Branding Course

MODULE VI
Branding and brand management

(10 hours)
Learning Outcomes
After completing the study of this module, you should be able to:
1. Understand the concepts of branding, brand creation and brand management;
2. Identify and describe some of the important factors in creating, developing and
exploiting a brand;
3. Recognize recent trends in the use of trademarks to create and enhance brands with a
view to increase the value of private corporations;
4. Explain essential steps to be taken for managing brands, including valuation and due
diligence;
4. Discuss different cases in which brands enhanced and increased the value of a
corporation through strategic alliances such as co-branding, franchising and licensing;
5. Identify and describe some of the important factors and benefits of adopting strategic
management of trademarks; and
6. Explain several ways of establishing and enhancing a nation brand.
DL302 Module VI – page 1

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§1. What is ‘Branding’?
1. Today, consumers have a large choice of products and services. Price is and will
always be an important factor for choosing one product or service, but it is no
longer the only factor in the decision-making process. Consumers tend to prefer
better quality and special features that fit their taste or lifestyle. They may also
search for something new and different.
2. Once consumers have experienced satisfaction with certain products and services,
they will most likely continue to buy them. The loyalty of consumers, based upon
a mutual trust between producers and consumers, is essential to the continuing
success of producers in the global market where numerous products and services
try to attract consumers.
3. The need to create and sustain consumer trust and confidence underscores the
renewed importance of having a good reputation and a recognized brand. Brands,
as we will see below, create value for any enterprise, be them for-profit or not;
small, medium or large; of a city, region, or country.
4. The concept of ‘brand’ is larger than the legal definition of a trademark. Although
many brands are registered trademarks, some brands are not registered as such.
Generally, a brand is a product, service, or concept that is distinguished by the
public from other products, services, or concepts. Such distinctions are used to
optimize a brand’s communication and marketing strategies. What we call
‘branding’ is the process of creating and disseminating such a brand and is not
necessarily reliant on formal trademark registration.
5. Branding is a marketing practice in which a company (or a country in the case of

nation branding) creates a name, symbol or design that is easily identifiable as
belonging to the company. This helps consumers identify a product or service and
distinguish it from other products and services. Branding’s importance is not
limited to memorable impressions, it also serves as a gauge of expectations from
a known company. In essence, branding is the means by which a company garners
recognition and becomes known to consumers.
6. Branding is an essential tool and a key component of today’s market economy. A

strongly established brand increases a company’s, giving the company more
leverage in the industry. Branding generates new customers through word of
mouth, the most effective form of marketing, with satisfied consumers
recommending the brand to their acquaintances. Branding likewise improves
employee pride and work satisfaction; employees working for a reputable brand
that is held in high regard by the public.
§2. Brand Creation, Naming and Development

7. Creating and developing a successful, sustainable brand requires strategy and
preparation. Brainstorming is usually the first step of a sound branding strategy.
The first step is to identify and define the company’s core values, qualities, and
objectives. Next, the company should choose the right name and an effective
marketing campaign, whether for a specific product or the company as a whole.

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Subsequent launches of new products must also be conceptualized to align with
the company’s core values and desired image. Before each launch, it is essential
that a company’s management, the marketing, and the legal teams cooperate on
all needed issues. Although trademark lawyers and marketers approach the
development and use of a mark from different perspectives, it is the synergy of
the relationship between the two that results in a successful marketing effort.
Early brainstorming sessions afford legal teams an opportunity to make pivotal
recommendations, such as on trademark registrability and availability before the
marketing team overcommits to a particular concept.
8. The components of a strong, legal mark may be considerably different from those
of a powerful mark for marketing purposes. The challenge is to ensure that the
selected name to become a trademark is strong from both the legal and branding
perspectives. Legally, the trademark must be available and distinctive. Branding-
wise, the selected name must effectively convey the desired message, and be
aligned with the company’s reputation, values and business objectives. A strong
brand is often one that consist of a name that is not suggestive and is originally
fabricated, thereby creating an inherent distinctiveness without any prior
associations. Examples include the trademarked brands “XEROX”, “KODAK”
and “APPLE”. These trademarks’ strength is their ease of registrability, though
they communicate little on their own. Branding and marketing are then used to
supply messages to be associated with the brand, whether through mottos or
taglines. Such effective messages included Xerox’s “The Document Company”,
“Kodak moments”, and Apple’s “Think different.”
9. Some strong brands do have some meaning, although some consumers may not
clearly perceive it. For example, in Greek mythology, “Nike” is the winged
goddess of victory. The Nike logo (the swoosh) is also derived from the goddess'
wings to symbolize the sound of speed, movement, power and motivation.
10. A strong brand, especially if intended for international markets, must also be easy
to remember and pronounce, and must avoid negative meanings in virtually every
language. Translations1, transliterations, and stylization of words and phrases
must also be made with great care.
11. There are countless examples of branding gone wrong. Numerous translation
mistakes are made in many industries, and failures of cross-cultural due diligence
may also be entirely accidentally symbol based. In 2019 Nike came under fire in
the Muslim world for a stylized shoe sole that looked too similar to the word
“Allah” in Arabic.2 The 2012 London’s Olympics logo design is one example of
a logo that was very negatively perceived by the public and by the Olympics
Committee. 3
1
https://www.businessnewsdaily.com/5241-international-marketing-fails.html
2
https://www.smartcompany.com.au/marketing/advertising/nike-recall-shoe-allah/
3
https://www.tailorbrands.com/blog/9-huge-branding-fails-from-your-favorite-companies

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12. Sometimes, brands fall victim to different pronunciations of their names in
different languages. An example is that of Merced-Benz’s Chinese trademark
transliteration, which first sounded like “bensi”4 - a sound a Chinese speaking
person would potentially understand as “rush to die”, a meaning that Mercedes-
Benz clearly did not intend to convey for its luxury and reputedly safe cars.
13. To avoid such matters, companies usually seek the services of branding or naming
experts when conceptualizing a new product, service or even company name.
There are also naming services websites that use random name generators and
artificial intelligence tools. Regardless of whether or not naming services are
used, the following steps are useful when choosing a new name and creating a
new brand or campaign5.
14. Step 1: Message and Strategy Development
The first step is to develop messaging and strategy, which will support each other.
Clear direction, messaging, and positioning itself can guide the brand’s naming.
A name that does not fit with any one of those aspects should not be retained.
For a new brand, it is crucial that the brands’ value proposition and what makes,
and marketplace uniqueness be clearly defined.
15. Step 2: Market Research
A second, often overlooked, step is market research. Understanding the market,

its variables, consumers, and suppliers allows for better branding and marketing.
Market research can identify potential problems with a name (such as whether the
name is already used or may be protected), provide an understanding of the
competition, and help identify the correct audience. A thorough understanding of
the market is crucial to the creation of an effective brand. A successful strategy is
to identify gaps and opportunities in the market and develop a brand that fills those
gaps. Such niche-filling strategies ensures increased visibility, especially in
crowded markets.
16. Step 3: Brainstorm
Brainstorming is important step that should be an inclusive exercise. The best

branding elements, including names, may come from outsiders with perspectives
that are different from those of core team members. It is important to have a
variety of views involved in brainstorming sessions so that creativity and
4
https://medium.com/@amirsanroberto/cultural-epic-fails-brands-gone-wrong-and-what-brands-can-learn-
from-kfc-mercedes-benz-and-pepsi-a57d823b76fd
5
https://www.business2community.com/branding/7-steps-for-choosing-a-brand-or-product-name-0381543

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possibility are maximized. At this stage, every idea should be entertained as a
possibility, and judgments should be withheld. A seemly ridiculous proposal
could turn prove to be the perfect strategy. When creating a brand or names, the
focus should be on exploring a global view. The brand should be viewed from all
angles, with clearly identified target audiences in mind. Insights from customers
or and industry third parties can also be valuable in finalizing a brand’s position.
17. Step 4: Create a Short List
Filtering potential brand names by creating a short list also helps to define the
brand identity and its position. The first step is to eliminate obvious non-
contenders, then focusing on potential winner names. A good brand name should
stand the test of time and work through market changes, brand extensions,
geographic expansions, trends, fads, and the like. If needed, a ranking or grading
system can be developed so that only a limited number of names is finally
retained.
18. Step 5: Search Trademark Availability
After a short list is established, it is usually the right moment to perform proper
trademark availability checks. Doing so eliminates potential conflict by
identifying any names that would potentially not be registrable or conflicting with
an earlier registered mark. Many trademark databases can be accessed and
searched free of charge, as outlined in Module II. If required, the services of a
trademark law firm can be retained as well. Another recommended check is to
ensure that a proposed brand name does not violate any specific industry or
country regulations. Last but not least, it is wise to check the availability of
domain names and social media identities and reserve these prior to initiating any
communication on the new name or even filing a trademark application.
19. Step 6: Refine List, Make Selection
After the list of potential brand names is shortened to very few names, ideally 2-
3 names, a final decision can be made. In certain situations, the brand and brand
name creation process can benefit from prior market testing. Surveys may be
conducted to gauge consumer response to each proposed brand name. Once
chosen, the brand name should be protected as soon as possible, as widely as
possible, to reduce risk of trademark squatting whereby entities not interested in
actual usage reserve a name for the purpose of selling it only. A practice used by
large corporations to avoid the name squatting problem is to apply for trademarks
under a different name. Doing so “disguises” the brand and trademark from
potential squatters to a certain extent. Once the mark is registered or upon launch
of the actual product, the trademark is assigned to its real owner. Registration and
other protections of brand names should be undertaken before any marketing or
advertising campaigns are launched.
20. The steps described above apply to small and large corporations. Different or
larger geographical coverage of a brand or trademark will require different
solutions. Global brands are among the most difficult to create and to protect. In
fact, the more global a brand is, the more difficult it is to protect. In addition to
availability issues, other country-specific requirements may vary widely. Such

