“If Coca-Cola were to lose all of its production-related assets in a disaster, the company would survive. By contrast, if all consumers were to have a sudden lapse of memory and forget everything related to Coca-Cola, the company would go out of business”

This famous quote, by a Coca-Cola executive, succinctly sums up how valuable a brand name can become and the implicit value of registering a brand as a trade mark.

There are many benefits of owning a trade mark registration. Not only does it make it easier and less costly to enforce your rights against infringing parties but your trade mark is also, legally speaking, an asset which acquires value through use and, if registered, becomes a tradable commodity. It can be pledged or hypothecated, for instance, to secure finance from a bank.

More importantly, perhaps, a registered trade mark can be sold like any other asset of a business. An unregistered trade mark cannot be sold separately as it forms part of the goodwill of a business and must therefore be sold as part of a going concern.

A practical example: local Company A has been trading in South Africa for a number of years under the brand X and has registered X as a trade mark. International Company B, which has used the X trade mark in other countries in relation to the same services provided by Company A in South Africa, wishes to enter the South African market. However, doing so would result in an infringement of Company A’s trade mark. Company A can sell its registered trade mark to Company B and can simply continue its business under a different brand.     

Brands can be valued according to different models and, based on such a valuation, a registered trade mark can be reflected as an asset on a balance sheet.

In the words of Jeff Bezos, founder and CEO of Amazon.com, "A brand for a company is like a reputation for a person. You earn reputation by trying to do hard things well". Making a small but wise investment now by registering your brand as a trade mark will yield a tradable asset with its own value.

Written by Kareema Shaik (associate) and Dale Healy (partner), Adams & Adams