Most Kenyans will probably be surprised to learn that the most valuable asset in some of the biggest businesses in the world is not the land, buildings or machinery but a tiny intangible asset called a trade mark or brand.
The world’s top ten brands have a combined value of more than 5 times the annual budgets of some developing countries (including Kenya).
The “Apple” trade mark tops the list with a whopping value of US$$170Billion (Ksh. 17 Trillion) followed by Google (US$ 101.8 Billion), Microsoft (US$ 87 Billion), Facebook (US$ 73.5 Billion), Coca-Cola (US$ 56.4 Billion), Amazon (US$ 54.1 Billion), Disney (US$ 43.9 Billion),Toyota (US$ 41.1 Billion) MacDonald’s (US$ 40.3 Billion and Samsung (US$ 38.2 Billion).
For ease of comparison, Kenya’s 2017 budget is Ksh. 2.6 Trillion.
A trade mark (or service mark in relation to services) is the name or mark applied to goods by a manufacturer to distinguish and make them stand out from those of the competition. It therefore serves as a badge of origin and confers an assurance of quality to the consumer. It carries with it the goodwill associated with the manufacturer. This is what makes customers to buy that specific product instead of a similar substitute from a different manufacturer.
Through consumption of the particular goods/services to which the mark is applied, consumers over time come to associate the mark with a certain level of quality that is uniquely superior compared to similar products/services in the market. This association is the magnet that attracts and binds the consumer to the product/service. It is where the rubber meets the road in the world of commerce.
It therefore goes without saying that the more a brand is known and trusted by the public, the more customers it will attract and hence the boost to the bottom line.
The success of a brand, however, brings with it certain challenges which the brand owner should deal with not only to preserve the brand but also to sustain its position in the market.
It is a fact that there are entrepreneurs who, instead of investing in research, development and marketing of their own brands, choose to ride on the goodwill of established brands either by outrightly ‘stealing’ or imitating them. This “brand theft” involves applying a trade mark on goods that are not manufactured by the owner of the mark. In extreme cases, the manufacturer of the fake goods either fails to disclose his/its identity on the label or falsely indicates the name of the trade mark owner as the manufacturer of the goods. Such goods would usually be close substitutes of the products of the genuine brand owner and therefore lack the assurance of quality that the brand is associated with. This is called counterfeit trade and is very rampant in Kenya in almost all sectors but especially in pharmaceuticals and fast-moving consumer products such as cosmetics, spices, baby foods, motor vehicle spare parts, electronics and construction materials.
Other unscrupulous competitors will try to come as close as possible to the established brand by using trade marks which, in the eyes of the average consumer, are very similar to the known brand. By so doing, the competitor attempts to confuse and mislead consumers into believing that either the product is manufactured by the owner of the established brand or there is some association between the two products or their manufacturers. It is not uncommon for retailers to mislead consumers by convincing them that although the brands look slightly different, the products come from the same ‘group of companies’ which is usually not the case.
Perhaps the more serious challenge arises where, through ignorance or neglect, the brand owner fails to protect his brand through the laid down legal process. This omission could, at worst deprive such owner the ownership of the brand altogether or, at best, force an unhealthy co-existence of the two competing brands in the market.
Brand ownership is acquired through trade mark registration at the Kenya Institute of Industrial Property (KIPI). The rights granted by registration are exclusive to the owner and can be renewed periodically in perpetuity. Unlike patents which last for a specific period of 20 years, trade marks rights do not expire so long as the registration is renewed every 10 years.
Registration is what enables the registered proprietor of a mark to defend his trade mark against infringement by obtaining injunctions and damages against infringers. In the absence of registration and verifiable common law rights in the mark, the trade mark owner will have no remedy against the unauthorised use of his brand by competitors.
In Kenya, trade marks are registered on first come first served basis. This means that the first to apply acquires priority over anyone one else who may apply to register the same mark subsequently even by a matter of minutes.
A brand owner who neglects to register his/its trade mark risks being deprived of it by a competitor who has subsequently obtained registration of the same or similar mark. There are, of course, ways and means of challenging such registration on grounds of bad faith or prior use but this is an expensive and time-consuming exercise which can be easily avoided by being proactive in protecting one’s mark through registration.
To safeguard the goodwill associated with a brand, the owner will want to ensure that it is not used by others (whether competitors or not) on products or services that dilute or bring disrepute to the brand. In the absence of registered rights in the mark, it is almost impossible to restrain such unauthorised use.
Talking of dilution, it is a common phenomenon for businesses to use the names of celebrities and internationally acclaimed public figures as trade marks for purposes of easily drawing customer attention to their goods. What most Kenyans may not be aware is that it is illegal to register the name of any living person as a trade mark without his/her consent in writing. So next time you come across a weave branded “Michelle Obama” or “Beyonce”, please take note!
Trade mark protection is territorial in the sense that a mark enjoys protection only in the country where it is registered. A trade mark registered in Kenya, for example, will not enjoy any protection in Uganda or any other country unless the proprietor has taken steps to have it protected in that other country where he intends to use it. Therefore, it is prudent for a business to consider its current and prospective markets and ensure that the brand is registered across the desired markets. For instance, the East African Community comprises a population of approximately 187 Million people across the 6 Member States including South Sudan. The free movement of goods and services across the common market makes it almost pointless to register a trade mark in one jurisdiction when somehow the goods bearing the mark will find their way across the border.
The only trade marks that enjoy some level of protection without the absolute necessity of being locally registered are those which fall within the statutory definition of ‘well-known trade marks’ .Examples include Coca-Cola, Google, Microsoft, Apple, etc. It should be noted, however, that even in respect of such brands, they will only be protected upon proof that they are well known in Kenya irrespective of their international notoriety. Accordingly, an internationally well known brand which has not been used in Kenya would not benefit from this protection.
The article was also featured in an article published in the Business Daily which you may access here.