LITERATURE RESEARCH

TRADEMARK
A trademark or trade mark is a distinctive sign or indicator used by an individual, business organization,
or other legal entity to identify that the products or services to consumers with which the trademark
appears originate from a unique source, and to distinguish its products or services from those of other
entities.

A trademark is designated by the following symbols:

™ (for an unregistered trade mark, that is, a mark used to promote or brand goods)

℠ (for an unregistered service mark, that is, a mark used to promote or brand services)

® (for a registered trademark)

A trademark is a type of intellectual property, and typically a name, word, phrase, logo, symbol, design,
image, or a combination of these elements. There is also a range of non-conventional trademarks
comprising marks which do not fall into these standard categories.

The owner of a registered trademark may commence legal proceedings for trademark infringement to
prevent unauthorized use of that trademark. However, registration is not required. The owner of a
common law trademark may also file suit, but an unregistered mark may be protectable only within the
geographical area within which it has been used or in geographical areas into which it may be
reasonably expected to expand.

The term trademark is also used informally to refer to any distinguishing attribute by which an individual
is readily identified, such as the well known characteristics of celebrities. When a trademark is used in
relation to services rather than products, it may sometimes be called a service mark, particularly in the
United States.

FUNDAMENTAL CONCEPT OF TRADEMARK

The essential function of a trademark is to exclusively identify the commercial source or origin of
products or services, such that a trademark, properly called, indicates source or serves as a badge of
origin. In other words, trademarks serve to identify a particular business as the source of goods or
services. The use of a trademark in this way is known as trademark use. Certain exclusive rights attach to
a registered mark, which can be enforced by way of an action for trademark infringement, while
unregistered trademark rights may be enforced pursuant to the common law tort of passing off.
It should be noted that trademark rights generally arise out of the use or to maintain exclusive rights
over that sign in relation to certain products or services, assuming there are no other trademark
objections.

Different goods and services have been classified by the International (Nice) Classification of Goods and
Services into 45 Trademark Classes (1 to 34 cover goods, and 35 to 45 services). The idea of this system
is to specify and limit the extension of the intellectual property right by determining which goods or
services are covered by the mark, and to unify classification systems around the world.

COPYRIGHT
Copyright is the set of exclusive rights granted to the author or creator of an original work, including the
right to copy, distribute and adapt the work. These rights can be licensed, transferred and/or assigned.
Copyright lasts for a certain time period after which the work is said to enter the public domain.
Copyright applies to a wide range of works that are substantive and fixed in a medium. Some
jurisdictions also recognize "moral rights" of the creator of a work, such as the right to be credited for
the work. Copyright is described under the umbrella term intellectual property along with patents and
trademarks.

The Statute of Anne 1709, full title "An Act for the Encouragement of Learning, by vesting the Copies of
Printed Books in the Authors or purchasers of such Copies, during the Times therein mentioned", is now
seen as the origin of copyright law.

Copyright has been internationally standardized, lasting between fifty and one hundred years from the
author's death, or a shorter period for anonymous or corporate authorship. Generally, copyright is
enforced as a civil matter, though some jurisdictions do apply criminal sanctions.

Exclusive rights granted by copyright

Copyright is literally, the right to copy, though in legal terms "the right to control copying" is more
accurate. Copyright are exclusive statutory rights to exercise control over copying and other exploitation
of the works for a specific period of time. The copyright owner is given two sets of rights: an exclusive,
positive right to copy and exploit the copyrighted work, or license others to do so, and a negative right
to prevent anyone else from doing so without consent, with the possibility of legal remedies if they do.

Copyright initially only granted the exclusive right to copy a book, allowing anybody to use the book to,
for example, make a translation, adaptation or public performance. At the time print on paper was the
only format in which most text based copyrighted works were distributed. Therefore, while the language
of book contracts was typically very broad, the only exclusive rights that had any significant economic
value were rights to distribute the work in print. The exclusive rights granted by copyright law to
copyright owners have been gradually expanded over time and now uses of the work such as
dramatization, translations, and derivative works such as adaptations and transformations, fall within
the scope of copyright.[9] With a few exceptions, the exclusive rights granted by copyright are strictly
territorial in scope, as they are granted by copyright laws in different countries. Bilateral and multilateral
treaties establish minimum exclusive rights in member states, meaning that there is some uniformity
across Berne Convention member states.

