Intellectual property is an area that local companies have neglected for a long time, excuse often being-it sounds like an unnecessary expense that we cannot afford. Industrial and intellectual property is often viewed by many businesses as the least of their priorities. It been left as a foreign subject, obscure and technical mystery, often viewed as the preserve of technical specialists and a handful of corporate lawyers. Question is, if goodwill is on the balance sheet as intangibles, why can’t trade marks, formulas, trade secrets, trade names, valuable confidential business information from customers lists to sales tactics or business methods, business tactics, creative designs, improvements on products, software and all these intangibles be missing from your balance sheet?
Do you realise that these intangible assets are as good as your brick and mortar, if not better, because of the value that is that is derived by these assets. If Coca Cola’s main factory in Atlanta was to burn down, destroying the plant and equipment-it still knows it holds 13 or so billion dollars in its brand equity and would still have a positive figure on its balance sheet, regardless of the mishap.
I would name a few companies-listed on the Stock Exchange whose main constituents are nothing but brands! These brands being trade marks…According to Delta Corporation’s 2016 results, it has almost $3 million of intangible assets arising from well-known brands such as Chibuku, Zambezi, Mazoe, Shumba Maheu etc. It is without doubt that without its brands, the company would not be able to achieve its exponential beverage sales. The brands give a unique identity to their products and through decades of advertising and marketing their brands, they have garnered brand followers which ultimately translates to sales. All these brands are trade marks which give Delta the exclusive right to exclude other companies from using similar identities of those products in the Zimbabwean market or any other market they protect their rights in.
Despite this reality, you will be surprised that many other well-known Zimbabwean grown, traditional brands are not even registered as trade marks. Meaning, a company from outside or even some cash seeking local person, known internationally as a trade mark troll, can dash to the trade mark office and apply for those rights and own them! Despite use or even though you have been trading for a long time in that market. The story is simple-registration of intellectual property rights is on a first come first serve basis. It is easy to lose all that your business is by not paying attention to protection of these legal rights. Companies end up spending a huge chunk of their budget in litigation, trying to save themselves from these “unscrupulous”, briefcase entrepreneurs, as they are casually known. Hiring a lawyer to defend these rights will cost you much more than just getting your house in order.
What is important to know is, you cannot protect or defend a right that you do not have! The bulk of IP rights are obtained through registration. We have seen local companies lose their IP rights to third parties who have seen this anomaly in the market and have smartly outmanoeuvred them and obtained these rights ahead of them.
Company secretaries, brand managers, marketing personnel, advertising heads and all you concerned corporates, include the status of your intellectual property as an agenda item in your next board meeting. Audit your intellectual property assets, know what you possess and ensure that you own it legally! Most annual general meetings (AGMs) are taking place now, task your legal person to consider your intellectual property assets and see whether you have the rights or not! Your business could just be an empty shell, standing on nothing, its intellectual property rights belonging to third parties, even your own employees! Be warned.