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international brands must appeal to local consumers while maintaining its
international image.
21. What constitutes a successful brand? According to some brand experts6, globally
successfully branded products that tend to fall into three categories:
- Products that represent tangible progress and supplant all other offerings for reasons
related to comfort, price, durability, reliability, and value;
- Products that appeal to taste (food, fashion, and lifestyle);
- Products that become global for reasons more directly related to the intangible values
expressed by the brand (e.g., Red bull).
22. Marketers have observed that customers increasingly choose a product because
of what the brand represents – whether a way of life or a set of ideas. The
argument is made that companies today do not create value in their products, but
rather in their brands; they are not marketing products but images, value and trust.
The brand is now more valuable and more important both to the consumer and to
the shareholders of the brand owner than the product it is ostensibly designed to
promote. In other words, it may not just be the product or technology that makes
the brand, instead, it is the brand that makes the product. As one marketing
executive explained: “Nike® for example, is leveraging the deep emotional
connection that people have with sports and fitness” 7. The “JUST DO IT”
trademarked tagline is a good example of how powerful branding and marketing
campaigns can be.
The “Just Do It" slogan was created to support a marketing campaign that first
targeted all Americans—regardless of age, gender or physical fitness level. Nike’s
fundamental objective was to represent sneakers as a fashion statement to
consumers. This led to Nike apparel becoming worn beyond just as fitness gear.
The "Just Do It" campaign went out to a range of media outlets including
merchandise, outdoor billboards, print media, and graffiti art. Throughout the
campaign, Nike enlisted a range of people from varying ethnicities and races, as
well as numerous notable athletes, in order to attract customers and promote the
image of Nike as being reliable to not only everyday customers, but also
professional athletes. Athletes such as football stars Bo Jackson, Ronaldinho
and Wayne Rooney, basketball stars Michael Jordan, and Kobe Bryant and tennis
stars Roger Federer and Rafael Nadal were used in Nike advertisements. In short,
the message conveyed by the branded tagline “JUST DO IT” is that if top athletes
can do it, why can’t you?
6
“Pro Logo” Michel Chevalier and Gerald Mazzalovo, Palgrave, 2004, page 275.
7
Scott Bedbury, the Vice President of Marketing at Starbucks and former head of marketing at Nike, quoted in
Klein, No Logo, p. 21.

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23. The same marketing executive further explains the power of brands: “With
Starbucks®, we see how coffee has woven itself into the fabric of people’s lives,
and that’s our opportunity for emotional leverage. A great brand raises the bar —
it adds a greater sense of purpose to the experience, whether it’s the challenge to
do your best in sports and fitness or the affirmation that the cup of coffee you’re
drinking really matters”.8
24. Analysis such as the above should be applied carefully. On one hand, brands
remain a fundamental communication tool; it reminds the public of the intrinsic
and “real” values of a product or service (i.e. its innovative character or other
qualities). But, on the other hand, it is important to be mindful that the link
between the brand image and associated goods or service can be beneficial to the
protection of general interests. It has been observed that the greater the
expectation for the brand in terms of emotions, the greater the vulnerability of the
brand to factors extrinsic to the product qualities and performance. The public
may judge the brand and the corporation on the totality of its image, especially
social practices, not just whether the product is good or has attributes that the
consumer wants. “The more companies promote the value of their brands, the
more they will need to seem ethically robust and environmentally pure.”9
Therefore, in order to meet consumers’ expectations for the company’s
correctness with regard to politics, ethics, environment and contribution to civil
society, brand owners may find themselves under increasing pressure to invest in
corporate activities that support their valuable brands, but that are not directly
related to the qualities or functions of the products they sell.
25. Lastly, there are seven characteristics of successful brands that should be
observed in brand creation:
26. Characteristic 1: Audience Knowledge
All successful brands understand and know their target market well. Successful brands
do not necessarily need to appeal to everyone — they focus their efforts on a specific
audience and from such audience may become desirable to a wider audience. This
characteristic is essential as a brand needs to be heard by and reach the right audiences
to become successful. It is better to have strong appeal to a core audience than to have
a mild appeal to a broad audience.
27. Characteristic 2: The Promise
A brand represents a promise made to customers and such promises must be clear,
honest and honored. The promise can be in the form of a slogan or tagline (for example
“HSBC: the world’s local bank”), or otherwise consistently communicated to the
public.
28. Characteristic 3: The Unique Proposition
It is easier to stand out in a today’s flooded marketplaces with truly unique products
and services. Uniqueness may come from innovation, quality, service, or history. To
8
Scott Bedbury, ibid.
9
The Economist, Brands, The case for brands, Pro Logo, September 8, 2001.

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capitalize on any unique element, the brand must be well positioned. Uniqueness can
boost consumer recognition and recall, leading to loyalty and increased sales.
29. Characteristic 4: Consistency
To be successful, brands must be consistent and reliable. Customer loyalty cannot exist
if a brand is inconsistent in its delivery across product quality or category. One example
of a brand suffering considerably from lack of consistency is CALVIN KLEIN. In the
1980s, the company Calvin Klein experienced the dark side of licensing when it chose
to grant trademark licenses to questionable licensees. The brand ceased to be perceived
as a luxury brand as some Calvin Klein branded products were sold in supermarkets at
low affordable prices, often with quality issues.
30. Characteristic 5: Storytelling
A good story is a powerful tool. This is true for a lot of brands, especially for brands of
person’s name. Brand stories can shed light on remarkable personalities and
achievements customers associate with the name. When creating a brand story, begin
with the audience’s profile. Determine characters that they most identify with. Create a
story that allows the audience to identify with the character, linking the character’s
positive attributes to the brand. Apple, for example, is a very successful storytelling
brand. The Apple keynotes initiated by Steve Jobs include employees (such as
engineers or product designers) telling stories about how a product was built,
developed, and conceived. Such stories generate a strong appeal to customers who are
interested in innovation design development.
31. Characteristic 6: Engagement
Engagement is an often-overlooked characteristic of successful brands. Consumers are

no longer satisfied with being a mere audience. Today, people are less likely to be
convinced by what brands say, relying instead on experiences and interactions with
brands, whether personally or as witnessed in public spaces. Successful brands know
how to bypass people’s resistance to being sold to by engaging with their audiences.
Social media platforms (Facebook, Instagram, etc.) as well as social media influencers
(for example celebrities having YouTube channels, etc.) have revolutionized customer
engagement with brands. Engagement builds trust, credibility, and familiarity. People
are much more likely to buy from brands who know how to engage them. New
advertising platforms rely on technologies and big data collected from online users. It
is now possible to know in real time customers’ preferences and interests. New tools
and technologies also allow for creative marketing strategies which considerably
increase the level of engagement with customers. Gamification, for example, has
become a popular strategy to engage with consumers online and through mobile
devices. Gaming techniques—such as competition, ranking lists, scoring systems, and
incentives—are used to attract customers with the overarching goal of building brand
loyalty, creating connections, and giving customers a reason to keep returning to the
brand and purchase products and services. These customer-oriented games have
benefits that propel companies closer to reaching their objectives. They aid in collecting
customer data, increasing engagement, boosting the company brand and promoting
repeat business.
32. Characteristic 7: Authenticity

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Authenticity is achieved when the consumer experience matches promised expectations
of the brand (quality, respectful of environment, charity dimension etc. If a brand falls
short to convince its customers about its authenticity, it may lead customers to think
they have been betrayed and it will negatively impact the brand equity and goodwill.
SAQ 1: Can you think of one example of a successful marketing strategy involving new
technological tools?
§3. Brand Management

33. Brand management is the process of managing a brand’s reputation and
improving the audience's perception of the brand in order to increase
brand awareness and loyalty. While branding is the process of building
your brand, brand management is the process of monitoring and maintaining it.
34. To protect brands, their established reputation, and corporate image, the conduct
of a company is supposed to have and implement a good brand management
strategy. Experts of branding suggest some general principles as follows:
 Carefully select and protect your brand (through IP and most specifically
trademark protection and trademark portfolio management);
 Know the potential of your brand and treat it as an investment, not a cost
(needs for sufficient investment in advertising, marketing and new product
development);
 Defend your brand in case it is at risk of losing its appeal and value (this
include avoiding a brand to become generic as well as enforcing trademark
rights in case of imitation, dilution or infringement);
 Exploit the financial potential of your brand (the brand expansion and
exploitation of the brand equity through co-branding, licensing and
franchising); and
 Understand that successful brand management nowadays is a complex task
(brand management requires a good understanding of how a brand contributes
to the success of a business and the creation of value) that requires time,
constant care, a vision and some consistency.10
35. Before delving further into brand management in the sections below, it must be
understood that branding is by nature an always evolving subject matter. As we
have stressed earlier, brand management is deeply influenced by technology and,
in particular, new forms of communication. The shift of resources away from
traditional media advertising towards direct and interactive marketing is one of
the main trends impacting brand management today. The way we see brands is
likely to change very significantly in the future. The arrival of augmented reality
advertising is one example of what brands will have to adapt to.
36. Another important change is the gradual concentration of resources on fewer,

bigger brands, each capable of supporting more products (as we have seen in the
example of Nestlé in Module I).11
10
“What is a brand?”, Tom Blackett, pages 23-25, Brands and Branding (2003), The Economist.
11
“Brands and Branding” Preface by Patrick Barwise, the Economist, 2003, page xiii.

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37. Finally, one shall never lose sight of the main objective of brand management
which is to increase its value. As recommended by trademark experts, a brand
should be managed like a savings account. While the company may make
occasional withdrawals from the savings account, the goal is to grow the account.
A brand is replenished by any use that is consistent with the intended brand
image.12 A discussion of the various forms of brand exploitation follows below.
§3.1. Trademark protection
38. Brands heavily rely on trademarks and are often perceived as having the same
definition. The term “brand” is often a synonym for a “trademark”. In
commercial circles however, the term “brand” refers to much more than a
trademark or the brand name alone. A brand can include any combination of
tangible and intangible elements, such as a trademark, design, logo and trade
dress, and the concept, image and reputation that those elements transmit with
respect to specified products and/or services.
39. The brand is composed of several elements that unite and embody the perceptions
and expectations in the mind of consumers, and it is the brand image as a whole,
which generates feelings of trust, loyalty and recognition in them. As one of those
elements, trademarks provide legal protection for the brand and their registration
grants exclusive rights to prevent others from marketing identical or similar
products under identical or confusingly similar marks. While choosing a ‘good’
trademark does not ensure the success of a brand, choosing the wrong trademark
can lead to many problems, including wasted time and money in registration and
marketing.
40. In choosing a trademark, a combination of legal and commercial factors must be

taken into consideration. In addition to the distinctiveness requirement, factors
such as countries where they will be used or registered must also be considered.
Consideration must be given to actual and potential translations, transliterations,
meanings and sounds. Eventual expansion plans for the brand into different
product categories or industries must also be considered at this early stage, as this
can influence filing strategy and priority claims in certain jurisdictions.
41. Trademark availability clearance searches are another important step to consider
prior to using a new brand. Trademark availability searches can detect identical
or similar signs which may restrict the use of a particular sign as a mark.
Trademark availability checks can further detect any potential risk of objection
or opposition against a particular sign. Both absolute and relative grounds for
refusal can influence the decision to protect one trademark over another, i.e. if it
has a derogatory connotation; if there is a restriction in the registration of
trademarks consisting of an individual’s name or geographic location; or simply
if the sign is available and has not been previously claimed by others.
42. Depending on the country, effective steps for protection may require more than
registration of a trademark and may include proper use strategies and other means
12
“The Synergy of Trademarks and Marketing,” James A. Dimitrijevs and Annette Schaffer, and it first
appeared in the INTA Bulletin of April 15, 2006, WIPO Magazine June 2006, pages 10 and 11.

