched an action,” Kuypers said.
But this is a bad business gamble that risks creating market confusion and wasting brand development dollars.
Kuypers believes the best strategy for cash-conscious clients is to register fewer trademarks. For example, BMW owns that trademark, but the cars are all numbered.
The core brand value resides in the BMW name and logo, not in the car models.
“The best strategy to limit expense in trademarking and still have defensible brand is to focus your brand under fewer trademarks. A house brand rather than product brands. Focus brand-development strategy on fewer trademarks, but deepen their brand value.” •