The print on paper format means that content is affixed onto paper and the content can’t be easily or
conveniently manipulated by the user. Duplication of printed works is time-consuming and generally
produces a copy that is of lower quality. Developments in technology have created new formats, in
addition to paper, and new means of distribution. Particularly digital formats distributed over computer
networks have separated the content from its means of delivery. Users of content are now able to
exercise many of the exclusive rights granted to copyright owners, such as reproduction, distribution
and adaptation.

Works subject to copyright

The type of works which are subject to copyright has been expanded over time. Initially only covering
books, copyright law was revised in the 19th century to include maps, charts, engravings, prints, musical
compositions, dramatic works, photographs, paintings, drawings and sculptures. In the 20th century
copyright was expanded to cover motion pictures, computer programs, sound recordings, dance and
architectural works.

Copyright law is typically designed to protect the fixed expression or manifestation of an idea rather
than the fundamental idea itself. Copyright does not protect ideas, only their expression and in the
Anglo-American law tradition the idea-expression dichotomy is a legal concept which explains the
appropriate function of copyright laws.

Related rights and neighboring rights

Related rights is used to describe database rights, public lending rights (rental rights), artist resale rights
and performers’ rights. Related rights may also refer to copyright in broadcasts and sound recordings.
Related rights award copyright protection to works which are not author works, but rather technical
media works which allowed author works to be communicated to a new audience in a different form.
The substance of protection is usually not as great as there is for author works. In continental European
copyright law a system of neighboring rights has thus developed and the approach was reinforced by
the creation of the Rome Convention for the Protection of Performers, Producers of Phonograms and
Broadcasting Organizations in 1961.
LICENSING
The verb license or grant license means to give permission. The noun license (licence in Australian,
British, Canadian, New Zealand, Indian and Irish spelling) refers to that permission as well as to the
document memorializing that permission. License may be granted by a party ("licensor") to another
party ("licensee") as an element of an agreement between those parties. A shorthand definition of a
license is "an authorization (by the licensor) to use the licensed material (by the licensee)."

Intellectual property
A licensor may grant license under intellectual property laws to authorize a use (such as copying
software or using a (patented) invention) to a licensee, sparing the licensee from a claim of infringement
brought by the licensor. A license under intellectual property commonly has several component parts
beyond the grant itself, including a term, territory, renewal provisions, and other limitations deemed
vital to the licensor.

Term: many licenses are valid for a particular length of time. This protects the licensor should the value
of the license increase, or market conditions change. It also preserves enforceability by ensuring that no
license extends beyond the term of IP ownership.

Territory: a license may stipulate what territory the rights pertain to. For example, a license with a
territory limited to "North America" (United States/Canada) would not permit a licensee any protection
from actions for use in Japan.

Mass licensing of software

Mass distributed software is used by individuals on personal computers under license from the
developer of that software. Such license is typically included in a more extensive end-user license
agreement (EULA) entered into upon the installation of that software on a computer.

Under a typical end-user license agreement, the user may install the software on a limited number of
computers.

The enforceability of end-user license agreements is sometimes questioned.

Trademark and brand licensing

A licensor may grant permission to a licensee to distribute products under a trademark. With such a
license, the licensee may use the trademark without fear of a claim of trademark infringement by the
licensor.
Artwork and character licensing
A licensor may grant a permission to a licensee to copy and distribute copyrighted works such as "art"
(e.g., Thomas Kincaid's painting "Dawn in Los Gatos") and characters (e.g., Mickey Mouse). With such
license, a licensee need not fear a claim of copyright infringement brought by the copyright owner.

