The value of trademarks
The value of trademarks like all legal matters is only illustrated when the worst happens. Until then it is difficult for an inexperienced entrepreneur to really appreciate their value. Mr Payan Tabibian is an entrepreneur, originally Iranian but with US nationality, who had an idea for a business, much like millions of other entrepreneurs around the world every day.
Mr Tabibian had an idea for a hamburger restaurant, and one of his initial tasks was to come up with a distinctive name and logo. Like millions of entrepreneurs just starting off their businesses, Mr Tabibian could not have imagined that 10 years after he thought of the Z-burger trademark, his brand name and logo would become embroiled in a legal battle worth millions.
Mr tabibian understood well the value of trademarks because he registered the name and logo in 2007, a year prior to opening his first restaurant in 2008. His logo was a 1950’s style red, white and yellow Z.
Mr Tabibian’s story is a genuine rag to riches tale that illustrates well the value of trademarks. He reportedly started off as a cleaner, mopping up floors in a hamburger restaurant. Hard working and focused he eventually rose to become manager of various hamburger and other fast-food restaurants. During that time he even went to school to study hamburger marketing.
Then the moment came when he decided to strike out on his own. He came up with a great idea for a hamburger restaurant that was community centric with lots of interactive activities with the local community.
The restaurant was a hit. According to the US press he even gave free food to local civil servants suspended due to federal government reduction in funding. He was a community hero. He then expanded. Within two years his stores were in six locations. As one would expect he is reportedly a hard worker putting in up to fourteen hours a day.
But all was not so rosy internally. Mr Tabibian had two partners. In 2014 he fell out with his partners and hence began the legal battle for the soul of the restaurants, the trademarks.
Such a clash is the text book example of why one should register a trademark. Even a small business hopes to become very profitable some day in the future, as that is a fundamental reason for setting up a business.
Whilst some small businesses have become savvy to the value of trademarks, protecting their brand, and leveraging products using intellectual property, most have not. Big business have been using intellectual property to protect their market share for centuries. The half eating fruit logo of Apple is unmistakable, Coca-Cola’s Spenserian script is iconic but locking in Trademark value is actually for all businesses, large or small. This fact is often overlooked by small businesses who fail to protect their brand name or logo before they set up their business, often leaving it until their business becomes more successful.
There are thousands of examples of large corporations like Apple and Coca-Cola suing companies and individuals who set up ventures with similar names. Much rarer are small businesses trying to stop large corporations from creating a new venture with a similar name to their trading name via a law suit. It is not always that small businesses do not understand the value of trademarks. It is just that some small businesses either cannot afford professional legal advice or are wrongly advised.
The biggest problem facing small and medium sized businesses bringing or defending a law suit is finance. Law suits are very expensive. Often corporations have deeper pockets, and can easily afford to spend between £50,000 and £250,000 in a typical scenario seeing off a challenge by a smaller company. Ironically, small and medium sized businesses are more likely to lose because they didn’t complete the paper work, and follow the registration and other intellectual property processes properly. Thus they could have saved themselves a lot more money by paying for specialised advice, and following that advice at the beginning of their venture.
The second problem facing small businesses in particular is that start-ups often don’t have the time or consider it a priority to register a trademark. They just don’t understand the value of trademarks and getting the registration process right. Infact they often do not view their marketing strategy through the prism of an overall intellectual property plan. The fact is that businesses that get an intellectual property specialist on board from the outset who can conduct a search for prior marks, advice on scope of registration including geographic and goods and services, will do better in the long run. It is vital for businesses to pick a name and logo long before they start the business itself. Businesses should register their chosen name and logo as a trademark, and most importantly build their marketing strategy within an overall intellectual property plan. This is particularly important for start-ups since they are often trying to create a small splash within a specialised market.
Mr Tabibian understood that sorting out routine work, including registrations and processes, was important. His earlier actions were vital to him in his case against his partners. His partners asked that the court order Mr Tabibian to transfer his trademarks to a company that they controlled. They also wanted him to stop using his trademarks in advertising alleging that the trademark belonged to the company. The federal judge disagreed saying in a preliminary ruling that the trademarks belonged to Mr Tabibian. The Judge is currently deciding how much to award Mr Tabibian but one thing is clear it will be several million. Not bad for a guy that started mopping floors.
Like the US, Britain too is a country that offers opportunities for the immigrant and the native to rise from rag to riches, that is why this story is so compelling. However, a word of caution. This is a US case which has completely different laws to English law. Notwithstanding, the story remains a very good example of the value of trademarks even for a very small start-up, you just never know where that idea might lead. Hats off to Mr Tabibian!! You can register and EU wide trademark at CMT Office. For more information on UK trademark law refer to the Trade Mark Act 1994 – UK Trade Mark Law.
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