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After a 10-year battle, Cadbury now owns the color purple in Australia.

Last month, Cadbury settled its protracted dispute with Darrell Lea, an Australian confectionery retailer. The dispute was triggered when Cadbury filed to register the color purple as a trademark. The Australian trademark office registered the trademark in 2003, giving the chocolate manufacturer the exclusive right to use purple on chocolate packaging.

Trademark in hand, Cadbury launched an assault on competitor Darrell Lea to stop it from using the same color in its stores, packaging and on staff uniforms. Darrell Lea, which has been selling chocolates since 1927, started using purple in 2002. Cadbury took its rival to court, claiming consumers might be confused and think that Darrell Lea or its products had some sort of association with Cadbury.

After six years, the two rivals settled out of court. Under the agreement, Cadbury retains its trademark, but will allow Darrell Lea to use a slightly different purple in its stores.

Color trademarks work the same way as traditional word and shape trademarks. To register a trademark, a brand owner has to convince the trademark office that the trademark is distinctive.

In other words, does the trademark create a connection between consumers and the product, as distinct from other similar products? Could consumers rely on the trademark alone to identify the maker? This is usually fairly obvious with brand names or symbols, such as x.

Things are a bit trickier with color trademarks. A brand owner can only register a color as a trademark if consumers identify the color with the brand.

To register purple, Cadbury had to convince the Australian trademark office that consumers recognize chocolate in purple packaging as being Cadbury chocolate. To support its case, Cadbury conducted market tests. Consumers were asked which chocolate brand they associated with purple. Cadbury came out in front.

This is hardly surprising, given Cadbury has been using the same color since 1920 and accounts for 70 percent of block chocolate sales in Australia.

Once registered, the trademark owner has the exclusive right to use the color for the goods or services listed in the trademark certificate. A color trademark can be useful for stopping copycats, products that mimic by using similar packaging. It can also be used to squeeze out competition.

Concerned that color trademarks give a trademark owner too much of a monopoly in the market, the Australian trademark office is now making it tougher to register colors. This is a genuine concern.

Besides Darrell Lea, Nestle will have to rethink how it packages its famous Violet Crumble chocolate bar, which has a purple wrapper. First made in 1913, the Violet Crumble predates both Cadbury.

There is an increasing trend worldwide for brand owners to try and register colors as trademark. Color can be a very important part of a brand, particularly with fast-moving consumer goods. It might be the one thing that causes a consumer to reach for your product instead of your competitor’s.

In Indonesia, a brand owner can register a color combination as a trademark, but not a single color. Yet brand owners rarely try to register color trademarks. Shape trademarks, such as the Toblerone chocolate bar and the Coca-Cola bottle, are much more common. This is partly because local brands tend to rely less on color to identify themselves.

But the main limitation is the law itself. The Trademark Law says that a trademark can only be registered if it can function by itself as a sign. This requirement rules out most brands. Consumers might associate colors with a particular brand, but very few colors function as signs. Brands that have successfully registered color trademarks include Standard Chartered Bank and Sensodyne toothpaste.

The message for brand owners is to avoid using color as the main tool for distinguishing your products. Color is powerful, but often defenseless.

Brett McGuire is a consultant for Rouse. His Web site is HAKItree.com/brettmcguire.