Artistic license is, however, not related to the aforementioned license. It is a euphemism that denotes
approaches in art works where dramatic effect is achieved at the expense of factual accuracy.

CONTRACT
In law, a contract is a binding legal agreement that is enforceable in a court of law or by binding
arbitration. That is to say, a contract is an exchange of promises with a specific remedy for breach.

Agreement is said to be reached when an offer capable of immediate acceptance is met with a "mirror
image" acceptance (i.e., an unqualified acceptance). The parties must have the necessary capacity to
contract and the contract must not be either trifling, indeterminate, impossible, or illegal. Contract law
is based on the principle expressed in the Latin phrase pacta sunt servanda (usually translated "pact
[disambiguation needed]s must be kept", but more literally "agreements are to be kept"). Breach of
contract is recognized by the law and remedies can be provided.

As long as the good or service provided is legal, any oral agreement between two parties can constitute
a binding legal contract. The practical limitation to this, however, is that only parties to a written
agreement have material evidence (the written contract itself) to prove the actual terms uttered at the
time the agreement was struck. In daily life, most contracts can be and are made orally, such as
purchasing a book or a sandwich. Sometimes written contracts are required by either the parties, or by
statutory law within various jurisdiction for certain types of agreement, for example when buying a
house[3] or land.

Contract law can be classified, as is habitual in civil law systems, as part of a general law of obligations
(along with tort, unjust enrichment or restitution).

According to legal scholar Sir John William Salmond, a contract is "an agreement creating and defining
the obligations between two or more parties".

As a means of economic ordering, contract relies on the notion of consensual exchange and has been
extensively discussed in broader economic, sociological and anthropological terms (see "Contractual
theory", below). In American English, the term extends beyond the legal meaning to encompass a
broader category of agreements.

This article mainly concerns contract law in common law jurisdictions (approximately coincident with
the English-speaking world and anywhere the British Empire once held sway). However, contract is a
form of economic ordering common throughout the world, and different rules apply in jurisdictions
applying civil law (derived from Roman law principles), Islamic law, socialist legal systems, and
customary or local law.

INSURANCE
Insurance, in law and economics, is a form of risk management primarily used to hedge against the risk
of a contingent, uncertain loss. Insurance is defined as the equitable transfer of the risk of a loss, from
one entity to another, in exchange for payment. An insurer is a company selling the insurance; an
insured or policyholder is the person or entity buying the insurance policy. The insurance rate is a factor
used to determine the amount to be charged for a certain amount of insurance coverage, called the
premium. Risk management, the practice of appraising and controlling risk, has evolved as a discrete
field of study and practice.

The transaction involves the insured assuming a guaranteed and known relatively small loss in the form
of payment to the insurer in exchange for the insurer's promise to compensate (indemnify) the insured
in the case of a large, possibly devastating loss. The insured receives a contract called the insurance
policy which details the conditions and circumstances under which the insured will be compensated.

ANSOFF PRODUCT – MARKET GROWTH MATRIX

The Ansoff Product-Market Growth Matrix is a marketing tool created by Igor Ansoff and first published
in his article "Strategies for Diversification" in the Harvard Business Review (1957). The matrix allows
marketers to consider ways to grow the business via existing and/or new products, in existing and/or
new markets – there are four possible product/market combinations. This matrix helps companies
decide what course of action should be taken given current performance. The matrix consists of four
strategies:

1. Market penetration (existing markets, existing products): Market penetration occurs when a
company enters/penetrates a market with current products. The best way to achieve this is by
gaining competitors' customers (part of their market share). Other ways include attracting non-
users of your product or convincing current clients to use more of your product/service, with
advertising or other promotions. Market penetration is the least risky way for a company to
grow.
 2. Product development (existing markets, new products): A firm with a market for its current
products might embark on a strategy of developing other products catering to the same market
(although these new products need not be new to the market; the point is that the product is
new to the company). For example, McDonald's is always within the fast-food industry, but
frequently markets new burgers. Frequently, when a firm creates new products, it can gain new
customers for these products. Hence, new product development can be a crucial business
development strategy for firms to stay competitive.