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of enforcement. In common law countries, such as United States and the United
Kingdom, actual, proper use is often of greater import as it confers a degree of
protection without registration. Use of a trademark in normal course of trade is
essential to enjoy continued protection of a trademark and general
commercialization of the brand. It includes protecting the trademark against
genericide (the process of a brand becoming generic), but also renewing
registrations, using it exactly as it was registered, opposing registration of
identical and confusingly similar marks, initiating prosecution against possible
infringements and exploiting its potential either directly or indirectly by
authorizing third parties.
43. Aspects such as maintenance, enforcement and skills to exploit the financial
potential of the brand and creation of value from the brand are all complex tasks
that will be elaborated below. In particular, several examples of co-branding,
franchising and licensing will be described below.

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§3.2. Trademark portfolio management and trademark due diligence
44. A brand is usually protected by several trademark applications which are

regrouped into what is called a trademark portfolio. A trademark portfolio
typically contains multiple trademark applications and registrations in several
countries, for various classes or products or services as may be applicable.
Further, a trademark portfolio may be composed of various types of trademarks
(word marks, semi-figurative marks, figurative marks three dimensional marks,
slogans, etc.). Effective trademark portfolio management is essential to
successful brand management.
45. Strictly speaking, trademark portfolio management includes all activities and
legal processes related to the trademarks of a company in all applicable different
jurisdictions. Successfully managing a trademark portfolio starts with filing for
registration, discussed earlier in this course in relation to its requirements and
proceedings. As a company develops new products and services, this process
might require greater cooperation with marketing experts when developing and
protecting new trademarks. The work of a trademark attorney, whether as internal
or external advisor, involves providing counsel from the outset of the selection
process. Counsel should be provided on a trademark’s legally protectability,
searches and clearances, and filing and use strategies based on the marketing
plans and the particularities of each jurisdiction. Counsel should also be
responsible for filing new trademark registration applications and modifications
to existing registrations.
46. In many cases, trademark portfolios are part of a broader collection of IP assets.
The IP portfolio of a company involves other rights beyond trademarks, such as
copyrights over the art of logos, protected industrial designs or design patents;
patents for invention; trade secrets, etc. An essential aspect of a proper trademark
portfolio management is knowing how to manage trademark rights to
complement and maximize other, anticipated IP protections. Because of the
complementarity among IP rights, it is always important to consider trademark
portfolios in the broader environment of the entirety of a company’s IP assets.
47. In practical terms and as already mentioned in Module II, trademarks must be
registered and timely renewed not to lose protection. Trademark registrations are
valid for a limited period of no less than seven years, based on Article 18 of the
TRIPS Agreement. However, such registration can be renewed indefinitely, and
a trademark can exist for as long as it is properly maintained. Therefore, in order
to keep trademark protection, registrations must be regularly renewed based to
each country’s specific rules for such matter. In addition, some countries can also
request proof of use every few years in order to maintain protection, and due
filing of the appropriate evidence and documents proving such use will keep
protection in place. Finally, as there are other ways to lose trademark rights due
to lack or inappropriate use, such as risk of becoming genericized, maintaining
protection goes much beyond just renewing active registrations and has to
actively consider the special circumstances and marketing plans for each brand.
48. It is also important to monitor activities that may affect a trademark portfolio.
Tracking competitor activities, similar products releases, and trademark registries
for possible oppositions, cancellations or revocations of conflicting trademarks

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should be part of trademark maintenance practice. Some companies specialize in
offering trademark watch services in different countries, including checking
trademark gazettes for possible oppositions. In addition, some trademark offices
have also incorporated similar automated alert services to make it easy to spot
similar trademark applications. However, the trademark watch service might also
include customs agencies and monitoring the marketplace and the cyberspace for
possible infringement and misuse. Trademark monitoring might not always be
about watching out for other’s negative or infringing potentially infringing
conducts. The information obtained from trademark watch reports can help
marketing efforts by providing insight into what competitors and third parties are
doing and in which markets. In some occasions, it might also help right holders
understand when they might be in risk of infringing third-party rights, for
example, when entering other markets or trying to expand to other types of goods
and services.
49. Once a potentially infringing conduct is discovered, as a result of conscientious

monitoring, actions must be taken to stop it. This course covered the topic of
enforcement of registered trademarks and the different options available to rights
holders. However, whether contemplating to take administrative, civil or criminal
measures, the first and biggest challenge for successfully enforcing trademark
rights is to collect all the necessary information regarding the potential
infringement. Correctly identifying the party and securing the evidence of the
infringement are key for building a successful case in any jurisdiction. Even if
the alleged infringement does not end in prosecution, working with investigators,
law enforcement and customs agents is essential in order to acquire and use the
information that will allow right holders to protect their trademarks using other
means. In some cases, it might be necessary and more appropriate to warn the
potential infringer of the situation, by sending cease and desist letters; in others,
and depending of the specific circumstances, it might not be desirable to warn the
potential infringer, especially when there is a risk of bigger damages or that the
evidence will be destroyed. Regardless of the specific measures taken in each
case, including settling or using alternative dispute resolution, mobilizing
towards action will be preferable to the possible consequences of the rules of
acquiescence in certain jurisdictions, as has been mentioned before on this course.
50. Finally, auditing trademark portfolios regularly is an often-overlooked task by

companies and professionals. Internal or external auditing can help maintain a
‘healthy’ portfolio, making sure to correctly identify all assets and their value,
but also to protect them sufficiently and exploit them to their full potential. While
searches and filing are usually given more importance in portfolio management,
an audit should also identify and measure the use of trademarks and their
commercial exploitation. Such use might be done directly or through authorized
third-party use, and checking that licensees, distributors and any other third
parties are using the trademarks in the terms in which they were authorized to do
so and in a way that will not harm the brand. The following section elaborates on
the options available to right holders to increase their revenue through the
exploitation of their brands.

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51. Auditing trademark portfolios regularly provides many benefits. First, a well-
managed and updated trademark portfolio is an essential tool to protect the value
of a company’s brands. Many companies estimate the health and relative worth
of their IP portfolios based on size alone. However, those IP rights will be worth
far less if the following checks and balances are not considered:
52. STEP 1: Review IP records and data for accuracy
The data in a trademark portfolio needs to be accurate and up to date. Inaccurate

reviews might lead trademark owners to think they own rights they do not.
Periodic verification, update, and editing of IP data (such as details of applicant,
address, list of products and services) can save both time and money in the long-
run, as it will identify potentially costly errors in the records. To identify and
rectify common errors, consider the following key questions:
 Which entity is recorded as the owner?

 What is the status?
 Are the rights in force?
 Are licenses in force and recorded against any rights?
 Are charges or other interests recorded against any rights?
 Do the registered rights match those used in the business?
 Are there any unregistered rights?
53. STEP 2: Audit IP portfolio for value and efficiency
The next step is to assess the value of a trademark portfolio against the costs
involved in growing and maintaining the trademark applications it contains. It
helps to identify, for example, trademark rights that are being renewed despite
never being used, as well as gaps in protection, which might leave a company
exposed or render the mark unprotected.
54. STEP 3: Make routine checks at regular intervals
Completing an IP audit is only the first step in what should be a regular

programme of portfolio reviews. Conducting audits at regular intervals (ideally at
least every six months), ensures that the portfolio continues to evolve with the
company’s business. It could also identify additional savings in the future by:
 Merging registrations;
 Allowing possible duplicate (local) registrations to lapse;
 Identifying unexploited rights that could be sold, licensed or allowed to lapse.
55. As one can see, a proper management of a trademark portfolio, will greatly
simplify and increase opportunities for any commercial transaction considered
involving the trademark such as valuation, acquisition or licensing. The clearer
and more updated the trademark portfolio is, the easier it is to assess and value
the brand.
56. A word must be said here about the concept of trademark due diligence which is
the process of analyzing information concerning a target company’s trademark

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portfolio and assessing the risks, exposure and benefits associated with the
proposed transaction. When performing a trademark due diligence, the potential
acquirer will analyze validity and risks of the trademark portfolio and its impact
on the strategic short and long-term business goals. The results have a profound
impact on the valuation of the mark and in case of a poorly managed trademark
portfolio it will negatively impact the contemplated transaction and the value of
the portfolio.
Case Study: Pallini
57. L’Industria Liquori e Affini Roma (I.L.A.R.) is a family owned company and a
leader in the Italian spirit and fruit syrups business. The company’s main brand
is Pallini. The Antica Casa Pallini was established in 1875 and founded by Nicola
Pallini, a local merchant and producer of liqueurs. Since 1920, the quality of the
liqueurs produced has been such that the Pallini trademark has become
synonymous to excellence and professional skill in the distillation of anise
liqueurs. In the 1960s the plant was transferred to a new modern site just outside
Rome and in 1986, the Antica Casa Pallini further expanded with the
establishment of a joint-stock company called I.L.A.R..
58. The use of raw and exclusively natural ingredients allowed I.L.A.R. to improve
its traditional products, nowadays considered essential for both restaurant and
bakery professionals. Today I.L.A.R. is proud to cite among its successes the
Romana Sambuca liqueur, an undisputed leader in the United States of America
with a market-share of more than 70%.
59. The firm’s commitment to quality and high standards has been rewarded by
success at various exhibitions and at national and international competitions from
the beginning of the century to the present day. I.L.A.R. confirmed its leadership
in the production of liqueurs with an anise base by consecutively winning,
(uniquely in the history of liqueur producers) the prestigious “Anglo Overseas
Trophy”, for the Romana Sambuca in 1992, and for the Romana Black (Sambuca
based liqueur) in 1993.
60. The last success of Casa Pallini is the Pallini Limoncello, a famous and widely
known lemon-based liqueur. In the quickly growing spirits category of the Italian
market, Pallini Limoncello has also received several prestigious prizes for
packaging: “The Communicator 1999” and the “2000 Creativity 30 Gold Medal”.
61. I.L.A.R. recognizes the value of its intellectual property and in this regard
considers it essential to protect its products and brands. Trademark registration is
considered an essential support to commercial diffusion and to maintain a high
standard of exclusivity all over the world. In some cases, the firm uses design
registration to protect certain design features of the bottles (labels, accessories
and packaging).
62. The firm has always been proactive in protecting its intellectual property rights
and not long ago, the company sued a rival Italian firm who copied the design of
the bottle of Mistrà Pallini. Pallini won the case and was awarded substantial
damages against the counterfeiter.

