Text: Atle Abelsen

Choice Hotel used a selection of its partners and best customers to test out the name of its new hotel "The Thief" on Tjuvholmen. This is entirely in line with a relatively new trend in the business community, where customers are involved to varying degrees in the innovation processes of companies. They call it open innovation, and build on research findings showing that the rate of success in launching new products rises enormously if the customers are involved.

"This makes new demands on the strategy adopted to protect intellectual property rights," Professor Leif Hem of the Norwegian School of Economics (NHH) emphasises. He is a specialist in brand strategies and customer behaviour, and notes that there are still loopholes in the legislation that can be exploited by 'creative people with entrepreneurial genes'.

Customer survey

The example of Choice Hotels and The Thief underlines his point. In 2012, Choice Hotels engaged a firm to develop a name, logo and design for their new hotel on Tjuvholmen in Oslo. The name The Thief was creative and exciting, in view of the place name and the fact that there has been a prison on the site (which also gave rise to the name Tjuvholmen, literally 'Thief Island').

Choice Hotels thought it was an exciting suggestion, but wanted to test it on a selection of partners and 'gold card customers'. One of these gold card customers was in an office share with a person who, on the same day that the survey was sent out, registered the name 'The Thief' as a trademark under 'hotels and restaurants'.

He told the newspaper VG, through his lawyer, that he came up with the name as long ago as 2009. He had started working on a hotel concept at the ideas stage, which he called The Thief. The origin of the name was that he had plans to 'steal' customers from large hotel chains.

After Choice Hotels became aware of the trademark registration they immediately contacted their lawyer, who warned that the case would be taken to court if the registration was not deleted.

After several rounds of negotiations heavily reported in the press, the parties finally reached a settlement at the end of the summer under which Choice Hotels paid the man NOK 250 000 to take over the trademark.

Timing is important

Henrik A. Christensen from the law firm Ro Sommernes DA, the lawyers who act for the Choice chain, says that they normally choose a name that is not subject to such restrictions before it is registered. Stricter routines have since been implemented internally.

Professor Helm views this in a historical perspective, drawing parallels with cases when the Internet came into widespread use in the late 1990s. Many companies had not yet registered domains in their names, and Telenor, SAS and Gjensidige were just some of the companies that had to pay a relatively dear price to extricate themselves from a situation in which others registered domains with their brand names and in some cases used them actively to harm the companies.

"In such cases the law often takes time to catch up. Today a company will generally be able to claim control of a domain that is associated with its trademark-protected name. The case of Choice and The Thief shows the law has now come a long way with regard to such open naming processes. It will quite clearly be advisable for companies to start safeguarding their intellectual property rights (IPR) early on, before they use an open innovation process."

Early legal advice

Linn Elisabeth Dølvik, a lawyer at Ro Sommernes who works in the area of IPR, stresses the importance of involving the right legal advisers as early as possible in the process.

"We are often not called in until a conflict has arisen. The processes then become far more complicated. Registering a name as a trademark is a simple process, and costs virtually nothing. And after registration you have five years to start using it," she says.

Need to develop routines

Professor Hem believes the law firms that work with IPR need to develop and establish strategies and routines that also safeguard their customers' intellectual property rights in processes with open innovation.

"This need not be just in the choice of name or design, it can just as well be linked to 'focus groups' that test out new ideas or a further development of existing patents, products or services," he says.

Some businesses also use their customers in idea-generating processes. The actual seed for a new product or a new service then comes from the customer. "Such processes are complicated to manage, purely in terms of rights. Awareness of rights quite simply has to be there from the outset. And it is always the company that is responsible for everything being done correctly."

Deserving of praise

Hem does not have an opinion on who was responsible in the case of Choice Hotels and The Thief.

"I would, however, like to comment that the hotel chain ought to have contacted and entered into a dialogue with this person first. Regardless of whether he had the idea before he became aware of the hotel chain's choice of name, or whether he exploited a loophole in the legislation to beat them to the line, he contributed to raising awareness among both businesspeople and lawyers of the importance of making an early start and having a well thought-out IPR strategy from the outset. He deserves praise for that."