by Howard N. Aronson, managing partner, Lackenbach Siegel LLC

Toy companies, like almost all consumer-oriented businesses, face an oversaturated market—or is it just saturated?

A market is saturated when it is no longer generating new demand for certain products, whether as a result of increased competition, decreased need, or obsolescence. Consider water pistols, for example—a product that anyone can buy anywhere, anytime. Or board games—in the U.S., the market for board games is saturated because almost all Americans own a board game.

An oversaturated market occurs when these conditions become so extreme that sales cannot budge—or even stay the same —from year to year. Look at the total sales volume for your product compared to the total number of potential customers, and you’ll have an idea of how saturated your market is. For toy companies, those figures can add up to “oversaturated”—although toys, unlike household appliances, for example, are often discarded to make room for the newest toy—whether movie-themed or a new technology. Does that mean few companies can survive, let alone increase sales? Everyone knows the big brands that enjoy increasing demand.  How do they do it?

IT’S ABOUT THE BRAND

The most effective way to differentiate yourself from the competition is branding,  and the key to branding is your trademark portfolio. Even if a potential customer could find an apparently identical product at a lower price, the customer often will seek and pay more for the promoted and protected brand. For example, Apple phone customers are highly loyal, even though prices, margins, and profits keep rising.

Smaller companies may see trademark protection as unnecessary when they face big competition, but that’s marketing mistake No. 1. Your trademarks will build an identity that adds value. A strong brand can be a company’s most valuable asset. Once you own it, nobody else can get it (as long as you keep using it).

Again, look at the way trademarks set apart the biggest and most successful companies. Time, consistency, and vigorous enforcement create trademarks that not only help prevent customer confusion (the purpose of trademark law), but also can protect companies from knock-offs that threaten sales and profits. Competitors can offer a similar toy, but you can stop them from using your trademarks to compete with you. Brand loyalty, built with strong trademarks, can set your company apart in a saturated—and even an oversaturated—market.

THE STRATEGY

Choosing a Trademark

It may be counterintuitive, but finding a strong trademark means resisting the temptation to choose a mark that is descriptive of your product. For example, “fast car” for a toy racer and “high bouncer” for a ball are weak trademarks. Instead, find a trademark that requires imagination and effort to build an identity with your product. Think Amazon, Apple, and Google, which have no descriptive qualities for the respective products to which they relate.    

The Trademark Trial and Appeal Board found the trademark “smart sensor” merely descriptive of “interactive electric action toys.” Such a descriptive mark fails as a strong trademark and thus cannot be registered in the Patent and Trademark Office, and would likely be unenforceable as an unregistered mark. Creativity in choosing a mark that doesn’t describe your product will pay off when you attempt to register your trademark—and when it’s time to enforce your trademark rights against competitors.

Searching Your Mark

A comprehensive trademark availability search will insure that another party is not using your chosen mark. Your IP lawyer can advise you on the results of the search, so you know whether to proceed with your application or choose a new trademark before you invest resources.

Registering Your Mark

Obtaining protection for your trademark via federal registration is vital. Your IP attorney can guide you through the preparation and filing of your application, and help insure that it reaches registration promptly.

Using Your Brand

Don’t be shy about using your trademark to promote your product. Your website, packaging, and advertising, including promotion on social media, are just a few of the ways you can help to make your trademark a household name. Your IP counsel can also advise you on the proper use of your mark and the most effective way to build brand recognition with your mark.

Enforcement

Federal trademark registration provides a host of benefits for trademark owners (see “Raising the Bar: Not So Fast! Trademark Protection that Keeps Pace with Fast-Track Toys,” in The Toy Books March/April 2018 issue) of registration. Monitor the use of your mark so you catch infringers in the act and leverage the benefits of registration. Ignoring or delaying enforcement will doom your brand’s power of exclusivity. With the help of your IP lawyer, you can make a plan to monitor use of your mark by others and to quickly take action to stop improper use because brand recognition can challenge—and set you apart in—an oversaturated market.

 

Howard N. Aronson has provided legal counsel to toy industry companies for the past 30 years. He is the managing partner of Lackenbach Siegel LLP, an intellectual property law firm recognized for its nine decades of handling toy company issues. Grateful acknowledgement is extended to Eileen DeVries, counsel at Lackenbach Siegel. Contact Aronson at haronson@LSLLP.com or (914) 723-4300.