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63. I.L.A.R. constantly monitors trademarks data banks, trade shows, trade
magazines, sales agents etc. with a view to preventing infringement of its
intellectual property both at home and in foreign markets. It is the policy of
I.L.A.R. to register trademarks in Italy and/or abroad (European Union and the
U.S.A.) when introducing a new product. The firm uses trademark agens to
manage all matters relating to its trademark portfolio (registrations, renewals,
inquiries on existing trademarks in other countries, disputes etc.)13.
SAQ 2: From the above success story of I.LA.R. what do you consider has good practice
the steps taken by the company to protect its brand?
SAQ 3: Do the following statements reflect recent trends in the brand management, and
if not, why?
(1) To protect brands, it is enough to protect the company’s name and the trademarks used
for its main products and services.
(2) Piracy and counterfeiting activities are a certain indication of the reputation and
appreciation of the company’s products, and it is not necessary to crack down on those
activities until the loss in income becomes a considerable amount.
(3) In today’s market environment, the tangible attributes of products, including

technological superiority, consistency of quality and usefulness in relation to practical needs
remain, as they have always been, the most important aspects for trademark branding and
marketing success.
(4) Good brand management requires ongoing cooperation between marketing experts and
legal experts, in order to assure that the brand assets adopted and promoted by the company
can be properly protected and therefore effectively exploited.
13
Source: WIPO SME Case Study.

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§4. Brand value and exploitation of brands
64. Brands play an important role in making a company valuable. According to
Generally Accepted Accounting Principles (GAAP), assets are composed of (a)
current assets; (b) plant, property, and equipment (corresponding to tangible
assets); and (c) other assets (corresponding to intangible assets). Though
accountants have recognized the existence of intangible assets for many years,
different types of intangible assets were aggregated in a class called goodwill
without being specifically identified.
65. In the 1960s, the wave of corporate mergers and acquisitions (M&A) prompted a
review of the accounting of intangible assets. In 1981, the United Kingdom
enacted the Companies Act, which permitted firms to include intangible assets in
their accounts. However, it was not until the 1990s that governments started to
develop more specific standards for intangible assets and IP. During the last
decade, when the economy and business increased their focus on value-added,
and became more services-oriented, and knowledge-intensive, the proportion of
intangible assets to tangible assets increased. Strategic alliances became popular
as a way of coping with global market competition and the value of M&A
worldwide has continuously increased from US$0.5 trillion in 1990 to US$3.8
trillion in 201814.
66. Determining a brand’s value has become essential in today’s economy and there
are two questions to be answered prior to such exercise. First, what is being
valued, the trademarks (narrower concept than the band as explained above), the
brand or the branded business (which includes as well tangible assets and human
capital)? In other words, what is a brand value? Secondly, what is the purpose of
the valuation?
67. There is no single definition of what a brand value is. In simpler terms, the brand
value is what the brand is worth to management and shareholders.15 In more
precise terms however, a brand value is not just a financial number added as an
accounting entry in the balance sheet of a company. It more generally defined as
the net present value of future cash flows from a branded product (or service),
minus the net present value of future cash flows from a similar unbranded product
(or service).
68. Measuring a brand’s value is complex because -as put forth by Ajimon Francis,
Indian Head and CEO for global brand consultancy Brand Finance- "It is a
measure of several factors like loyalty of customers, the ability of a brand to keep
offering newer products and technology, and the connect with consumers, who
give it a premium."16 We need to say a few words on how such premium can be
estimated.
14
Number & Value of M&A Worldwide.
15
https://assets.ctfassets.net/cnquojwxf8dg/4Wj4L1llSEEOMaKkAGYau4/c7e55dba5d662c7c4a2f933deebed36a/
The_importance_of_measuring_brand_value_and_brand_equity_-_Archer_Malmo.pdf
16
https://www.mondaq.com/india/advertising-marketing-branding/553838/brand-valuation-approaches-and-
methods

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69. The value of a brand can be measured using different valuation approaches or a
combination of several approaches:
70. One simple way to evaluate brand value is to look at the achieved "revenue
premium" over non-branded generic alternatives. A generic or private label brand
where advertising and brand investment do not exist can be a good candidate for
the non-branded alternative. Such “market approach” can be quite challenging in
most cases. An overbroad definition diminishes the worth of niche brands, while
a too narrow definition diminishes the worth of mass brands.
71. Another, more complicated, way to track a brand's value is to value the customers.
That is, find each customer, the customer's lifetime value and sum over all these
current customers. Of course, one also needs to look at the rate at which the brand
is gaining new customers and calculate a valuation for the future customers using
their projected lifetime valuations. Once current and future customers are valued,
the sum will provide a value for the brand. This approach requires calculating and
approximating certain parameters such as margins or defection probabilities. But,
given the technological advances, these can be done with a big-data infrastructure
at mass scale, close to real time. This is the underlying principle of the so-called
“income approach”.
72. Finally, when the “premium” is not evident to establish (because the brand is for
example very new or has limited customers) using any of the two approaches
described above, a last approach consists at looking at the costs for
obtaining/replacing a brand (these costs including the trademark protection and
advertising costs for example). Such “cost approach” is helpful to determine a
minimum brand value and has the merit of being relatively simple to use though
it does not reflect the “premium”. The cost approach can be used quite easily for
accounting records, the expenses for brand protection for example can be treated
as investments in the balance sheet of a company.
73. There are various reasons and situations were measuring a brand value is
important. First, brand valuation is useful not only for the brand and the respective
owning company to improve upon the same but also for the purposes to increase
the market value and ascertain accuracy in instances of mergers and acquisitions.
In other words, brand valuation comprises of technical valuation which can be
utilized for balance sheet reporting, tax planning, litigation, securitization,
licensing, mergers and acquisitions and investor relations purposes and
commercial valuation which is operational for the purpose of brand architecture,
portfolio management, market strategy, budget allocation and brand scorecards.
The application of brand valuation is for strategic brand management and
financial transactions.
74. Measuring a brand value can also help pricing a product at optimal price to
customers. Understanding the value of the “premium” will allow brand owners
to sell at higher price than comparable products or competitors’ similar product.
75. Here are some examples of situations when brand valuation can be useful:
 Mergers and acquisitions. A corporation will rarely pay book value to acquire
another business entity. The difference between book value and the

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acquisition price paid is called goodwill. Goodwill is often defined as the
value of a business entity not directly attributable to its tangible assets and/or
liabilities. Estimating the financial value of a brand helps determine the
premium over book value that a buyer should pay.
 Licensing. As we will see in detail below, licensing of trademark assets can

be beneficial both to the licensor and to the licensee. The licensor benefits
from a new source of revenue (the royalties or license income) and the
licensee benefits from a lower advertising and customer acquisition costs.
 Financing. Companies will strong established brands obtain better financial

terms than companies without. In some instances when a company needs to
be liquidated or becomes insolvent the remaining value (the goodwill) of the
intangible assets and in particular the brand can help securing a loan (with the
brand assets being used as collateral) or find a buyer for the brand.
 Budget allocation. Determining a brand value will help management to

allocate budget more efficiently in a way that will increase return on
investment. Some companies adopt very detailed branding strategies
considering their actual and future intended brand value and the need for
investments be made to reach these objectives.
76. As we will see in detail below the various forms of exploitation of brands have a
direct impact on brand value. Learning how to strategically exploit trademarks
and increase brand value is the purpose of this section, For an in-depth course on
Intellectual Property Management including a detailed presentation of valuation
tools and valuation approaches, students can refer to the distance learning course
of WIPO DL-45017.
§4.1 Using trademarks as the linchpin of IP licensing
77. Trademarks are used by businesses as the linchpin of lucrative licensing

programs.18 There are many different types of trademark licensing. Sometimes,
there is a simple license of the trademark, often for use in a different market
segment than that exploited by the trademark owner (e.g. licensing the name of a
baseball team for use on a coffee mug). On the other hand, a trademark may be
only part of a larger licensing program for a package of intellectual property (e.g.
licensing the right to manufacture a pharmaceutical including patent rights, rights
to technical documentation, and rights to use the trademark drug name in
connection with its sale and distribution).
78. The important point in the latter case of a comprehensive IP license is that the
trademark is often the handle or pivotal point that makes the entire licensing
transaction effective from a business perspective. The right to manufacture a
patented product or a product containing trade secrets, and to sell it in a market
is rendered far more valuable if the right to use a recognized name is included in
the deal. In some cases, the goodwill in a trademark is such that the grant of other
17
https://welc.wipo.int/acc/index.jsf?page=courseCatalog.xhtml&lang=en&cc=DL450E#plus_DL450E
18
Stephen A. Degnan and Brian Napper, “Trade, Service, Persona Marks Get Big Royalties,” LES Nouvelles 34,
no. 3 (date): 125.

