As competition grows both inside and outside the sector, charities are increasingly aware of how crucial a registered trademark can be. In the second of two features on branding, Mian Ridge looks at the importance of brand protection.
When Millard Fuller called his new housing charity Habitat for Humanity in 1976, he had no idea of the rumpus the name would one day cause. In the 30 years since, the charity has expanded its work into 100 countries and become one of the best-known bodies in the US.
When Fuller and Habitat for Humanity parted company in 2005, Fuller opened a new charity called Building Habitat, a mile down the road from the original charity's headquarters.
Within weeks, Habitat for Humanity sued Fuller, claiming the new charity infringed its trademark. The lawsuit claimed that the new charity would confuse people, possibly diverting funds and damaging the original charity's identity.
Fuller insisted that such a lawsuit should not be a priority for an overtly Christian body such as Habitat for Humanity. "Can you imagine Jesus being concerned about protecting a brand?" he asked. But faced with a potentially long and costly court battle, he ended the legal dispute by changing the name of Building Habitat to the Fuller Center.
This case is unusual, and unusually bitter - the latest chapter in a long dispute between Fuller and Habitat for Humanity. But it emphasises an area to which charities are having to pay increasing attention - brand protection.
Although charities keep an eye on the brands of other non-profit organisations, difficulties more commonly arise between charities and commercial organisations, which might either hijack a charity's brand - through the use or adaptation of images, logos and slogans as well as names - or use such trademarks in cause-related marketing.
Charities' brands have always been important. A charity's name is one of its most valuable assets, and the distinctiveness of logos and slogans can set one charity apart from another. But at a time when charities are jostling for attention in an ever-expanding market and competition for funds, media coverage and volunteers is intense, a charity's brand is more important than ever.
The need to protect these brands has been increased in recent years by the rise of cause-related marketing, in which charities endorse products in return for royalties or a fee, and by the development in many charities of a commercial arm through which they sell merchandise, thereby competing with the commercial sector.
"Having a strong brand identity is only half the battle," says Jens Lundgaard, managing director of Brandworkz, a brand-management company that works with mental health charity Mind. "The other half is the ongoing, day-to-day implementation and protection of it."
With the health and success of charities so dependent on their brands, what steps can they take to protect them?
The most effective protection is to register trademarks such as names, slogans, logos and images. If another organisation then uses or adapts a trademark, the owner will have the power to build a case, showing that reputation and goodwill are invested in the trademark.
Failing to register a trademark exposes the charity to a number of dangers.
"In business, the confusion that arises when two organisations have the same or similar names might cause lost product sales," says Helen Scott-Lawler, a partner and head of intellectual property at Burges Salmon Solicitors.
"For a charity, this confusion might cause lost donations or, perhaps worse, damage to its reputation."
A charity failing to register a trademark risks letting another organisation register an identical or similar trademark; the latter could then complain about the originator's use of that trademark.
Charities with unregistered trademarks do have the option to defend their brands in court by claiming 'passing off', but this would be expensive and they would have to prove that people assume the name is identified with them and that by using it another organisation is causing confusion.
The Royal British Legion, for example recently obtained an injunction to prevent a record company from selling a remembrance album called Poppies, which bore a picture of a poppy.
Show you mean business
The possession of a registered trademark alone often acts as a deterrent to copycats, showing that a charity takes brand protection seriously. But Andrew Allan-Jones, a solicitor with Burges Salmon, says that charities should heighten this perception by using the (R) symbol with registered trademarks whenever possible.
He adds that charities should keep an eye on which trademarks other charities are seeking to register in the same area of work. "This can be done by engaging a trademark-watching service, which alerts the charity to identical and similar trademark applications that are being filed by third parties," says Allan-Jones. "The charity then has an opportunity to try to stop those applications being registered." Such services are relatively cheap and can save charities a lot of money and trouble, he adds.
Once a charity decides there has been an infringement of its registered trademark, it should write to the other side to ask it to stop. "There are special rules about exactly how you write this letter," says Allan-Jones. "Flouting the rules risks giving the other side the opportunity to sue for what are called 'unjustified threats' of trademark infringement." But if this letter does not do the trick, what steps should a charity take?
The Charity Commission advises charities to use legal action as a last resort and to look for other ways of resolving difficulties over the use of their brands.
Last Christmas, Ann Summers adapted the Dogs Trust's registered trademark slogan "A dog is for life, not just for Christmas" to promote its Rampant Rabbit vibrator, changing it to "A rabbit is for life, not just for Christmas".
