‘Strong’ trade marks, ‘strong’ brands: what do we mean?

When we refer to a ‘strong’ trade mark, or a ‘strong’ brand, what do we mean? Given the ease with which both practitioners and academics use the term ‘strong’ as they glide between trade marks and brands, the question is not trivial. There is a long tradition of interpretation regarding the meaning of the same word when it appears in related contexts. Two thousand years ago, the Jewish Rabbis developed the principle of ‘similar laws, similar verdicts’. The basic idea was that when the same term appears in two different contexts, it should be given the same understanding, thereby enabling a degree of unified meaning. How does this principle fare in our situation?

There is a plethora of definitions of ‘brand’ (not a statutory term). A representative definition is offered by Michael Freno:

‘[T]he brand comprises all publicly identifiable knowledge associated with a particular product, service or company. The trademark is just the legally protectable portion’ (‘Trademark Valuation: Preserving Brand Equity’, (2007) 97 The Trademark Reporter 1056).

From this definition, we see that a trade mark is only one component (albeit a crucial one) of a brand. Trade marks are not identical to brands.

Against this background, consider the familiar (at least in U.S. practice) four-fold classification: generic, descriptive, suggestive and arbitrary/fanciful marks. Lying at the root of this continuum is not trade mark strength but distinctiveness. Consistent with the statutory foundation of trade marks, the underlying question is whether the trade mark serves as a source indicator, i.e., is it distinctive? It is distinctiveness that is the prerequisite for legal protection.

As for the strength of a trade mark, William Landes and Richard Posner have described its role as follows:

‘[t]he more resources the firm spends developing and promoting a mark, the stronger will its mark be and the lower consumer search costs will thus be: so the firm will be able to charge a high price’ (‘The Economics of Trademark Law’ (1988) 78 TMR 267, 277).

As such, strength provides a commercial benefit, not a legal one, inasmuch as a distinctive mark needs not be a strong mark. It is true that distinctiveness may also be acquired by use. However, when we say that a mark has acquired distinctiveness, we do not make any implicit statement about the strength of the mark. We are simply saying that, by virtue of certain indicia of use, the mark has become a source indicator.

Moving from the traditional trade mark situation, two further trade mark-related circumstances warrant discussion. The first is passing off, which is based on whether the mark has acquired sufficient goodwill to protect it against misappropriation. Goodwill, not strength, is the issue. The second is whether a mark is ‘well-known’. Here as well, the prerequisite for finding that the mark is a well-known mark is distinctiveness, ie, whether it is legally protectable. Only if the mark is distinctive, we move to a consideration of trade mark strength and evaluate whether the mark is well-known. If it is well-known, the mark will provide protection beyond source confusion (against dilution and tarnishment) and will thereby be potentially more commercially valuable.

Regarding brands, the consideration focuses on brand equity, where the trade mark is merely the legal portion of the brand. David Aaker has identified five parameters for brand equity: (i) brand loyalty, (ii) brand awareness, (iii) perceived brand quality, (iv) brand associations, and (v) proprietary assets (ie, IP rights). Brand equity provides value both for the consumer and the brand owner. Based on these parameters, brand equity is used to determine the strength of a brand, which is a major factor in assessing the brand’s commercial value and its potential for supporting product line extensions and product innovation (see D. Aaker, Managing Brand Equity (Free Press, 1991)).

Against this backdrop, we circle back to the principle of ‘similar laws, similar verdicts’, and the extent to which one can identify a common meaning for ‘strong’ trade marks and ‘strong’ brands. For trade marks, strength does not impact on the protectability of a mark but primarily on whether the mark is providing particularly valuable information for consumers, which can be monetized by the trade mark owner. For brands, strength arises in connection with brand equity, which is ultimately determinative of the value of the brand. It follows that the primary significance of ‘strength’, both in a ‘strong’ mark and a ‘strong’ brand, relates to the value of the mark in the marketplace rather than to its legal status.