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IP rights (such as patents) might be commercially weak without the
corresponding trademark license.
79. Trademark license agreements regulate how a registered trademark owner (the
licensor) gives rights to another party (the licensee) to use the licensor’s
trademark. Usually the licensor receives a negotiated royalty in exchange for such
grant of rights.
80. Such relationship is usually advantageous for both parties. The licensor receives
revenue for the use of its mark without the expenses and risks of product
manufacturing, marketing, and sales. The licensee, in turn, has an opportunity to
use the trademark without the expenses and risks of research and development.
When employed properly, a trademark license agreement can be a cost-effective
way to reduce the price of entry into the marketplace for both parties. A licensor
business can expand through a licensee existing marketing and distribution
channel, increasing brand awareness, and automatically boosting trust in the
mark. Trademark licensing can also be a powerful tool to reduce occurrence of
trademark infringement by turning a counterfeiter into a licensed business partner
or simply by occupying the market with enough genuine products.
81. In some cases, however, trademark licensing can produce unwanted outcomes.
One downside of trademark licensing is the risk of compromised quality
especially when license is given to manufacture, package, distribute and sell
products or services without clear and well enforceable quality standards. Brand
equity can suffer tremendously from licensing if the licensee does not meet the
quality expected by the consumers. Other risks include unsuccessful marketing
efforts, or lack of trademark use which can lead to poor sales. As no sales equals
no royalties, selecting the right licensee and crafting a sound trademark licensing
agreement are paramount to successful licensing.
§4.2 Co-branding
82. An interesting form of trademark licensing is formed by co-branding alliances.

Trademarks are useful in establishing strategic alliances because the marks of one
company may complement the other, just as the products of the two companies
may be complementary. Co-branding arrangements reinforce joint marketing
programs.
83. With the advent of the Internet as a powerful marketing tool, it is common to see
web sites where marks of different, distinct companies are combined to
demonstrate to the user the complementarity of the products or the utility of joint
ventures. In particular, “Partner Pages” are common, where web links are made
to companies with whom the web site owner has some type of established
business relations. The logos and names of these companies are arranged in a
constellation around the logo of the website owner. This display gives the user an
immediate visual understanding of the constellation of businesses that are in some
way involved in the product.
84. The overall effect of co-branding arrangements is to communicate a message to

the potential consumer. The message that co-branding often conveys is the classic
and age old message that the whole is greater than the sum of its parts; that the

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companies have joined forces to accomplish something larger than they could
accomplish successfully alone, whether it be better products, larger markets,
interoperable equipment, joint solutions to technical challenges, tools that
enhance each other’s performance, reliability of service, or some other feature.
85. Co-branding may be particularly useful today, given the increasing complexity
of technology products available to the average consumer. In contrast to the
consumer of 100 years ago, today’s consumer is faced with choices of staggering
technical complexity as he negotiates purchases of computers, mobile phones,
televisions, espresso makers, audio systems, etc. In this connection, the consumer
may become used to thinking that a product bearing a certain component or
embodying a certain technology has cutting-edge characteristics. If this
component or technology is announced by a logo or trademark, which comes
along with the trademark of the product’s manufacturer, then co-branding is
taking place.
86. Normally co-branding requires a licensing agreement between the owner of the
trademark distinguishing the technology or component and the maker of products
embodying such technology or component. Typically, the license agreement
obliges the licensee to respect certain technological standards. Sometimes, the
licensor has the right to “certify” the respect of its standards by the licensee.
87. These agreements may be beneficial not only for their parties, but also for the
public of consumers. From the licensor’s point of view, the trademark enhances
the value of the technology itself, transforming a hard to read technical
specification into an understandable consumer concept. From the licensee’s point
of view, it receives not only a useful technology to enhance its product, but also
a marketing tool that is leveraged over several businesses and powered by a larger
marketing program than it might be able to afford. From the consumer’s point of
view, the trademark conveys in a quick, easy to understand, visual sign, that
would otherwise be a complicated message: the fulfilment of a technical
specification.
Case study: Intel Inside
88. An American manufacturer of microprocessors, Intel Inc. produced successive

generations of microchips (the 8086, 286, 386, and 486). However, Intel did not
take trademark protection for its numbering system. As a result, its competitors
such as AMD, Chips and Technologies, and Cyrix also used the X86 name for
their own processors. Realizing its mistake, Intel, in 1991, started encouraging
computer manufacturers such as IBM, Compaq, Gateway, and Dell to put the
“Intel Inside” logo in their computer advertisements and on their packages. The
incentive to computer companies was a cooperative advertisement allowance
paid by Intel that amounted to 3 percent of the company’s purchases of Intel’s
processors (5 percent when the logo is put on the packaging). The campaign
resulted in more than 90,000 pages of advertisements in an eighteen-month
period, with a potential $10 billion exposure. The recognition of the Intel brand
among business end users went up from 46 percent to 80 percent. After a full year
of the Intel Inside campaign, Intel’s worldwide sales went up by 63 percent in
1992. The prominent display of the Intel Inside logo by the leading computer

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manufacturers has influenced consumers to think that Intel’s microprocessor
must be very good19.
Case study: DOLBY® Sound trademark licensing program
89. Dolby Laboratories, a privately held company headquartered in San Francisco,

California, in the United States, develops audio signal processing systems and
manufactures professional equipment to implement these technologies in the
motion picture, broadcasting, and music recording industries. Dolby also licenses
these technologies, along with its trademark and logo, for use in the consumer
electronics industry.
90. Beginning in the 1960’s Dolby began to achieve some fame as a technology
leader in sound when it pioneered the technique known as analogue “noise
reduction”. Dolby noise reduction works by lowering the noise when no audio
signal is present while allowing strong audio signals to cover or mask the noise
at other times.
91. Dolby revolutionized tape recording in the late 1960s and early 1970s with Dolby
A-type (for professional applications) and Dolby B-type (for consumer
applications) noise reduction. Later in the 1970s Dolby revolutionized film sound
with the Dolby Stereo analog sound system. Then in the 1980s both tape
recording and film sound saw significant improvements through the use of Dolby
SR (“Spectral Recording”). In the late 1980’s and early 1990’s Dolby came out
with Dolby Surround Sound and Dolby Pro Logic for the new field of home
theatre. By the 1990’s Dolby applied its analogue noise reduction work to digital
audio technology, introducing Dolby Digital.
92. According to Dolby, not just anyone can use the DOLBY™ logo. Extensive
technical and testing requirements must first be met. The reward for the fulfilment
of these requirements is “Access to recognized and respected Dolby logos”.
93. The effect of the Dolby trademark licensing program has been to make the reach
and appeal of its name far greater than the sale of actual Dolby manufactured
products.
94. The success of Dolby licensing is that almost two-thirds of its revenues come
from licensed products. Dolby’s technological innovations are protected with
patents, which will expire one day. But it is the trademark that has provided the
engine for Dolby’s licensing program, and the trademark potentially can be
preserved forever. Through its trademark licensing program, Dolby parlayed its
name into a trademark that is synonymous with state-of-the-art video and audio.
The “DOLBY SOUND” became an important mark for any consumer electronics
product to be able to display. From the consumer’s perspective, it became
important to see the Dolby logo on the equipment in order for them to be
purchased. The name has cachet.
19
See Chiranjeev Kohli and Mrugank Thakor, “Branding Consumer Goods: Insights from Theory and Practice,”
Journal of Consumer Marketing 14, no. 3 (Spring 1997); Aaker, David A. , Building Strong Brands, The Free
Press, 1996, pp. 12-13.

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SAQ 4: From the examples of INTEL and DOLBY above what factors do you think may
have contributed to the success of these two brands?
SAQ 5: List one example of trademark licensing which is intended to show technological
platform compliance.
§4.3 Franchising
95. Franchising is a different form of licensing as it involves a relationship that goes

beyond the grant of a license and includes a deeper relationship of control where
the underlying business is required to operate in accordance with designated
systems and procedures. A franchise is a legal relationship where one party,
called the “Franchisor”, grants to the other party, called the “Franchisee”, the
right to develop, establish, and duplicate the operations of the franchisor’s
business.
96. The International Franchise Association estimates that franchising accounts for
one-third of all retail sales in the United States of America, including the sales of
firms such as McDonalds and Coca-Cola. The most widely known results of
franchising appear to be fast-food restaurants, hotels or cosmetic retail shops.
Franchising extends from first food chain to industries as diverse as the hiring of
formal wear, car tuning, the preparation of taxation statements or returns, lawn
care, day-care schools and dentistry. In short, it may apply to any economic
activity for which a system can be developed for the manufacture, processing
and/or distribution of goods or the rendering of services. It is this “system” that
is the subject matter of franchising.
97. Often the greatest element of value in a franchise agreement is the right to use the
franchisor’s trademark. A license to sell McDonald’s hamburgers and a purchase
agreement to buy McDonald’s supplies, but without the right to use the familiar
logos, wrappings, or the all-important name, would be a diminished license
indeed; it would lack the all-important goodwill that has attached to the
McDonald’s brand throughout the decades of its existence20.
98. The way franchising works is that the franchisee and franchisor conclude an
agreement that has several components, generally including terms concerning the
purchase of equipment and supplies, but always including a trademark license.
The trademark license permits the franchisee to conduct a business using the
franchisor’s trade name, trademarks, trade dress, methods, and procedures. In
exchange for these rights, the franchisee pays a royalty and/or a flat fee and agrees
to conduct the business in ways that maintain the goodwill associated with the
mark.
99. In franchising agreements, the degree of control of the trademark owner over the
franchisee is generally greater than is the case for standard trademark licensing
agreements. In the case of franchising, the franchisor allows another person (the
franchisee) to use his way of doing business (including trademarks, know-how,
customer service, software, shop decoration, etc.) in accordance with a set of
prescriptions and in exchange for compensation or royalty.
20
https://www.mcdonalds.com/us/en-us/about-us/franchising/acquiring-franchising.html

