The Monthly IP Blog - February 2017

The Monthly IP Blog
Canadian Intellectual Property & Branding Law

February 2017

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Still more branding basics...

Corporate Brand vs. Autonomous Brand?

The Corporate Brand

A company may have a system or hierarchy of brands. For example, General Motors has a number of branded divisions which include CADILLAC and CHEVROLET, among others. Within each division there are separate brands for different models of vehicles such as BOLT or CAMARO . Finally, in some cases specific features or components may be branded. This type of approach is not specific to the automotive industry and is frequently adopted by larger brand owners. Such an approach provides the advantages of simplicity and relatively low costs. However, it may be inappropriate if it prevents the growth of differentiated brands within the system.

The top brand in such a hierarchy is frequently referred to as a "corporate brand" or "house brand" and the other brands as subsidiary or secondary brands. There are advantages to be gained by tying brand name(s) to the brand owner's name. If goodwill has been built up over the years, a new brand extension can gain acceptance by being linked with this historical goodwill. Consumers will feel more confident in purchasing goods or services which are associated with a well-established firm. For example, H.J. Heinz Company has consistently used the HEINZ component of its name as part of the brand name for a multitude of products. However, care must be taken to ensure that such a brand name is used as a trademark and is not simply a tradename. The use of a business name may not support a trademark registration unless the tradename is given special typographical treatment or prominence.

The number of subsidiary brands can vary from large families of brands, such as all CHEVROLET branded vehicles, to specific sub-brands which are only used on one type of product. Where there is a distinct set of customers who are provided with a distinct product, often through distinct channels, a sub-brand may be the most effective choice. This may also be appropriate where the market is segmented. For example, MARRIOT hotels provide different types of accommodation, with different levels of amenities and services, directed to different types of consumers ranging from economy to luxury in association with different sub-brands.

Autonomous Brands

Another strategy is to develop and manage a system of strong autonomous brands relating to specific products. Such an approach is more flexible and allows specific brands to develop. These brands may be directed at specific segments of the relevant market. For example, Procter & Gamble has always used individual brand names in association with products which appeal to different segments of different markets. Further, if the individual brand approach is adopted and the new brand is unsuccessful, goodwill associated with the firm as a whole will be damaged less than if the brand had been directly tied to the corporate name.

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John S. McKeown (Bio)

Goldman Sloan Nash & Haber LLP

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These comments are of a general nature and not intended to provide legal advice as individual situations will differ and should be discussed with a lawyer.

John McKeown

416-597-3371
mckeown@gsnh.com