IP and Retail Conference: Part I

Today's the day of CLT's IP and Retail Conference, hosted at Holborn Bars, Central London (right).  Opening the programme, barrister Jackie Reid (11 South Square) reviewed the notion of choice of name: what are the criteria for choice and why do names work, whether for goods or services, she asked.  The addition of descriptors to wholly distinctive terms was often advisable, to lead the consumer to an understanding of what the name applied to (eg INFINITY + FOODS). Offensive connotations are well avoided in most situations, unless the shock value makes the name more attractive to the target audience. Such connotations may also lead to difficulties in securing trade mark registration, though marks which may allude to concepts that may offend some consumers (for example references to genitalia) will generally be registrable, eg DICK AND FANNY.

A good name will also match consumer expectations and be memorable (unless it's for pharmaceutical products, in which it will be polysyllabic, unpronounceable and contain at least one X).  Consumers need education in appreciating and remembering a mark -- but education costs money and coming up with a highly distinctive word makes this process easier and distances the brand from its competitors. Sometimes choice of a descriptive name can be highly effective, bearing the market in mind, for example COST-CUTTER for shops selling low-priced products. Translation of names when they enter new markets is another topic to consider, since not all brands work well in other languages, Jackie reminded us.

In a masterly summary of the peaks and troughs of IP law as it applies to retail shop names and shop-fronts at both EU and UK law, taking due note of CJEU rulings and pending references.

Jackie also gave us a case study involving betting shops, contrasting betting shops (with brands usually based on a person's name: William Hill, Ladbrokes, Paddy Power) with online betting services (with catchy words containing "bet"). Names have problems of their own: not being unique, they are vulnerable to uses by others who seek to rely on the "own name" defence -- and traders who register and then sell their names may try to regain their use.

What then would be a good name for a betting shop? Jackie posed this question and sought suggestions from the conference registrants on the basis of her overview of the legal and commercial parameters. Suggestions included JACK POTT, BET WARRIOR and (from Jackie herself) ALPHA BET -- which had the advantages of being distinctive, of containing a positive allusion and of coming ahead of almost everything else in the alphabet, with the possible exception of AARDVARK BET.

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Next to speak was Nigel Parker (Allen & Overy), who examined procedures for turning retail business models into money.  The paradigm taken by Nigel was that of the retail supply chain for Kindle readers and the content that people read on them: profits as both a manufacturer and as a retailer can thus be reaped. Kindles are sold online, as well as through high street stores, so Amazon plays the role of distributor too, while retaining control of its intellectual property.   Kindle's operational structure is highly tax-sensitive, with the company's European operations being based in Luxembourg, as indeed is that of retail group Arcadia, owned by the wife of Philip Green; she's a citizen of Monaco and is subject to that principality's highly benign tax rates.

Licensing or division of brands is also a good means of cashing in on their goodwill. The licensee bears the expense of manufacture and marketing, with the accompanying risk; the licensor bears a risk too: the risks that a licensee may damage the goodwill or under-exploit the licensed brand.

Securitisation and borrowing money against the borrower's IP assets is now standard practice in the retail sector, said Nigel.  Often the IP represents the most significant slice of asset value, allowing the retailer to acquire more debt. A recent example of a business borrowing heavily on its IP assets is Toys Я Us.  Lenders may make securitisation depend on the borrower's continued investment in its brand.  Other examples of IP securitisation in recent time include Dunkin' Donuts and Dominos, franchisors that borrow against their franchise income.

Turning to franchising, this is the best-known and popular means by which the developer of a retail business can generate profit from a brand, again taking advantage of the fact that the licensee (franchisee) provides its own capital and has to keep paying franchising fees and a proportion of the franchisor's operating costs.  Fast growth while retaining control is another major attraction. Loss of control on the part of the franchisor can however damage the brand, and a large amount of know-how -- plus the franchisor's business model -- inevitably are exposed to the franchisee who may later become a direct competitor. Quality control and pricing are also fundamental.