From that date, the Institute of Chartered Accountants' Financial Reporting Standard 10 'Goodwill and Intangible Assets' ('FRS10') will require that the values of intangible assets (such as brands and intellectual property) and acquired goodwill be recognised in financial statements. Henceforth, brand mis-management will have a highly visible effect on a company's value.
Though arguably overdue, FSR10 must be welcomed as a serious recognition that brands and other intangible assets can often be more effective determinants of business success than the tangible assets traditionally associated with business activity.
As far as litigation against a brand pirate is concerned, the ability, post-FSR10, to point to definite changes in written down values should assist brand managers to establish levels of recoverable damages via the normal account of profits remedy; and may even give rise to a separate head of damage, namely, impairment of intangible asset value.
You should:
- Review your brand protection strategy. Ideally, you should deploy your accounting, legal and marketing resources (both internal and external) together as part of a 3-pronged business strategy to best exploit and protect your business assets.
- Obtain insurance against the activities of brand pirates. The terms or availability of such insurance will reflect the extent to which the party seeking such insurance has already implemented an aggressive and pro-active brand protection strategy.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
