18 May 2019

Getting it Right from the Start

When a business is starting out, the to-do list can be overwhelming. For many spanking new entrepreneurs, registering a trademark is buried below creating a logo, renting office space, and finding an accountant.

But the difference between filing an application to protect a brand and not doing so, can be the difference between success and failure. Companies that started out with an idea and some business cards have sometimes gone on to become household names that have endured for decades. Many others remain lost to the competition.

"Registering our trademark globally gave us confidence to set our sights on building a global company without hesitation." Kalle Törmä

In recent years, the need to register a trademark has only increased as counterfeiters, cybersquatters, and trademark trolls run sophisticated operations targeting businesses everywhere. For many startups, a stolen trademark can be their first introduction to the world of intellectual property (IP).

Two young brands at different stages of their IP lives, for which trademarks and their legal counsel have played a big part in their journey, are featured below.

The Fishwives Club Boutique Winery

When Patrick James Robertson left a career in advertising to create The Fishwives Club Boutique Winery in Cape Town, South Africa, in 2012, he had scant knowledge of IP.

His startup’s artistic labels, slick marketing, and brand name reflected his previous expertise. He did register his trademarks in South Africa; however, despite that, his brand was unprotected overseas.

Trading went well and he started exporting to Europe. But then, to his amazement, two European importers registered his brand without his permission.

“I spent 25 years in advertising, but we didn’t get into the legal side of brands, we were just in charge of creating brands,” Mr. Robertson admits. “I didn’t know trademarks could be used as a weapon against a supplier.”

The situation is complicated by the fact that his company still has a contract with the importers, despite currently pursuing a case in the German courts challenging the registration. While sales have not been affected, they might be if he cannot register his mark in the EU. The experience has also been stressful and has cost him money in legal fees. It has, he says, been an education.

We see that a lot through the INTA Pro Bono Trademark Clearinghouse— people with big dreams and smaller budgets—and we’re happy to help them. Jaime Vining

“When I created my own brand, I didn’t think this would be a thing. I thought trademarks pertained to IP such as ideas. I thought that once you started trading as a brand, you would automatically be known as the owner,” he recalls.

Now exporting to 10 countries (mostly in Europe and also three countries in Africa), The Fishwives Club Boutique Winery plans to enter the U.S. market. But after getting his fingers burned in Europe, Mr. Robertson is not taking any chances, and has enlisted the help of INTA’s Pro Bono Trademark Clearinghouse.

The Association created the clearinghouse to help clients with trademark issues who may not be able to afford legal representation. For Mr. Robertson, this means valuable advice on how to file in the United States—a major market that could dramatically boost his business.

“Patrick didn’t want to run into issues with rogue distributors who might try to register his trademark without his permission,” says Jaime Vining, Co-Founder of Friedland Vining Intellectual Property Attorneys (USA), who is the pro bono team lawyer assigned to Mr. Robertson’s case.

“His company is a startup, and he doesn’t have the funds to register worldwide, but he does want to expand worldwide. We see that a lot through the INTA Pro Bono Trademark Clearinghouse—people with big dreams and smaller budgets—and we’re happy to help them.”

Other brands are lucky enough not to face the kind of dispute that befell Mr. Robertson, and protection from unscrupulous actors is only one positive aspect of registering trademarks, as Ms. Vining explains.

“A trademark registration is a corporate asset. So if Mr. Robertson were to sell his business some time down the line, he could potentially earn royalties or other forms of income from the trademark,” she says. “It’s important for him, as he has these broad business plans, to make sure his trademark is clear in the countries he wants to expand into, especially as he’s taking on new distributors.”

Mr. Robertson now includes “trademark” and “registered” symbols across his marketing materials to represent his South African registrations. He confirms that he will register trademarks in every territory he expands into, including Europe—but first he has to win back his mark.

“Trademarks are essential for anyone creating a brand. It gives you a leg to stand on. Without it, you are going to be in for a lot more money than you thought, so spend the money and protect yourself. Be cautious,” he warns.

Flowhaven

In Espoo, Finland’s second largest city, a startup is making waves across the hyper-competitive world of media and entertainment licensing.

Founded in 2016, Flowhaven (Finland) offers companies a software platform to manage their licensing relationships. In practice, this means helping to manage the workflows between licensors, agents, and licensees, including contracts, product approvals, and sales and royalty reporting—making sure obligations are being met on all sides.

