In an increasingly-competitive business world, it is of utmost importance to establish a strong brand name. Global brand presence highlights one’s business activities in regional or global markets, making product/service sales scalable to accommodate broader consumer reach. In order to build sustainable IP value, innovation and design need to be synergistically leveraged in strategic marketing campaigns to sustain competitive advantage. Different forms of IP (typically starting with trade secrets and utility and design patents during the early years of innovation and growth, and transitioning to trademarks during product maturity) are used at different stages to build sustainable brand equity through a time-paced execution strategy – foundational elements of a successful IP strategy.
The value of a trademark derives from several overlapping benefits, from providing legal protection for one’s efforts in making a mark recognized, and deterring others from exploiting a mark, to conferring a quality assurance to consumers, who in turn choose one’s products or services over others based on the recognized brand that backs such offerings. Imitation may be the sincerest form of flattery, but when a company finds blatant copycats riding the coattails of their success, it may be too late to prevent price and market-share erosion by building up a brand name at that point.
Unlike patents or copyrights that can be in force only until their limited expiration date, marks can last forever. Beside the brand name itself, the registered stylization elements that outline a mark’s name further serve as indefinite forms of competitive edge. A mark can either have “inherent distinctiveness” (meaning that it is unique enough to earn customer recognition on its own), or “acquired distinctiveness” (sometimes referred to as “secondary meaning,” which means customer recognition develops over time through continued use). Intellectual property firms specialize in assessing the strengths and weaknesses of these issues for a desired mark.
Constructing a balanced IP portfolio, to implement a comprehensive IP strategy, needs to include sustaining competitive advantage as a key performance measure of the overall plan. Sustainability means factoring product and process technology lifecycle into the strategy-formulation process. As products advance from invention to maturity, different forms of IP acquire greater (and lesser) importance at the various stages in the lifecycle. With proper branding campaigns, this can apply to process technologies as well (such as Intel’s “Intel Inside” campaign).
A valuable concept in leveraging the balance of IP for sustaining a desired economic effect (meaning high rents) is to capitalize on the economic benefits of any given form of IP at its value-generating peak. Furthermore, by creating appropriate linkages between the different forms of IP, such benefits can be further leveraged at the next stage of advancement through the dominant IP instrument associated with that stage. Such a concept is referred to as value transference.
Nermien Al-Ali, in her book on Comprehensive Intellectual Capital Management: Step-by-Step, provides further insight by noting:
Value transference strategies can be used in conjunction with ‘build a fortress’ strategies to lengthen the business life cycle of a primary form of IP, and hence preserve as long as possible the competitive position. It involves investment in secondary forms of IP near the end of the business life cycle of the primary form … For pharmaceutical companies, the expiry of a patent is followed by a major drop in the sales of the patented product, sometimes reaching 80 percent. Investing heavily in a trademark/brand, however, near the end of the patent life cycle (whether legal or business) can save a considerable market share (e.g., in the case of Zantac).
As Al-Ali puts it, the goal of the strategy is “[m]arrying the two forms of IP in advertising and marketing … to transfer value of patents to trademarks/brands near the end of the patent legal term or business life cycle, transferring value from technological superiority to brand equity.”
James Conley, from the Kellogg School of Management’s Center for Research on Technology & Innovation, performed a “teardown” study of the evolution of the Apple iPod and the incorporation of design into Apple’s IP strategy. (Apple continues to utilize this strategy to secure effective monopolies on designs.) In Conley’s essay entitled, “Trademarks, Not Patents: The real competitive advantage of the Apple iPod,” Conley details Apple’s effective use of value transference, and emphasizes the importance of the interplay detailed above.
… some firms know how to build brand identity through great design, and they understand how to leverage and secure critical design elements and cognitive touch points of the user experience through non-traditional marks. In the process, they build strong, transferable brand identity throughout the product lifecycle that can be leveraged in future offerings.
This has led us to consider the possibility that the cognitive touch points of the user experience can be reconciled – and secured or monopolized – as unique brand elements through non-traditional marks. Marks, unlike patents or copyrights, never expire if used properly. Registered design elements that serve as a brand foundation are therefore indefinite forms of competitive advantage.
Value transference, in a nutshell, is the premeditated use of multiple intellectual property regimes at specific points across the product lifecycle, in order to realize sustainable differentiation. This is typically achieved by using patents early in the lifecycle to secure functional differentiations – such as new combinations of storage or battery technology (utility patents), and/or unique ornamental attributes (design patents). But while the focus of the functional differentiation remains unique at or near the launch of a new product, it is not sustainable. While a company has this advantage, however, they’ll want to build an association between patented aspects of the offering, and a non-functional cognitive touch point of the user experience. The critical design elements central to the cognitive touch point (shape, color, sound) are then secured with a registered trademark.
Conley names several examples of successful implementation of value transference in which patented products were outlived by their flagship brands such as “the Dolby name in consumer electronics, the NutraSweet red swirl in food ingredients, the Purple Pill (Prilosec and Nexium) in pharmaceuticals, Legos and Barbie in the toy market, and the shape of the Nintendo game boy or the original game controller.”
An important point in mastering such a marketing strategy is to cater to the strengths of the various forms of IP simultaneously. As an example, Conley points out that when AstraZeneca launched Nexium, they incorporated the tagline “Today’s purple pill is Nexium” in all their ads, and made their website address “purplepill.com” lead to a site motif infused with a purple color scheme in order to build and reinforce secondary meaning. Owens Corning used a similar approach in their 1970’s advertising campaign that used The Pink Panther as an identifier for their fiberglass insulation. The pink color of the product has no functional use other than to convey secondary meaning in signaling the brand to the consumer.
FlashPoint IP, a leader among intellectual property firms, provides all types of professional trademark searches for registered and unregistered marks worldwide, as well as national and international trademark registration. We assist in the candidate selection process of brand names to maximize IP value and protection. Contact us to discuss your options regarding IP strategy and positioning, and to find out more about FPIP trademark filings. On Your Mark, Get Clearance, Go!
