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Insights

Direct Selling Alert

Brand Protection

| Published by Rohan Harris, Craig Subocz, Stephanie Quatela

Put yourself in these shoes…

You run an entrepreneurial and successful direct selling business and have developed a new product. Based on your market research, you’re confident of success. You’re concerned that your success may inspire a wave of ‘copycat’ products in Australia, including by some of your independent salespersons (ISPs).

So what should you do to protect your new product? 

A robust brand strategy can assist in protecting the ownership of intellectual property in your new product and how it is marketed and promoted.

Copyright rules

Copyright protects the original expression of ideas against unauthorised exploitation. It applies to original literary (including software, newsletter articles, emails, manuals, product instruction sheets, etc), artistic works (including photographs, drawings, etc), and other works (including audio-visual recordings).

Typically, the author of the work owns the copyright, unless the author is an employee (in which case, the employer owns the copyright) or the author assigns copyright to a third party.

Importantly, copyright does not apply to a single word or a new marketing tagline, because they are generally too short. Brand names and marketing taglines usually can only be protected as registered trade marks.

If your business engages a third party to develop something creative (e.g., a new logo to market the product) or to produce collateral for marketing materials, the contractor will own the copyright in those items unless the contractor assigns the copyright to you.

Additionally, as independent contractors, your ISPs will own the copyright in the materials they produce to help sell your new product to their customers.

Copyright owners have exclusive rights under law, including the right to reproduce their work. The owner is entitled to damages and injunctions for copyright infringement.

Accordingly, you should ensure that:

  • when you engage a third party to create works for your business, your contract contains clear provisions regarding the ownership and use of these creative works;
  • your employees are aware that the works they create for your DSO are owned by the DSO;
  • you either license or acquire from your ISPs the copyright in materials they produce to help sell your products;
  • where you own the copyright in your marketing and other materials used to promote your business, your products and your opportunity, you clearly assert copyright ownership, using the “©” symbol.

Trade marking it

In Australia, a trade mark is anything that distinguishes a particular product or service from other products or services.  A trade mark can include a brand name, a logo, a picture, a sound, a scent, a movement, a tagline or phrase.  In the direct selling world, ISPs often use a corporate ‘trade mark’ in the running of their businesses.

Trade mark owners have exclusive rights to use their registered trade marks to promote the goods or services for which the trade mark is registered. This means that your business is entitled to damages and injunctions where the trade mark is infringed could use a registered trade mark to prevent others, including ISPs, from using a trade mark for the goods and services for which it is protected. 

It is not compulsory to register a trade mark, but if you do not register a trade mark, you must prove that your trade mark is associated with your business so strongly that people who see a confusingly similar brand would think that goods or services supplied under that brand come from your business or are approved by your business.

A registered trade mark is also an asset and adds value to your business.  Registration acts as a deterrent to any third parties who plan to use the trade mark by giving the owner of the trade mark the right to restrain actual or threatened unauthorised use of the trade mark or confusingly similar marks.

Further, a registered trade mark can be lodged with Australian Border Force to help restrict the importation of counterfeit goods.

Accordingly you should ensure that:

  • any brand and trade mark developed for your new brand is checked to ensure it does not infringe any registered trade mark;
  • any trade mark used by the business is registered under the trade mark regime;
  • any contract governing the relationship between ISP or employee with the business explicitly states that the business owns all trademarks and that the ISP or employee are granted a non-exclusive and non-transferable licence to use the trademark for the purposes of that contract;
  • any styling assistance that you enlist in developing your trade marks are closely monitored to ensure that the appropriate trade marks are registered under the trade mark regime;
  • consider whether it is useful to lodge your trade marks with Australian Border Force if you’re concerned about the possibility of counterfeit goods being imported into Australia; and
  • where your trade marks are registered, clearly assert the fact of registration, using the “®” symbol (make sure you don’t use this symbol on any unregistered trade mark).

Regardless of whether your business is small, medium or large, it is imperative that you account for brand protection in the business.

For further assistance regarding brand protection strategies, please contact Rohan Harris, Craig Subocz or Stephanie Quatela