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100. The franchising arrangement relates to a system, which the franchisor allows—
or licenses—the franchisee to exploit. This may be referred to as the franchised
system, or simply “the system.” The franchised system is a package comprising
intellectual property rights relating to one or more marks, trade names, industrial
designs, inventions and works protected by copyright, together with relevant
know-how and trade secrets, to be exploited for the sale of goods or the provision
of services to end users.
101. As shown in the following example, the factors that typically characterize a
franchise relationship include the following features: a license to use the system;
an ongoing interactive relationship; and the franchisor’s right to prescribe the
manner of operating the business.
SAQ 6: Can you point out some of the differences between trademark license agreements
and trademark franchise agreements and provide some examples?
Case Study: Vespucci
102. A restaurant selling Italian food and operating under the name of VESPUCCI.
While VESPUCCI is the mark (both for goods and services) and the trade name
under which the franchisees operate the restaurants, the company offering the
franchise (the franchisor) is referred to as Vespucci, Inc. Vespucci, Inc. has
developed a system for preparing and selling its food products, which are sold in
large volume and in a uniform manner. The system includes various factors that
contribute to the success of VESPUCCI restaurants, including recipes and
methods of preparing food that produce a product of consistent quality, good
seating in the restaurant, the design of employees’ uniforms, the design of the
buildings and billboards, quality sources for supplies, the design of packaging, an
inventory of ingredients used in the preparation of the food, and management and
accounting systems. Vespucci, Inc. imparts its knowledge and experience to its
franchisees to assist them in developing a new business. Without the franchisor’s
guidance, the local restaurant owner is liable to make serious mistakes which
could cause the business to fail. Moreover, Vespucci, Inc. retains the right to
supervise and control the way in which the local franchisee is operating the local
VESPUCCI restaurant, so that the goodwill of the VESPUCCI mark and trade
name is maintained and the value of the local restaurant, indeed of the whole
system under which VESPUCCI restaurants are operated, is not reduced.
Vespucci, Inc. receives a financial benefit in exchange, in the form of a payment
by the local franchisee to Vespucci, Inc. That payment may include an advance
payment or “up-front fee” and some form of continuing payment based, for
example, on a percentage of the franchisee’s total sales. Payment in kind might
also be envisaged. In addition, depending on the nature of the agreement, the
franchisee may have a number of other payments to make for items such as
special food spices, rental of equipment (e.g. ovens, cutting machines, etc.),
purchase of consumable goods and miscellaneous articles necessary for his
business.
Case Study: Nando’s

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103. In the local Portuguese community in Johannesburg, South Africa, Fernando
Duarte and his friend Robert Brozin became partners to set up Nando’s in
September 1987. Nando’s is a fast-growing restaurant chain with over 200 outlets
across Africa, Australia, Canada, Egypt, Israel, Malaysia, Saudi Arabia, and the
United Kingdom. The company has developed considerable international
reputation and goodwill in its Nando’s name, which is readily and distinctively
associated with its fast food chicken outlets around the world, so much so that it
now owns an extensive international portfolio of registered trademarks
surrounding the word Nando’s. In October 2000, the group was ranked as South
Africa’s eleventh most global company in a survey conducted by Price
Waterhouse Coopers, providing clear recognition of the stature and presence that
the Nando brand has achieved in the international arena. The strength of the
“Nando’s” brand has also allowed the company to diversify into other sectors
which include Nando-branded retail products and merchandise. “We’re probably
one of the biggest non-American global brands in quick-service restaurants. A lot
of South African companies have bought global brands, but no one has taken a
South African brand and gone out to trade in the high street. That’s what we’re
trying to do,” said Mr. Brozin. In March 2000, Nando’s filed a cybersquatting
case with the WIPO Arbitration and Mediation Center under the Uniform Dispute
Resolution Policy (UDRP) applicable to generic top-level domains adopted by
the Internet Corporation for Assigned Names and Numbers (ICANN). The
respondent, a California resident, had registered the domain names nandos.com
and nandoschicken.com and offered to license or sell them back to Nando’s. The
administrative panel found the case in favor of Nando’s and ordered the registrar
to transfer the said domain names to the company21.
SAQ 7: Your company has a successful health spa business, operated under the name
“Body Well,” which utilizes special treatments and apparatus that consumers seem to
like. Due to the company’s success, management has decided to open additional health
spa locations, but has not yet decided whether to operate the new locations itself, or to
license the trademark to others who will own and operate the additional locations. You
have been asked to advise management on the legal issues relating to licensing, and
whether a simple trademark license or a franchising agreement would be preferable.
They have heard that a franchise is a license for a “system”, but they do not know exactly
what that means.
21
Sources: Nando’s International Limited and the Financial Times (London).

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§4.4 Character Licensing and Merchandizing
104. Character licensing is a common type of license, where a popular character from
a book or a movie is licensed to licensees who exploit the character in a different
business segment catering to the same customer base.
105. Broadly speaking, the term “character” covers both fictional human beings (for
example, Harry Potter, Tarzan or James Bond) or non-human characters (for
example, Donald Duck or Bugs Bunny) and real persons (for example, famous
personalities in the film or music business, sportsmen).
106. The main sources of fictional characters are:
 literary works (such as Pinocchio by Collodi or Tarzan by E.R. Burroughs);

 strip cartoons (such as Tintin by Hergé or Astérix by Uderzo and Goscinny);
 artistic works (such as paintings, for example, Mona Lisa by Leonardo da
Vinci, or drawings, for example, the panda of the World Wide Fund for
Nature (WWF));
 cinematographic works (such as King Kong, Rambo or E.T. with respect to
movies, Columbo with respect to television series or Bambi with respect to
motion picture cartoons).
107. As regards the primary use of a fictional character, it can in most cases be referred
to as an “entertainment function.” Such a character may appear in a novel, a tale
or a strip cartoon and the success gained by the work depicting the character
generally leads to new stories.
108. In other cases, the primary uses of a fictional character can sometimes be referred
to as “promotional, advertising and recognition functions.” This will concern, for
example, characters which are closely linked to a certain company (such as the
“Michelin Man”, the Exxon (Esso) tiger or the Peugeot lion), to a certain product
(such as the character Johnnie Walker to a Scotch whisky) or to a given event
(such as the mascots used to personalize Olympic Games or World Cup football).
Those characters are created with a view to popularizing legal entities, products
or services, and activities.
109. Character merchandising can be defined as the adaptation or secondary

exploitation of the essential personality features (such as the name, image or
appearance) of a character in relation to various goods and/or services with a view
to creating in prospective customers a desire to acquire those goods and/or to use
those services because of the customers’ affinity with that character.
110. The following examples of character merchandising can be given:
 a toy is the three-dimensional reproduction of the fictional character Mickey

Mouse;
 a T-shirt bears the name or image of fictional characters;
 the label attached to a perfume bottle bears the name of an actor or actress;
 an advertising movie campaign for a drink shows a pop star drinking it.

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111. As an organized system, character merchandising originated and was initiated in
the United States of America in the 1930s in the Walt Disney Studios in Burbank
(California). When this company created its cartoon characters (Mickey, Minnie,
Donald), one of its employees, Kay Kamen, established a department specialized
in the secondary commercial exploitation of those characters and, to the surprise
of most, succeeded in granting an important number of licenses for the
manufacture and distribution of low-priced mass market merchandise (posters,
T-shirts, toys, buttons, badges, drinks).
112. Character licensing and merchandising rely on the legal protection of the
attributes of the character itself. A number of intellectual property rights may
serve this purpose:
i) Copyright
113. Fictional characters (such as Mickey Mouse, Donald Duck, Pluto; but also
television characters played by real actors) may attract copyright protection in
various ways. At least in some jurisdictions, they may be protected as such, as
the sum of certain characteristics – appearance, disposition, habits, etc. – which
have been defined by their creator. Where provided, this protection combines
with the copyrights that may subsist in books, drawings, movies, photos, three
dimensional works (sculptures, dolls, robots) where the fictional character is
described, depicted, embodied.
ii) Trademarks
114. The essential personality features of a fictional character (e.g. name, and portrait)
may, under certain conditions (mainly of a substantive nature) be registered as
trademarks. As regards the essential personality features of a real person, the
question may be resolved similarly, as many national legislations allow the
registration of personal distinctive signs (i.e. name, portrait etc.) as trademarks.
However, considering that this conclusion does not hold true everywhere, the
adoption of nicknames, stage names and personalized logos (for example, in the
pop music area, such stage names as the Beatles and the Rolling Stones with their
respective “Apple” and “Tongue and Lip” logos) makes merchandising easier, as
stage names and logos are more easily registrable everywhere.
115. There are however some features of trademark law which may pose problems for
character licensing and merchandising.
116. In countries where rights only result from registration, the time needed to obtain
a trademark may erode the value of the character. As a matter of fact, the public’s
recognition of many characters and their popularity are of limited duration, even
if there are some notable exceptions such as the cartoon characters of Walt Disney
or the literary characters of Beatrix Potter.
iii) Industrial Designs
117. Industrial design protection is mainly relevant for cartoon characters represented
in the form of aesthetic designs for three-dimensional articles which mainly

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belong to the toy or costume jewelry areas (dolls, robots, puppets, action figures,
brooches, “pins”). The relevance of design protection will be of importance
notably when copyright protection is excluded or reduced in one jurisdiction or
another. Furthermore, since design protection is often subject to registration, a
design application will be helpful to establish prima facie evidence of ownership
as from the date of the application.
iv) Other Forms of Protection
118. Many countries have enacted provisions, either under general law (Constitution,
Civil Code, etc.) or under specific statutes, which enable a real person as such to
be protected against the unauthorized commercial or advertising use of the
essential features of his or her personality (name, pseudonym or nickname,
image, symbols, etc.) or a real recognizable person portraying a character against
the unauthorized commercial or advertising use of the essential features of the
character portrayed. Those rights will, in general, supplement the protection
which may be available within the scope of intellectual property in its broadest
sense (including marks, industrial designs, copyright, unfair competition). Such
protection may be achieved through the notions of defamation or libel, privacy
rights and personality or publicity rights.
Case Study: Harry Potter
Warner Bros. acquired worldwide merchandizing rights for the Harry Potter character in the
popular children’s book series by J.K. Rowling. Warner Bros. has in turn divided up these
license rights to various of its business partners/licensees:
- Hasbro will have the rights to develop and distribute trading cards and youth
electronic games.
- Competitor Mattel will make toys, another company has the rights to make
“interactive candy”.
- Electronic Arts, the California software entertainment company, is licensed to
make Harry Potter computer and video games, and Coca-Cola secured still other
rights relating to marketing of the first Harry Potter film.22
§5. Nation Branding