The charity allowed the sex shop chain to finish its campaign if it promoted the charity to its online supporters.
Clarissa Baldwin, chief executive of the Dogs Trust, who first coined the slogan in 1976, says the charity registered the trademark because the slogan was being copied so often. It still is, she adds.
"The slogan is catchy and has a clear and powerful message, so it has become part of everyday vocabulary," she says. "It has been used or plagiarised by many other organisations, so we took the decision to make it a registered trademark in 1995."
Before taking things to court, charities should look at the risks - this means considering damage to the charity's brand, reputation and identity if they do not take legal action, and damage to the organisation, its assets and its beneficiaries that might result if they do. But they should also bear in mind that if someone does steal their registered trademarks, the longer they leave it, the more difficult it could be to prove that intellectual property rights have been infringed.
There are obvious dangers in suing a company that can afford to sue a charity back, as the Diana, Princess of Wales Memorial Fund found to its considerable cost. In 1998, the charity took the American memorabilia company Franklin Mint to court over the sale of a commemorative Diana plate that it claimed violated its "exclusive rights" to Diana's image and name - a move that backfired badly. When the charity lost the case, Franklin Mint sued it for malicious prosecution at a cost of $25m and the Diana Fund was forced to ask other trusts to supply the millions of pounds it had promised to various projects and beneficiaries.
Proper licence terms
If a charity allows a company to use its brand, whether through sponsorship or promotional ventures, the Charity Commission recommends that trustees be careful how they allow it to be used.
"In the corporate sector, there are tight guidelines over the use of a brand that anyone using it must adhere to," says Ian Hempseed, a partner and head of charities division at Hempsons Solicitors. "But this is one of the problem areas I have come across with charities, when, say, a charity has allowed a business, in very loose terms, to put its brand on its products.
When charities make the deal, they should impose licence terms on the business that state the charity can terminate the deal if the terms are not adhered to.
"I've seen a number of very weak agreements that leave charities open to problems. In this situation, the charity's trustees are not being prudent."
Charities can now buy trademarks that cover the entire European Union as well as the 60 countries that have signed the Madrid Protocol, an international trademark agreement policed by the World Intellectual Property Organisation.
This is particularly important for charities that have operations abroad.
Branding experts and lawyers also advise charities to buy the most relevant domain names that people use to access their websites. "These can be cheap to register, as little as tens of pounds each," says Scott-Lawler.
"But they can be very expensive to prise from the hands of a cybersquatter."
Trademarks can also be used to protect brands on the internet, however.
A disability rights activist who ran a website criticising top disability charity Leonard Cheshire was forced to relinquish the domain name www.leonard-cheshire.com after a ruling by the World Intellectual Property Organisation.
After a lengthy investigation, the panel said the site was confusingly similar to the organisation's trademark and that the activist, Paul Darke, had no right or legitimate interest in the domain name, adding that he had registered and used the name in bad faith.
There is recourse for charities that feel their brands have been copied or exploited - particularly if the organisation has taken preventive protective action.
"It is the charities with good, strong brands that are the most successful in terms of fundraising," says Simon George, a director of the fundraising consultancy Wootton George.
"Charities should recognise that if they have a good brand, they have a valuable asset. And like any valuable asset, it needs to be protected, nursed and grown."
A trademark is a symbol or sign that distinguishes a product or service.
Registration gives an organisation the exclusive right to use the trademark for particular types of business that are specified in the registration.
It also prevents other people or organisations using the trademark for those types of business, or any other areas of business, that are confusingly similar.
There are two kinds of trademark - registered and unregistered. An (R) denotes a registered trademark and the initials TM denote an unregistered trademark, which offers no protection above the common law. A registered trademark is obtained at the UK Patent Office; the more distinct the trademark, the more likely the Patent Office is to register it.
CASE STUDY - WWF-UK
WWF-UK has fought a long legal battle for the sole use of its trademark WWF initials. The charity first registered the initials as a trademark in 1961, when it was founded as the World Wildlife Fund. In 1994, a dispute between WWF and the billion-dollar World Wrestling Federation culminated in a contract restricting the latter's use of the WWF initials, particularly outside the US.
In 2001, the charity sought and was granted an injunction to prevent the ongoing use of the initials by the wrestling federation. When it lost its appeal in 2002, the federation announced it was changing its name to World Wrestling Entertainment, or WWE. But WWF says the use of its trademark initials has caused continuing problems, eroding knowledge in schools - where it had previously done much education and awareness-raising work - of what the initials stand for.