It is important to recognise that beyond the physical assets that organisations own, there are also intangible assets that are worthy of protection.
There is a risk that because intangible assets are out of sight, they are out of mind for many organisations.
Businesses almost always take careful steps to make sure physical assets are insured, secured and registered. In the same way, some simple but effective legal steps can also be taken to safeguard intangible assets.
What is an intangible asset?
Intangible assets can be an organisation’s reputation, good will, know-how and to some extent, confidential information and intellectual property. These are things that take years to develop into success, or for some established charities, they are the product of legacies inherited from the work of predecessors. If mismanaged, these kind of assets can be lost instantly, tarnished by mismanagement or hijacked for other motives.
Some examples of adverse events can be:
1. bad publicity;
2. unauthorised disclosures by ex-employees or contractors;
3. stealing of know-how / confidential information;
4. defamation material, perhaps motivated by moral or ethical objections.
The public look to not for profit organisations for integrity, good stewardship of assets, the continuing outcome of good deeds and also expect some moral / ethical alignment with their own values. Without that, public faith in a charity can be irretrievably lost.
There are a number of different intangible assets, some of which will be covered in future articles. This article focuses on one kind of intangible asset that sits within the class of intellectual property – trade marks. Not for profit organisations should consider protecting their trade mark and the valuable reputation they have built behind it.
What is a trade mark?
A trade mark is a way for the public to identify goods and services and sets organisations apart from their competitors.
Typically, this is an organisation’s name, logo or slogan.
Some marks are associated with a particular cause such the White Ribbon, which represents a movement working towards ending violence against women.
Some marks are historic like the names of churches such as The Salvation Army and they are the legacy of a century of good works in the Australian community.
Some marks are new and whilst there may not be a lot of community association behind that mark yet, it is worthwhile investing in protecting that name now so ownership is confirmed before other competitors arrive. This can make a difference in an emerging field.
Ultimately, trade marks represent to the public what that organisation, who owns it, stands for.
Trade marks possess the power of association or endorsement. The public will associate new or unknown products or services with the good will and reputation of the organisation behind that mark. It can be a powerful endorsement if a new service is associated with a well-established charity or if a commercial product is endorsed because the public see a logo and know certain sale proceeds from that product will be donated to a charity.
How are trade marks protected?
Under law, trade marks are owned upon their creation by the person who originally created it.
Employment contracts between an organisation and their employee often stipulate that intellectual property created by that employee during their employment vests in the organisation, rather than in that employee. The same is seen when contractors create logos or brand names for clients.
In Australia, trade marks are regulated by the Trade Marks Act 1995 (Cth) and its registration is administered by a government agency named “IP Australia”.
The term ‘trade mark’ itself does not simply refer only to those which are registered. Though, common usage of this term may suggest so. Trade marks can be registered or unregistered.
Once a trade mark is created but not yet registered under the Trade Marks Act 1995 (Cth), it is protected in common law by the tort of passing off (known as ‘common law trade marks’). This tort is a legal action brought in the Courts where one party alleges that another party has wrongly suggested there is a connection between their product / service and that of another party, causing damage to the latter party’s reputation or good will. This can happen when a competitor’s logo is so similar, the public is misled into believing it is from the same origin.
If an organisation takes steps to register the trade mark, the registered trade mark is afforded additional statutory protections found in the Trade Marks Act 1995 (Cth). To prove infringement, that Act looks at whether the other party’s mark is substantially identically with or deceptively similar to a registered trade mark. The Court is empowered to grant an injunction, monetary damages or an account of profits from the infringer.
There are also protections under the Australian Consumer Law with respect to misleading or deceptive conduct. This kind of protection and the one available in tort, is very difficult and expensive to prove and maintain. Therefore, the registration of a trade mark remains a very important mechanism to give organisations comfort and protection.
As prudent steps, it is recommended that not for profit organisations do an audit of their intangible assets / intellectual property and assess where gaps lie. Some logos, product names or slogans may need to be registered. Some may already be registered and require some careful legal management. Some may require additional legal documentation so third party uses are carefully controlled.
The careful protection of intangible assets such intellectual property should be of an equal priority to organisations as the physical assets that organisations owns.