119. Another example of how brands can increase goodwill can be found in nation
brands. Like enterprises have been using branding techniques and strategies to
differentiate themselves and their products and services from their competitors,
countries are now doing the same. A good image and well-tended reputation can
boost a country’s competitiveness and attract customers (for example tourists) in
the same way as a corporate brand. A study suggests the rise of the “Brand State,”
in which a carefully crafted and well-executed nation-brand exercise may be
instrumental in more effectively taking advantage of a country’s unique culture.23
22
“The Harry Potter Phenomenon”, Interview with Nils V Montan, President of International Trademark
Association, Managing Intellectual Property, April 2001, p. 18 et seq.
23
Peter van Ham, The Rise of the Brand States, Foreign Affairs, September/October 2001, available at
http://www.foreignaffairs.com/articles/57229/peter-van-ham/the-rise-of-the-brand-state

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120. Defining the nation’s image is the initial step on the road towards nation branding.
Others include refining that image, promoting it, ensuring it is properly received,
and constantly updating and re-defining it in response to any relevant changes or
developments. Many nations have whole departments for this type of work, and
their results are measurable in terms of the increase in tourism, Foreign Direct
Investment (FDI), transfer of technology, balance of payments deficits or
surpluses, job creation, etc.24
121. Nation branding is the creation and establishment of an image of a country based
on positive and relevant values and perceptions. The nation brand embodies a
shared national vision of who and what the country and its people are, what they
represent, what the country physically looks like, and what it stands for. All
countries have a “country equity”, that is, an emotional value resulting from an
association with that country.25
122. The external perception of a country is also important: how does the world see
that country? All countries have an image in the world, sometimes referred to as
“reputational capital.”26 Understanding that image, refining it to serve the best
interests of the country, and effectively marketing the country through nation
branding, is happening every day on a global basis. Nation branding can also be
viewed as a layer of “value-added” to the quality, and the identification and the
perception of the nation and its goods and services; in that connection, the
creation and execution of a nation-branding process could become more effective
if government policies integrating IP aspects applied (e.g. registering national
brands, protecting GIs internally and promoting their protection abroad).
123. The benefits which are available from good policies and strategies of
governments relative to culture and creativity are not limited to the cultural
industries. The strategic integration of the IP system promotes innovation and
creativity in all industries and serves as a measurable stimulation for all domestic
individuals and enterprises who are innovators and creators.
124. In the global market, cultural and social aspects are playing an increasingly
important role in the decisions of consumers in choosing products and services.
For example, many consumers first consider the image perceived from the design,
outlook and name of a product, rather than the price. These social and cultural
factors can be seen as a value-added component of products and services, and
some of them can be capitalized as intrinsic to the value of the brand.
125. The process and benefits of successful branding are one of the best ways to keep
loyal customers, and thus enable providers with a sustainable and competitive
position in the globalized market. For entrepreneurs to be successful on a long-
term basis, such cultural and social elements should be considered, and factored
into the innovation and creativity of the producers and their products and services.
24
Kamil Idris and Hisamitsu Arai, Intellectual Property-Conscious Nation, Chapter 8, WIPO Publication 988,
http://www.wipo.int/freepublications/en/intproperty/988/wipo_pub_988.pdf
25
Philip Kotler and David Gertner, “Country as Brand, Product and Beyond: A Place Marketing and Brand
Management Perspective,” Journal of Brand Management, April 2002.
26
Juergen Gnoth, Leveraging Export Brands Through a Tourism Destination Board, Journal of Brand
Management, April 2002.

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126. The importance of reflecting cultural and social elements in the marketing of
products and services, and the enhancement of the brands associated with them,
is not limited to strategies of the private sector. Countries can also consider ways
to leverage their cultural heritage, by identifying, establishing and promoting a
“nation brand,” because increasingly sophisticated consumers are concerned not
only with quality and price, but also with the origin of the particular products and
services, and the culture behind them.
127. A recent interesting phenomenon has been the practice of nations using
trademarks and service marks, especially slogans and logos, to emphasize their
distinctive traits for purposes of attracting tourism, investment or political favor.
The slogan or logo is used to communicate the image that the country wishes to
project; the image is for a nation what a brand is for a commercial product. It is
said that a picture is worth a thousand words; certainly, a strong graphical logo
and a few words, repeated in international advertising, is worth a great deal in
terms of tourism revenues or other anticipated benefits.
128. As shown in the following cases, it is possible for the government to implement
trade promotion policies integrating IP into them which help companies in the
country to enhance their competitiveness and brand in the global market. In
return, the country’s brand could be boosted by good brands of certain companies
originating from the country. Here are some examples:
129. The Hong Kong Special Administrative Region of China “is where opportunity,
creativity and entrepreneurship converge,” and has marketed itself as “Asia’s
World City”.27 Portugal is “Where the Atlantic Meets Europe”.28 St. Lucia
branded itself as the best vacation spot in the Caribbean. When the tourists
responded, the Government successfully created linkages to St. Lucia’s garment
and fashion sectors.29 In the same way, Jamaica created effective linkages
between its strong tourism sector and its own garment and fashion sectors.30 In
2002, Poland’s Ministry of Foreign Affairs hired a consultancy to design a logo
for its nation-branding process centered mainly on the promotion of tourism and
trade, and ultimately came up with a red and white kite with the word “Polska.”
Such logos may be protected as certification marks and placed directly on goods
and used in conjunction with services, to represent the value of the nation and
guarantee the quality of specific products—a major benefit when dealing with
matters of exportation. New Zealand’s stylized Kiwi symbol has been carried on
many manufactured exports and was also adopted as a certified trademark by the
New Zealand Manufacturers’ Federation.31
27
Tjaco Walvis, The Branding of Nations, Stardust New Ventures, 2002.
28
Ibid.
29
From Conference Paper on St. Lucia, at Small States in Transition—From Vulnerability to Competitiveness,
organized by ITC, Port of Spain, Trinidad & Tobago, January 2004.
30
Ibid.
31
“New Zealand’s Experience with National Branding” presented at the Session 4 “Projecting Value: Is there a
Case for National Branding?” at The Executive Forum 2002 organized by the International Trade Center, at
www.intracen.org/WorkArea/DownloadAsset.aspx?id=51982 .

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Case study: The “Amazing Thailand” nation brand
130. In another example, the Tourism Authority of Thailand (TAT) adopted in the
2000’s a strongly marketed destination branding strategy under the slogan
“Amazing Thailand”.
In 2016, more than 30 million foreign tourists visited Thailand and it is an absolute
record for the whole Southeast Asia. Also, in 2016, Bangkok became the most visited
city in the world, 22.5 million people visited the city that year. Thus, Bangkok left
behind other globally recognized urban tourism, such as New York (19 million tourists)
and London (17.4 million).
131. A range of very successful branding campaigns has led to this success, including:
"Amazing Thailand", "Thailand: once in the life-time", "Thailand: great
invitation", "Unseen Thailand", "Thailand: Where Life Rules Everything" and
number of regional programs for the main resort areas of the country,
implemented for the most part since the early 2000s within the TAT portfolio.
SAQ 8: Can you think of your own country (or region) nation brand? Can you present
its characteristics, to which public it is intended and check if such mark is registered and
if so for what type of good of products or services?

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Additional Bibliography- Module VI
The participants in this course are assumed to be familiar with accessing publicly available
cases and case summaries. At the end of the session, the Academy would like to hear from
participants on how easy or difficult it was for them to access the cases below, which are
strongly recommended for this module.
 Guide. The Power of branding, UK Design Council

https://www.designcouncil.org.uk/news-opinion/power-branding
 Practitioners’ checklist. Trademark Due Diligence, Alan Blum and Patricia McGovern,
published by the International Trademark Association (INTA):
https://www.inta.org/GlobalTrademark/Documents/Checklists/Checklist_Due%20Diligen
ce--FINAL.pdf
 Article. 41 causes of brand failure, Derrick Daye, 2010

https://www.brandingstrategyinsider.com/41-causes-of-brand-
failure/#.XrIrSy2B124
 E-learning content. Trademark Licensing for SMEs (WIPO IP Panorama- Module 12)
https://www.wipo.int/export/sites/www/sme/en/documents/pdf/ip_panorama_12_le
arning_points.pdf
 Article. Tricks of the Trade(mark): An Introduction to Trademark Valuation, Scott

Weingust, Kevin McElroy, and Mac Hibler, 2017
https://www.stout.com/en/insights/article/tricks-of-the-trademark-an-introduction-
to-trademark-valuation/
 Website. The Place Brand Observer, Nation Branding Reading List for Students and
Researchers
https://placebrandobserver.com/nation-branding-reading-list/
 Article. Destination Branding as a Tool for Sustainable Tourism Development (the Case
of Bangkok, Thailand), Denis Ushakov, Maria Ermilova, and Ekaterina Andreeva,
Revista Espacios, Vol. 39 (Number 47) Year 2018
http://www.revistaespacios.com/a18v39n47/a18v39n47p09.pdf

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Module Summary
Module VI- Branding and Brand Management
What is branding? The concept of ‘brand’ is larger than the legal definition of a trademark,
though many brands are registered trademarks, there are some brands that may not be
registered. Generally speaking, a brand is a product, service, or concept that is publicly
distinguished from other products, services, or concepts so that it can be easily communicated
and usually marketed.
What we call ‘branding’ is the process of creating and disseminating such brand name. It is a
marketing practice in which a company (or a country in the case of nation branding) creates a
name, symbol or design that is easily identifiable as belonging to the company. This helps to
identify a product and distinguish it from other products and services. Branding is important
because not only is it what makes a memorable impression on consumers but it allows
customers and clients to know what to expect from a specific company.
Brand creation and development
Creating and developing a successful, sustainable brand requires some preparation, and a
good strategy. Choosing the right name, the right marketing campaign for a specific product
or company suppose that its core qualities and values are well known and that the brand
chosen is well aligned not only with these core values and qualities but also with the
objectives to be attained.
What constitutes a strong mark from a legal perspective is indeed quite different from what
constitute a strong mark from a marketing perspective and one of the challenges is to ensure
that the mark selected is both strong from a legal standpoint (in particular the mark must be
available and distinctive) and that its meaning conveys a message, is aligned with the
company reputation, values and business objectives.
Before opting for a new name, the following steps can be recommended: develop a strategy
and messaging; conduct a market research, brainstorm, create a short list of names, perform
trademark availability checks, refine the list and make a final selection.
Branded products that have successfully become global fall into three categories as follows:
- Products that represent tangible progress and supplant all other offerings for reasons
related to comfort, price, durability, reliability, and so on;
- Products that appeal to taste (food, fashion, and so on);
- Products that become global for reasons more directly related to the intangible
values expressed by the brand
There are 7 characteristics of successful brands: the audience knowledge/good understanding

of the market; the promise made to customers; the unique proposition of the brand; the
consistency and reliability; the brand story; the engagement and the authenticity.
Brand management and protection
Brand management is the process of managing your brand reputation and improving your
audience's perception of your brand in a way that builds brand awareness, equity, and loyalty.