3. Market development (new markets, existing products): An established product in the

marketplace can be tweaked or targeted to a different customer segment, as a strategy to earn
more revenue for the firm. For example, Lucozade was first marketed for sick children and then
rebranded to target athletes. This is a good example of developing a new market for an existing
product. Again, the market need not be new in itself, the point is that the market is new to the
company.

4. Diversification (new markets, new products): Virgin Cola, Virgin Megastores, Virgin Airlines,
Virgin Telecommunications are examples of new products created by the Virgin Group of UK, to
leverage the Virgin brand. This resulted in the company entering new markets where it had no
presence before.

The matrix illustrates, in particular, that the element of risk increases the further the strategy moves
away from known quantities - the existing product and the existing market. Thus, product development
(requiring, in effect, a new product) and market extension (a new market) typically involve a greater risk
than `penetration' (existing product and existing market); and diversification (new product and new
market) generally carries the greatest risk of all. In his original work , which did not use the matrix form,
Igor Ansoff stressed that the diversification strategy stood apart from the other three.

While the latter are usually followed with the same technical, financial, and merchandising resources
which are used for the original product line, diversification usually requires new skills, new techniques,
and new facilities. As a result it almost invariably leads to physical and organizational changes in the
structure of the business which represent a distinct break with past business experience.

For this reason, most marketing activity revolves around penetration.

FIRST MOVER ADVANTAGE

Mechanisms leading to first-mover advantages

First-mover advantages can arise from three primary sources. Each category is then separated into a
variety of different other mechanisms. All mechanisms are theoretical and assume that other
competitors trying to merge into the market are being exploited and overpowered by the first-mover
company. All other things equal, the following are the three primary sources of first-mover advantages.

Technological leadership

The first of the three is technological leadership. A firm can gain FMA when it has had some sort of
upper-handed breakthrough in its research and development (R&D) resulting from a direct
breakthrough in technology. A learning curve can provide sustainable cost advantage for the early
entrant if learning can be kept proprietary and the firm can maintain leadership in market share. The
diffusion of innovation can diminish the first-mover advantages over time, and can be triggered via
workforce mobility, publication of research, informal technical communication, reverse engineering,
plant tours, etc. R&D expenditures can also provide technological leadership. The technological pioneers
can retain their advantage if they protect their R&D through patents or if they successfully keep them as
trade secrets. However in most industries patents confer only weak protection, are easy to invent
around or have transitory value given the pace of technological change. With their short life-cycles
patent-races can actually prove to be the downfall of a slower moving first-mover firm.

Examples of technological leadership

1.In a paper by Spence (1981) he discusses how the learning curve can be kept proprietary, yet also still
be a huge and controversial barrier to entry. Although the starters in a FMA market have complete and
utter control for a period of time, the competition still remains, trying to chase ever so closely to the
originators. Spence states that firms trying to emerge as first-movers will usually sell their products
below cost in an effort to understand the market better (i.e. gain intelligence) and then, over the long-
run, turn the market around and control the markets’ cost. Though Spence states that this sort of
competition reduces profitability, most of the time it is needed to break in to the new markets.

2.Procter and Gamble are another example of when technology leadership helped propel their product
(disposable diapers) into the US market. They used a learning-based preemption to help invest in low-
priced European synthetic fiber which helped create the diapers at a cheaper, more profitable price.

3.When the technology advantage is a function of R&D the first-movers can stay pioneers and profitable
if their technology are patented and remain in-housed trade secrets. The case of Gilbert and Newbery
(1982)and Reinganum (1983)illustrates what happens if the first-mover firm or close followers were to
assume what each other’s R&D departments were doing. This can result in the second or third-movers
actually surpassing the leaders because they are out-thinking their competition.

