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Trademarks are usually among the most critical and valuable assets of a business. If it is unique it enables a company to build brand reputation and public goodwill through the products or services it sells. The term ‘trademark’ refers to any word, name, slogan, logo, and designs applied to identify and differentiate an organization’s products in its business trade (Busse, 2011). The focus of this paper is on Coca Cola’s trademark. It will give its history as well as the value it creates to the company. Moreover, the paper will indicate whether the trademark appears on Coca-Cola’s balance sheet as well as why the corporation strives to protect it.
Coca-Cola’s Trademark History
The development of Coca-Cola originally took place on May 8, 1886, by a local pharmacist known as Dr. John Pemberton in Atlanta, Georgia. The original drink was a type of syrup sold for five cents as a fountain beverage (Busse, 2011). After that, the drink was given a familiar taste by adding carbonated water to the syrup. However, it was Frank Robinson, Pemberton’s partner and bookkeeper, who devised the actual Coca-Cola logo and whose distinctive writing resulted in the unique appearance that originates from every capital “C”. However, due to his poor health Pemberton disposed the company to Asa Chandler. In 1893, Chandler trademarked the logo and words “Coca-Cola” after recognizing the importance of protecting it from contenders producing imitation products (Busse, 2011). The trademark incorporated the distinctively styled writing of the logo as well. Nevertheless, Coca-Cola continued to face persistent attempts to duplicate the beverage regardless of the legal moves taken to shield the integrity of the brand, particularly, as the sales started to grow at an increasingly swift pace.
With a desire to protect the trademark, the company instituted advertising campaigns, which reminded the customers to ask for genuine drink and accept no substitutes whenever they purchased its products. However, these measures were only marginally successful. Consequently, in 1915, the organization developed and patented the unique body shape of Coca-Cola bottle. Fair enough, in 1977, the court granted the bottle design a trademark that serves as a legal example for case law regarding packaging and a landmark in the history of Coke trademark. As the beverage continued to become popular, the contemporary culture started to strengthen its influence. The word “Coke” began being used more regularly by younger consumers when referring to the drink. Consequently, in 1945, the court granted Coca-Cola a trademark for the phrase “Coke” (Busse, 2011).
The Value of Coca-Cola’s Trademark to the Company
In the business world, a trademark is undeniably the most vital asset. Thus, it makes sense to try to shield it from the rivalry. Being an American icon, Coca-Cola is the third most valuable brand globally only behind Apple and Google. Moreover, its cost is approximately $ 80 billion (Busse, 2011). The corporation’s trademark plays a crucial role in developing and protecting its valuable brand. The Coca-Cola Company is a regular filer of corresponding applications. In fact, the organization has over 430 federally registered trademarks and more than 100 pending applications for trademarks in the US alone (Busse, 2011).
It is due to this reason that Coca Cola’s trademark is an essential asset of the organization, and that is why the company strives hard to protect it. In conjunction to this, the President of Coca-Cola once stated that even though all of the corporation’s other assets such as vehicles, factories, buildings would be destroyed, Coca-Cola would still emerge from the damage and recreate itself as long as the trademark survives. Consequently, the loss of the company’s trademark would ruin the organization beyond repair (Busse, 2011).
Trademark on the Balance Sheet
Due to the fact that trademarks hold future economic value, they get the accounting description of an asset. It is for this reason that they would appear in the assets section of the statement of financial position. However, sometimes they do not appear there due to some reasons. Trademarks are classified as intangible assets since they are not physical objects and cannot be touched. Intangible assets materialize in the fixed assets portion of the assets segment. Due to the accounting rules, an organization can display an asset in its statement of financial position only when it can establish a fair cost of that asset, often as a result of disposal. However, if the asset is generated internally, like trademarks, it cannot be sold. Thus, they do not appear in the financial position of the company (Busse, 2011).
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Concurrently, this is the case for the Coca-Cola Company’s trademark. It has a value of $ 80 billion but since the estimation of this asset is not termed sufficiently reliable to meet the financial statement recognition standard, it is not displayed in the Coca-Cola Company’s statement of financial position. Nevertheless, the organization has bought other trademarks like Minute Maid worth a total cost of $ 2.3 billion and they appear on the corporation’s balance sheet. When determining the value of a trademark, other costs such as advertising costs are included in its base. The reason of this is that a recognized trademark is usually created through broad and expensive advertising (Busse, 2011).
The Coca-Cola Company is always in the wake of protecting its trademark. The reason for this is to prevent its competitors from intentionally misrepresenting its products to be largely similar. Coca-Cola institutes protection for its trademark by employing a huge legal staff whose primary role is to ensure the integrity of the logos, trademarks, brand names, and intellectual property. Coca-Cola’s trademark is an asset of the company because its value is easy to estimate and if the corporation was to sell some of its brands it could do so by giving up their trademarks.