The company has more than 20 employees across its offices in Finland and Los Angeles, California, USA. Its software is in use in more than 200 countries, helping big licensors such as Rovio Entertainment, also based in Espoo, as well as licensing agents representing brands, including the FIA World Rally Championship.

Flowhaven is turning into one of Finland’s success stories, following in the footsteps of Rovio, where Flowhaven CEO Kalle Törmä worked previously.

At Rovio, Mr. Törmä was a brand licensing specialist during the company’s period of major growth, as its “Angry Birds” game and related merchandise grew into a massive global franchise.

“My life would have been easier if there had been software available that could be tailored to meet the customer’s needs using business data,” says Mr. Törmä, who went on to create a workflow tool that did just that.

Built on Salesforce, the world’s largest customer relations management software-as-a-service (SaaS) program, Flowhaven scaled a solution already in use to meet the rigors of brand licensing.

It’s a complex and fast-moving market, with global licensing operations sometimes involving several hundred companies and thousands of products. The task can be a race against time to find the best partners, and launch the right products that adhere to the right agreements, all without delays or worse—having counterfeits entering the market.

“Time is of the essence, whether it’s a games studio, film studio, or sports merchandise company. Typically there’s a fixed date—some event that merchandise is aimed at—meaning there is a very small window brand owners are aiming to capitalize on,” explains Mr. Törmä.

With a good knowledge of IP from the beginning, Flowhaven ensured its own IP was registered in all the regions it had targeted for expansion.

“It was pretty straightforward that if we wanted to be the experts at managing brands then we needed to ensure we properly established our own brand, so we put the trademarks in place from the beginning,” he adds.

A blanket approach was also important for other reasons. With 55 percent of the brand-licensing industry based in the United States, mostly in California, a company with its head office in a Nordic country would always be looking beyond its borders.

As a SaaS product, an international customer base is essential. But, Mr. Törmä explains, registering its trademark in dozens of countries gave the company something more.

“Registering our trademark globally gave us confidence to set our sights on building a global company without hesitation or future fears that we would need to switch brand names or worse, start again,” he recalls.

In conversations with clients and investors, having solid trademark coverage across many markets is “a sign of a company working at a more mature level,” Mr. Törmä suggests. “You don’t necessarily need a rationale behind why you have trademarks, but it is a sign that there’s a long-term plan in place that is being followed.”

Investment Matters

Mr. Törmä’s IP lawyers, Katri Kiviniemi, European Trademark and Design Attorney, and Sakari Salonen, Head of Intellectual Property, both at Castrén & Snellman (Finland), agree.

Ms. Kiviniemi says trademarks are especially useful to brands looking to scale up, because of their value with investors. The IP situation is one of the first topics investors ask about, she says.

For Finland’s entrepreneurs, who rely on such investment, this makes registering IP essential.

“I would always say that companies that are born global, like most web-based companies, should instantly protect their trademarks all over the world in the regions they are aiming for, because once the brand is out there, it’s fair game,” says Ms. Kiviniemi.

Even so, Finland’s vibrant outward-looking startup scene suffers from the same lack of IP awareness as elsewhere, notes Mr. Salonen.

“Based on our experience, many companies do not understand the territorial scope of trademark protection. In many cases companies think they have protection, but are surprised to discover that an EU trademark doesn’t, for example, cover Norway.

“They face a lot of problems because they are not able to get trademark protection where they want it,” he says.

Trademarks and Success

The markets in which The Fishwives Club and Flowhaven are building their brands are very different, and the companies began with a marked contrast in IP knowledge, yet both are leaning on the trademark system to protect their IP as they expand into new regions.

Both have felt the confidence boost that registering gives a young company—which leads to the question: can a brand be a success without a trademark?

“You can absolutely be a success—especially in the United States, where our trademark laws are based on use, not on registration,” says Ms. Vining.

“But in Europe and most of the developed world, your rights are based on registration, not use, so registration can play a very important role to an aspiring business expanding internationally.”

Not doing so can leave companies vulnerable to costs, not to mention stress and increased working hours, like those suffered by The Fishwives Club.

“We see a lot of trademark trolls and as companies expand, if they don’t register the trademark it can be very difficult and costly to acquire that trademark back,” warns Ms. Vining.

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