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While branding is the process of building your brand, brand management is the process of
monitoring and maintaining it.
Experts of branding suggest some general principles of brand management as follows:

- Carefully select and protect your brand (through IP and most specifically trademark
protection and trademark portfolio management);
- Know the potential of your brand and treat it as an investment, not a cost (needs for
sufficient investment in advertising, marketing and new product development);
- Defend your brand in case it is at risk of losing its appeal and value (this include
avoiding a brand to become generic as well as enforcing trademark rights in case of
imitation, dilution or infringement);
- Exploit the financial potential of your brand (the brand expansion and exploitation
of the brand equity through co-branding, licensing and franchising);
- Understand that successful brand management nowadays is a complex task (brand
management requires a good understanding of how a brand contributes to the success
of a business and the creation of value) that requires time, constant care, a vision and
some consistency; and
- Honor your stakeholders (such as customers, employees of your company, your
shareholders and trade partners).
Trademark portfolio management and due diligence
A trademark portfolio typically contains multiple trademark applications and registrations in

several countries, for various classes or products or services as may be applicable. Further, a
trademark portfolio may be composed of various types of trademarks (word marks, semi-
figurative marks, figurative marks three dimensional marks, slogans etc.).
It is important to consider trademark portfolios in the broader environment of all IP assets of

a company, to properly docket renewal deadlines, need to establish use and any other factor
which may impact the trademark protection coverage (including territories as well as classes
and goods and services protected).
It is also important to keep a close watch on any activities that might have an effect on the
trademark portfolio. Studying competitors, possible similar products launched in the markets,
and trademark registries for possible oppositions, cancellations or revocations of conflicting
trademarks. Regularly monitoring rights and enforcing trademark against infringement is also
part of strategic trademark management.
Finally auditing trademark portfolios regularly provides many benefits. First, a well-managed
and updated trademark portfolio is an essential tool to protect the value of a company
brand(s). Many companies estimate the health and relative worth of their IP portfolios based
on size alone. However, those IP rights will be worth far less if the following checks and
balances are not considered: review of IP records for data accuracy; audit IP portfolio for
value and efficiency; put a timeline for health checks.
Due diligence is the process of analyzing information concerning a target company’s

trademark portfolio and assessing the risks, exposure and benefits associated with the
proposed transaction. When performing a trademark due diligence, the potential acquirer will
analyze validity and risks of the trademark portfolio and its impact on the strategic short and
long-term business goals. The results have a profound impact on the valuation of the mark

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and in case of a poorly managed trademark portfolio it will negatively impact the
contemplated transaction and the value of the portfolio.
Brand value and exploitation of brands
Determining a brand’s value has become essential in today’s economy and there are two
questions to be answered: First, what is being valued, the trademarks (narrower concept than
the brand as explained above), the brand or the branded business (which includes as well
tangible assets and human capital)? In other words, what is a brand value? Secondly, the
purpose for such valuation.
A brand value is the net present value of future cash flows from a branded product, minus the
net present value of future cash flows from a similar unbranded product -or, in simpler terms,
what the brand is worth to management and shareholders.
The value of a brand can be measured using different valuation approaches:
- A market approach which looks at the achieved "revenue premium" over non-
branded generic alternatives;
- An income approach which generally requires calculating and approximating the
income potential of a particular brand. The objective is to find each customer, the
customer's lifetime value and sum over all these current customers. One needs to
look at the rate at which the brand is gaining new customers and calculate a
valuation for the future customers using their projected lifetime valuations;
- A cost approach which consists at looking at the costs for obtaining/replacing a
brand (these costs including the trademark protection and advertising costs for
example).
Here are some examples of situations when brand valuation can be useful:
- Mergers and acquisitions;
- Licensing;
- Financing;
- Budget allocation.
Using trademarks as the linchpin of IP licensing
There are many different types of trademark licensing. Sometimes, there is a simple license
of the trademark, often for use in a different market segment than that exploited by the
trademark. On the other hand, a trademark may be only part of a larger licensing program for
a package of intellectual property (e.g. licensing the right to manufacture a pharmaceutical
including patent rights, rights to technical documentation, and rights to use the trademark
drug name in connection with its sale and distribution).
Trademark license agreements regulate how a registered trademark owner (the licensor) gives
rights to another party (the licensee) to use the licensor’s trademark. Usually the licensor
receives a negotiated royalty in exchange for such grant of rights.
Such relationship is usually advantageous for both parties. The licensor receives revenue for
the use of its mark without the expenses and risks of product manufacturing, marketing, and
sales. The licensee, in turn, has an opportunity to use the trademark without the expenses and
risks of research and development.

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In some cases, however, trademark licensing can produce unwanted outcomes. One downside
of trademark licensing is the risk of compromised quality especially when license is given to
manufacture, package, distribute and sell products or services without clear and well
enforceable quality standards. Brand equity can suffer tremendously from licensing if the
licensee does not meet the quality expected by the consumers. Other risks include
unsuccessful marketing efforts, or lack of trademark use which can lead to poor sales.
Co-Branding
Co-branding is a form of strategic alliance allowing complementarity between brands to

reach new customers or to reinforce, change perception of a brand’s image (ex: new
technology- see Intel Inside)
Franchising
Franchising is a different form of licensing as it involves a relationship that goes beyond the
grant of a license and includes a deeper relationship of control where the underlying business
is required to operate in accordance with designated systems and procedures.
The way franchising works is that the franchisee and franchisor conclude an agreement that
has several components, generally including terms concerning the purchase of equipment and
supplies, but always including a trademark license. The trademark license permits the
franchisee to conduct a business using the franchisor’s trade name, trademarks, trade dress,
methods, and procedures. In exchange for these rights, the franchisee pays a royalty and/or a
flat fee and agrees to conduct the business in ways that maintain the goodwill associated with
the mark.
Character Licensing and Merchandizing
Character licensing is a common type of license, where a popular character from a book or a
movie is licensed to licensees who exploit the character in a different business segment
catering to the same customer base.
Broadly speaking, the term “character” covers both fictional human beings (for example,
Harry Potter, Tarzan or James Bond) or non-human characters (for example, Donald Duck or
Bugs Bunny) and real persons (for example, famous personalities in the film or music
business, sportsmen). Character licensing and merchandising rely on the legal protection of
the attributes of the character itself. A number of intellectual property rights may serve this
purpose: copyright, trademarks, designs and other forms of protection (such as publicity
rights).
Nation Branding
Like enterprises have been using branding techniques and strategies to differentiate
themselves and their products and services from their competitors’ countries are now doing
the same. A good image and well-tended reputation can boost a country’s competitiveness
and attract customers (for example tourists) in the same way as a corporate brand.
Nation branding is the creation and establishment of an image of a country based on positive
and relevant values and perceptions. The nation brand embodies a shared national vision of

Version 2.0
who and what the country and its people are, what they represent, what the country physically
looks like, and what it stands for. All countries have a “country equity”, that is, an emotional
value resulting from an association with that country. Countries can also consider ways to
leverage their cultural heritage, by identifying, establishing and promoting a “nation brand,”
because increasingly sophisticated consumers are concerned not only with quality and price,
but also with the origin of the particular products and services, and the culture behind them.
A recent interesting phenomenon has been the practice of nations using trademarks,
especially slogans and logos, to emphasize their distinctive traits for purposes of attracting
tourism, investment or political favor. The slogan or logo is used to communicate the image
that the country wishes to project.

Version 2.0

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MODULE VI

Branding and brand management

1. Understand the concepts of branding, brand creation and brand management;

6. Explain several ways of establishing and enhancing a nation brand.

DL302 Module VI – page 1

5. Branding is a marketing practice in which a company (or a country in the case of

6. Branding is an essential tool and a key component of today’s market economy. A

§2. Brand Creation, Naming and Development

DL302 Module VI – page 2

DL302 Module VI – page 3

14. Step 1: Message and Strategy Development

15. Step 2: Market Research

A second, often overlooked, step is market research. Understanding the market,

16. Step 3: Brainstorm

Brainstorming is important step that should be an inclusive exercise. The best

DL302 Module VI – page 4

17. Step 4: Create a Short List

18. Step 5: Search Trademark Availability

19. Step 6: Refine List, Make Selection

DL302 Module VI – page 5

DL302 Module VI – page 6

26. Characteristic 1: Audience Knowledge

27. Characteristic 2: The Promise

28. Characteristic 3: The Unique Proposition

DL302 Module VI – page 7

29. Characteristic 4: Consistency

30. Characteristic 5: Storytelling

31. Characteristic 6: Engagement

Engagement is an often-overlooked characteristic of successful brands. Consumers are

32. Characteristic 7: Authenticity

DL302 Module VI – page 8

§3. Brand Management

36. Another important change is the gradual concentration of resources on fewer,

DL302 Module VI – page 9

§3.1. Trademark protection

40. In choosing a trademark, a combination of legal and commercial factors must be

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44. A brand is usually protected by several trademark applications which are

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49. Once a potentially infringing conduct is discovered, as a result of conscientious

50. Finally, auditing trademark portfolios regularly is an often-overlooked task by

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52. STEP 1: Review IP records and data for accuracy

The data in a trademark portfolio needs to be accurate and up to date. Inaccurate

 Which entity is recorded as the owner?

53. STEP 2: Audit IP portfolio for value and efficiency

54. STEP 3: Make routine checks at regular intervals

Completing an IP audit is only the first step in what should be a regular

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Case Study: Pallini

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(3) In today’s market environment, the tangible attributes of products, including

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 Licensing. As we will see in detail below, licensing of trademark assets can

 Financing. Companies will strong established brands obtain better financial

 Budget allocation. Determining a brand value will help management to