Best practices for trademark use are not carved in stone but it’s critical to ensure that brand policies are appropriate for a company’s particular circumstances.

It is essential to the successful entry of any business into another jurisdiction that it identify early on what brand and image it wants to convey in the new marketplace to differentiate itself from its competitors and avoid potentially embarrassing and costly litigation. There is no universally accepted definition of what constitutes a “brand,” however it can be one of the most important assets of a business. From a legal perspective in Canada, a brand is virtually synonymous with a trademark. Like a mark, a brand can be a name, a word, a symbol or a combination thereof used to identify the products and/or services of a seller and to distinguish them from those of its competitors. A brand is the identification of the source of the product or service. 

The four key components of a brand are: the brand name and/or logo; the product and its shape; the packaging; and the image and associations or values of the product or service. 

The key to successful brand positioning is brand differentiation. This is analogous to the concept of distinctiveness under trademark law. The more distinctive a trademark, the more recognizable and valuable it becomes. 

Brand image is obviously highly subjective. The image is the consumer perception of the brand’s attributes and associations that derive symbolic value. A brand is a proxy to the quality, price, and other attributes of the particular product or service. 

Brand equity is often referred to as the value attributed to a brand. It is a function of the recognition and recall factors of the particular trademarks involved as well as the image and public perception of those marks. Brand equity is typically accounted for as goodwill on the balance sheet of the organization, however business valuators have developed specific techniques to determine the economic value of trademarks. 

Brand extension is a term used in reference to adding products and/or services to existing ones. It can also be used in connection with a business expanding into new geographic markets. Brand extensions, if successful, add value to brand equity. But if they’re unsuccessful, they dilute or diminish such value. This is always a factor when foreign businesses enter the Canadian marketplace. 

Another branding concept is hierarchical branding. Within large organizations, marketing and sales experts will develop brand hierarchies to differentiate between the organization, its direct and indirect businesses, and its products and services. For example, you may have a corporate brand at the top of the organization with divisional or subsidiary brands underneath. Furthermore, within the product and services delivery, you could have national brands and private-label brands catering to different consumer segments. In essence, these various brand hierarchies are merely different trademarks used for different purposes. 

A related concept is co-branding, where two brands are used together to leverage unrelated businesses and create synergies. Under trademark law in Canada, both participants to co-branding campaigns should execute co-licensing agreements to enable each to use the other party’s trademarks while maintaining adequate control over their own trademarks. 

Under Canadian law, a strong trademark is one that uses invented or coined words that have no meaning in relation to the wares or services in association with which they are to be used. Such coined trademarks are more easily registered and enforced. Other examples of strong trademarks include dictionary words (having no meaning in relation to the products or services to which they refer), designs or logos, and trademarks that include letters or numbers. 

Weak trademarks typically contain descriptive elements. They describe the character or quality of the goods or services. It is unlikely that these trademarks ever become distinctive, regardless of the extent to which they are used unless they acquire a secondary meaning in the marketplace and hence a sufficient degree of distinctiveness. They are generally difficult to register and enforce. 

A fundamental part of the new market penetration process (like new brand selection) involves appropriate trademark searches. These searches, which assess availability and registrability, help to prevent premature expenditures toward promotional campaigns that may lead nowhere. Therefore, although a search is not required by law in Canada, it is generally accepted that appropriate searching is a prudent and cost-effective investment. Depending upon the needs and resources of the business and its particular market circumstances, different searches may apply. 

If the trademark is also going to be used in Quebec, a search may be advisable for the translated version or official language equivalent of the trademark. There is a risk that an English-language trademark could be considered to be an infringement of the equivalent French-language trademark covering the same wares or services. 

The use of trademarks in brand advertising or on packaging gives rise to a tension between legal and marketing issues and necessitates a delicate balancing of notice and appearance considerations. Marketing considerations may conflict with, but should not override, legal considerations. Brand experts strive for a trademark that is short, easy to remember, easy to read, and easy to pronounce. Its ability to be translated and to be used cross-culturally in the global marketplace is also an important factor. 

Typically in Canada, registered trademarks are identified with ® and unregistered trademarks are identified with TM. This can be varied if, for example, the advertising or packaging is to be used in the Quebec. The usual bilingual form that is used is “TM/MC” (trade-mark/marque de commerce) for an unregistered mark and “TM/MD” (trade-mark/marque deposée) for a registered mark. Even ® may be inappropriate in Québec because it is an English-language symbol. It may be more appropriate to use both ® and an E (for “enrigistrée”) in a circle or even ®/MD. 

Whether any of these symbols are used depends on the owner’s preference, the medium used, and the impression to be created. Sometimes an asterisk is used to avoid clutter in a simple or stylized logo. The asterisk puts the reader on notice and refers her or him to a license reference, caution statement, or any other disclaimer. If the trademark is advertised under a license, notice must be given of that fact. This is typically accomplished using an asterisk or other symbol referencing the reader to some statement on the packaging or in print advertising. 

Other customs have evolved in relation to the appropriate use of trademarks. This is the case in both Canada and the United States. By following a few basic rules of proper usage, trademark owners can maintain and increase the value of their brands: always use your trademark as an adjective, not as a noun or verb; never use your trademarks in the plural or possessive form; use your marks only in connection with their approved product or service; use the ™ symbol on all your marks or the ® symbol if your trademark is registered; use distinctive type or font to differentiate your trademark from surrounding text; never abbreviate or alter the spacing of your mark; never change the spelling or type form or graphic elements of your trademark; and include trademark notices when using them in advertising and packaging. 

These “best practices” for trademark use are obviously not carved in stone and may vary from product to product or service to service, especially where licensing occurs. There are a wide variety of trademark usage guidelines available on the web for practical guidance, however care must be taken to develop brand policies and trademark usage guidelines that are necessary and appropriate to each company’s particular circumstances. 

Brands and trademarks identify the goods or services of a particular business and can become extremely valuable assets. Therefore it becomes critical to ensure that trademarks are properly selected, registered, and policed to safeguard their inherent economic value. A trademark can often become the most valuable form of intellectual property a business owns. In Canada, as in the U.S., by using the mark properly and diligently, and by policing its use on a consistent basis, the owner can indefinitely preserve the rights and goodwill associated with the trademark and the brand at relatively little cost.

Marc J. Belliveau is a partner with the legal firm Stewart McKelvey and practises in securities, intellectual property, corporate, and commercial law. He can be reached at mbelliveau@smss.com

.