New Order Meet The Beatles
A best-selling band is a best-selling brand
Yesterday, She Loves You and Hey Jude are all famous Beatles hits, the best-selling band and brand with sales of over 2 billion albums.* The Fab Four have enjoyed extremely successful careers and have profited hugely from music sales.* So imagine that George and Ringo come together one Friday evening at George’s house and decide to take away Paul's shareholding in the Beatles (without telling Paul or John's widow Yoko about it). Paul's Hoefner bass would be weeping none too gently on discovering the news the following morning.
Blue Monday for New Order
This is the analogy recently drawn by the barrister for Peter Hook, a former member of Joy Division, which became New Order. Hook owns a 25% share of Vitalturn Limited, the company that held New Order’s intellectual property rights and the owner of the “New Order” trade mark. When Hook parted company with the band in 2007, the other members continued to use the name New Order, but then they set up a new company, New Order Limited, in 2011, without Hook. They granted the new company worldwide exclusive rights to the New Order trade mark and related sources of income for 10 years.*
Since 2011, New Order Limited has generated revenues of £7.8m. Hook receives 1.25% of the band’s royalties and other income from merchandising and performances: he's now claiming £2.3 million in lost income and argues he should receive 12.5% instead of 1.25%.*
This situation is not unique: many household names, including Deep Purple, Spandau Ballet and Monty Python*, have been involved in legal disputes about their trade mark or brand and the royalties or income that flow from them. The judge in the Peter Hook / New Order case commented that legal costs could be huge (close to £1m), but, for example, in the case of Mark Forstater with the Pythons, they can be worth it (Mark argued successfully that he was the Seventh Python and entitled to a 1/7th share of Spamalot revenues as it was spun out of The Holy Grail in which he had a 1/7th stake).
If trade marks and brands are handled properly when they're created, and are properly maintained and monitored, this kind of expensive litigation can be avoided. More importantly, registering them in the first place can make you millions.
Q. Why protect your brand and your trade mark? A. It could be worth millions.
Your trade mark is your brand, and vice-versa, and it is central to the commercial value of your business, especially where you're creating a difference in a crowded marketplace (for example, Nike in sportswear, or Chanel in clothing and perfume). Brand loyalty and brand premium price (i.e. you can charge more for your product) are sought-after prizes, but they can only be protected from competitors via ownership of their trade marks (e.g. “Nike”, the tick logo and “just do it”, “Nike Air” and so on).
Trade mark creation, registration, management and protection are crucial to any business trying to build and maintain a brand, and to give itself a competitive edge in its chosen marketplace. Registering a company at Companies House or owning a domain name does not protect your brand or your commercial trading name. Only registering your trade mark gives you:
- the right to its exclusive use for the goods or services for which it is registered and
- the right to sue for infringement if anyone else uses a similar mark or one which could cause market confusion
So what is a trade mark and how do I register one?
Your trade mark has to be unique or distinctive - any sign which can be represented graphically and/or in words and which can distinguish the goods or services of your business from another. It can be long or short, it can be one trade mark or multiple marks, either just in the UK, or for all EU countries (via one application) or even worldwide.
It's a good idea to search the relevant trade mark database before starting the registration process, to see what else is already out there.. If you and your advisers feel confident that your trade mark stands a good chance of being registered, an application is prepared: this involves drafting widely enough to cover the goods and services that you want your trade mark to cover, but drafting narrowly enough to give it the best chance of being registered and minimising objections from existing trade mark owners, or the Intellectual Property Office itself (for the UK). There is an art to getting the balance just right.
In the UK, after an application is sent in with the relevant fees, you receive an examination report within 1-3 weeks, and, if the examiner has no objections, your application is published in the Trade Marks Journal for 2 months, during which time anyone can oppose it. If there are no objections, your trade mark will then be registered. End to end, the process takes about 3 to 4 months and the registration date is backdated to the original application filing date.
Protecting your brand by registering your trade mark corners your brand equity and stops others muscling in on, or trading off, your name. The New Order case highlights the huge value that can flow from licensing a trade mark to others, and the importance of ensuring that the income that derives from it ends up in the right hands.
1.The Beatles Album Sale Statistics - See US Recording Industry Association of America (RIAA).
2.Sir Paul McCartney, Forbes 2015, http://www.forbes.com/profile/paul-mccartney/
3.‘Blue Monday for New Order’ The Telegraph, 30 November 2015, http://www.telegraph.co.uk/news/uknews/law-and-order/12025791/Blue-Monday-for-New-Order-as-Peter-Hook-sues-them-for-many-millions-of-pounds.html
5. Forstater v Python (Monty) Pictures Limited  EWHC 1873 (Ch)