4.Lastly, physical aspects of FMA are not the only way certain firms acquire this advantage. Managerial
systems that may help the organizational and behavior aspects of the company may prove to be highly
beneficial to emerging companies. When a firms management style is unlike any other and grasps
certain concepts of management and the economy that other firms do not then they will benefit (i.e.
American Tobacco, Campbell Soup, Quaker Oats, Procter & Gamble).

Preemption of scarce assets

Preemption of input factors, if the first-mover firm has superior information, it may be able to purchase
assets at market prices below those that will prevail later in the evolution of the market. Preemption of
locations in geographic and product characteristics space, in many markets there is room for only a
limited number of profitable firms; the first-mover can often select the most attractive niches and may
be able to take strategic actions that limit the amount of space available for subsequent entrants. First-
mover can establish positions in geographic or product space such that latecomers find it unprofitable to
occupy the interstices. Entry is repelled through the threat of price warfare, which is more intense when
firms are positioned more closely. Incumbent commitment is provided through sunken investment cost.
Preemptive investment in plant and equipment, the enlarged capacity of the incumbent serves as a
commitment to maintain greater output following entry, with price cuts threatened to make entrants
unprofitable. When scale economies are large, first-mover advantages are typically enhanced.

Examples of preemption of scarce assets

1.For the preemption of input factors a great example is the controlling natural resources in the case of
Main (1955).[6] In the case Main states that the concentration of high-grade nickel in a single geographic
area made it possible for the first company in the area to declare themselves a first-mover. They then
gained almost all of the supply of nickel in the area and have since controlled a vast proportion of the
world’s production and distribution of the product.

2.For the preemption of locations in geographic space there was a theory developed in some papers by
Prescott and Visscher (1977) and numerous other colleagues stating that the first-mover indeed has a
huge advantage to claiming a certain geographic area so long as that area provides the firm with all the
resources it needs to thrive. If said area can be claimed and then made to flourish then the cost of entry
to other firms would be too great. In essence, when a firm establishes itself on a certain plot of land it
can gain full control of the market incorporated with that land, thereby holding on to that power for a
vast period of time.

3.Preemption and investment in plant and equipment can prove to be another advantage for the first-
mover. In the case of Schmalensee (1981) he says that when scale economies are large, FMA are usually
larger and more profitable. They even sometimes grow so much that they turn into natural monopolies.
He then goes on to state that further advantages arise from the aforesaid scale economies which
provide only minor entry barriers and immense opportunities for future growth, development, and
profit.
Switching costs and buyer choice under uncertainty

Switching costs, late entrants must invest extra resources to attract customers away from the first-
mover firm. Buyer choice under uncertainty, buyers may rationally stick with the first brand they
encounter that performs the job satisfactorily. For individual customers benefits of finding a superior
brand are seldom great enough to justify the additional search costs that must be incurred. It can pay off
for corporate buyers since they purchase in large amounts. If the pioneer is able to achieve significant
consumer trial, it can define the attributes that are perceived as important within a product category.

Examples of switching costs

1.Switching costs play a huge role in where, what, and why consumers buy what they buy. Users, over
time, grow accustomed to a certain product and its functions, as well as the company that produces
them products. Once a consumer is comfortable and set in their ways they apply a certain cost, which is
usually fairly steep, to switching to other similar products (Wernerfelt 1985).

2.Another switching cost is described in Klemperer (1986) where the seller actual creates the cost. For
instance in airline frequent-flyer miles many consumers find it important that an airline provides this
service and are willing to actually pay more for an airfare ticket if it means they will get points towards
their next flight.

3.Buyer choice under uncertainty has developed into its own little advantage for first-movers. They
realize that if they get their brand name out there quickly through advertisements, flashy displays, and
possible discounts then people will try their product. If the product performs their desired need
satisfactorily then they will keep their brand loyalty therefore increasing the firms’ revenue (Porter
1976). Also, a study by Ries and Trout (1986) showed that newcomers that emerged into the market as
far back as 1923 were still at the top of their specific markets almost seven decades later.

