Trademarks are some of the most recognizable and valuable intellectual property assets in the world. In fact, trademarks surround us daily. Some of the most popular include Starbucks, UPS, Coca-Cola, Toyota, AT&T, Google, and many more. As you see, trademarks touch nearly all aspects of our lives. How we search online. What we drink. The type of phone service we use. The kind of car we drive. And so much more. Without these trademarks, companies and their products would all blend together, making it difficult to determine which products to buy as consumers. But what really makes trademarks so valuable?
1. Recognition. Trademarks help consumers recognize companies and their products. For instance, much of the population around the world recognizes the golden arches that signify a McDonald’s restaurant. Without the golden arches trademark, McDonald’s would not stand apart from other burger joints. Such recognition cuts down on marketing costs as consumers are more likely to purchase from a trademark or brand they are familiar with.
2. Protection. Trademarks provide explicit protections for brands, slogans, logos, and other similar items. This means that other companies cannot mirror or use these trademarks without paying a penalty. There are no statutory limitations for the life of trademarks, as there are for other types of intellectual property such as patents and copyrights.
3. Positive cash flows. As mentioned earlier, trademarks provide recognition. In turn, this gives companies the ability to reap more benefits as consumers are likely to buy products of recognized brands over generic options or those that are not as well recognized. For instance, consumers are more likely to buy a particular brand of cereal over a generic version, even if the ingredients and tastes are similar.
4. Communication. Trademarks are a great way to communicate to the public. Companies that market well using their trademarks gain the most recognition. For instance, Apple has done a remarkable job of marketing. If it had not marketed its products as well as it has, consumers would not be able to differentiate the technology company versus the fruit. It has done so well that a search online will bring up the technology company before it will the fruit. In the scheme of things, the word “apple” doesn’t naturally conjure up images of technology. The natural image would be the fruit. However, the technology company has done such a superb job of associating its name with its technological products that many people today automatically associate the word with the company and its products.
5. Versatility. Trademarks come in many forms. They can be slogans, logos, business names, phrases, symbols, designs, or images. Even some sounds are trademarked. Therefore, a company can utilize a variety of trademarks to gain traction in the market.
As you can see, trademarks provide many ways that companies can bring value to the market. So much so that the market has valued many brands at literally tens of billions of dollars. Icons such as Coca-Cola, Marlboro, or Nike’s swoosh all represent brands that command a market premium, despite seemingly nonexistent or minimal functional differences among nonbranded products.