By Paul H. Beattie
Somewhere in the suburbs of Seattle, never mind where exactly, there is a little bakery called FRIAR ANGELINO’S. It makes the best bread imaginable – a circle of sourdough, with a flaky outer crust and a warm, spongy interior. Above the entrance is an old weather-beaten sign creakily swinging with the Seattle breeze. The sign depicts a rotund, smiling monk, with a bottle of wine in one hand and a round loaf of bread in the other. Not long ago, an investor approached the owner. A deal was struck, and now FRIAR ANGELINO’S bakery franchises are springing up throughout the Pacific Northwest. The loaves of bread have also begun appearing in supermarkets, wrapped in simple brown paper bearing the bakery’s trademark — the name FRIAR ANGELINO’S and a picture of a fat, smiling monk.
Customers are buying the bread. They see the name and the picture of the fat monk, and they buy. They buy because they know all the loaves come from the same source and are of the same high quality. They buy because they want that particular kind of bread, not some other kind.
The owner is pleased. In addition to his little bakery and his wonderful recipe for bread, he now has a valuable trademark. He can put the smiling monk and the name FRIAR ANGELINO’S on any bakery product, and thousands will try it because of the quality they associate with the trademark. He can also sell or license the trademark to others he likes and trusts – others with a taste for quality. That picture of the smiling monk, together with the name FRIAR ANGELINO’S, is now worth quite a bit more than the ancient, vine-covered stucco and brick building where he opened his first bakery at the age of 31 when he first emigrated from Trieste.
This apocryphal allegory reveals one of the best-kept secrets of commercial law: the potential value of a good trademark for small businesses. A trademark is any word, name, symbol, device, or combination of these things, that is adopted and used by a business to identify its goods and distinguish them from those of its competitors. The smiling monk in combination with the name FRIAR ANGELINO’S is an example of a trademark. The name or picture alone might also be a trademark. I even once got a trademark on the color blue for oil filters.
Trademarks serve several functions. First, they identify a business’s goods and distinguish them from those of its competitors. Second, they signify that all goods bearing the trademark come from, or are controlled by, the same commercial source. Third, they suggest that all goods bearing the mark will be of the same quality. Finally, they act as powerful marketing tools, stimulating demand for goods labeled with the trademark.
Used to advantage, the trademark emerges as one of the most powerful and inexpensive legal devices available to business. A trademark can become the repository of all the consumer goodwill developed during the life of a business. If, for example, the Coca-Cola Company were suddenly to lose all its tangible assets, it could borrow billions on the strength of its trademarks alone. In some sense, the value of a trademark is a storehouse of both the creativity of the conceiver of the mark and of all the commercial good-will invested over time in the mark.
Neither is the value of trademarks limited to large companies. Registering a trademark typically costs less than $5,000, and limited common law trademark rights can accrue to a business before a trademark is even registered. Reduced to its essence, a trademark is simply the symbolic embodiment of a business’ commercial identity. And any business, small or large, can benefit from strengthening its commercial identity.
A future article by Paul H. Beattie will explore the factors a business should consider in selecting a trademark.