First-mover disadvantages

Although in some cases being a first mover can create an overwhelming advantage, in some cases
products that are first to market do not succeed. These products are victims of First Mover
Disadvantages. These disadvantages include: “free-rider affects, resolution of technological or market
uncertainty, shifts in technology or customer needs, and incumbent inertia”. Delving into each of these
deeper we see:

Free-rider effects

Secondary or late movers to an industry or market, have the ability to study the first movers and their
techniques and strategies. “Late movers may be able to ‘free-ride’ on a pioneering firms investments in
a number of areas including R&D, buyer education, and infrastructure development”. The basic principle
of this effect is that the competition is allowed to benefit and not incur the costs which the first mover
has to sustain. These “imitation costs” are much lower than the “innovation costs” the first mover had
to spend, and also can cut into the profits which the pioneering firm should be enjoying.

Studies of free rider effects place the biggest implications on riding the coattails of a company’s research
and development and learning based productivity improvement. Overall these studies showed the
effects of free riders as they are able to make their way into the market and not spend the money or risk
the failures which the first movers did. Other studies have looked at free rider effects in relation to labor
costs, as first movers may have to hire and train personnel to succeed, then the competition hires them
away.

Resolution of technological or market uncertainty

First movers must deal with the entire risk associated with creating a new market, as well as the
technological uncertainties which will follow. Late movers are given the advantage of not sustaining the
risks, mostly monetary, with creating a new market. While first movers have nothing to draw upon when
deciding potential revenues and firm sizes, late movers are able to follow industry standards and adjust
accordingly (Lieberman and Montgomery). The first mover must take on all the risk as these standards
are set, and in some cases they do not last long enough to operate under these standards.

Shifts in technology or customer needs

“New entrants exploit technological discontinuities to displace existing incumbents”. In this case of first
mover disadvantages, the late entrants are able to assess a market need that will replace what is
currently being offered. This takes place when the first mover does not adapt or see the change in the
customer needs, but also when competition develops a better, more efficient, and sometimes less
expensive product. Oftentimes this new technology is introduced while the older technology is still
growing, and in this case the new technology may not be seen as an immediate threat.

An example of this is the steam locomotive industry not responding to the invention and
commercialization of diesel fuel (Cooper and Schendel, 1976). This disadvantage is closely related to the
incumbent inertia, and occur if the firm is unable to recognize a change in the market, or if a ground
breaking technology is introduced. In either case, the first movers are at a disadvantage, in that although
they created the market, they have to sustain it and can miss on opportunities to advance as it can
compromise what they have already.
Incumbent inertia

As firms enjoy the success of being the first entrant into the market, they can also become complacent
and not fully capitalize on their opportunity. “Vulnerability of the first mover is often enhanced by
‘incumbent inertia’. Such inertia can have several root causes:

(1) the firm may be locked in to a specific set of fixed assets,

(2) the firm may be reluctant to cannibalize existing product lines, or

(3) the firm may become organizationally inflexible”.

Firms that have severe fixed assets cannot adjust to the new challenges of the market as they have no
room to change. Firms that simply do not wish to change their strategy or products and incur sunk costs
from “cannibalizing” or changing the core of their business, fall victim to this inertia. Some firms simply
will not change as it will not maximize their short term profits to do so. Although these numbers will be
higher in the long run, the organization will fail. These firms are sometimes unable to be sustained in a
changing and competitive environment. They may pour too many of their early assets into what works in
the beginning, and not project to what will need to work in the long run.

Some studies which investigated why incumbent organizations are unable to be sustained in the face of
new challenges and technology, pinpointed aspects of incumbents which fail. These included: “the
development of organizational routines and standards, internal political dynamics, and the development
of stable exchange relations with other organizations” (Hannan and Freeman, 1984). In other situations
cannibalizing the company is not an option because the costs associated with it will be too much for the
firm to succeed after the change. All in all some firms are too invested and rigid in the “now”, and are
unable to project the future to maximize their current market stronghold.