Are Trade-marks Recession Proof?

Ashlee Froese is an Osgoode Hall alumnus and currently practices intellectual property at the law firm of Keyser Mason Ball LLP.

In today’s tough economic times, downsizing and cutting costs has become the global universal mantra.  But is this strategy necessarily applicable to intellectual property?  Given that trade-mark rights can exist in perpetuity, their value should weather the economic storm.  Indeed, the trade-mark, arguably, is the most valuable asset to a company, intangible or otherwise.  The trade-mark is not merely a slogan.  It is the stamp of the corporate brand.  The trade-mark signifies to the customer the company’s reputation, quality and experience.  The goodwill attached to the brand, through the trade-mark, may be more valuable than any widget the company produces.  Ultimately, a sneaker is sneaker until it’s a NIKE sneaker.  That one word, NIKE, changes (for better or worse) the customer’s connotation of that sneaker. 

There are a number of strategies available that can reward trade-mark owners in tough economic times.   

Recessionary Marketing: Tighten the Budget or Launch a Re-Brand?

In today’s global economic turmoil, the marketing department has been hit hard.  A majority of companies have adopted a hibernation model by slashing their marketing budgets in an effort to reduce costs.  But this creates a marketing vacuum whereby few of the actors in a market niche are speaking to the consumer.  This void can be ripe with opportunity for the aggressive company to increase its market share. 

The reality is the consumer has not stopped consuming.  The consumer is just more selective in its purchasing decision.  The proactive company is well positioned to refine its message, through its branding strategies, to speak directly to the customers’ concern:  Value.  A poignant example of re-branding efforts to fit these times is Wal-Mart Stores Inc.’s launch of their new slogan: SAVE MONEY. LIVE BETTER.  This speaks directly to consumers’ concern: buy cheaper priced products without affecting the quality of the product or your lifestyle.

Interestingly, despite the tough economic times and companies’ knee-jerk reaction of adopting a marketing hibernation model, WIPO and CIPO have both reported increases in trade-mark application filings in 2008 at 5.3% and 4.9%, respectively.  So, it appears that trade-mark protection is not entirely falling victim to the economy.

Bankruptcy Brands: Bargains for the Brand Troll

Another avenue of opportunity for the aggressive company lies in taking advantage of the surge in bankruptcies.  As more companies fold, opportunities for the “brand troll” increase.  The company Linen ‘N Things may be no more, but we have not heard the last of that brand.  In January 2009, retail liquidators, Hilco Consumer Capital LP and Gordon Brothers Brand LLC, bought the rights to the LINEN ‘N THINGS brand, which will likely become a great source of royalty revenue.  The SHARPER IMAGE electronic store and BOMBAY furnishings store brands have also suffered a similar fate. 

Licensing: Making your IP Work Overtime

Licensing can be a very profitable revenue stream.  WIPO reported that global IP licensing was valued at $100 billion (US) in 1999.  Licensing is mutually beneficial.  It allows the licensor to recoup costs incurred in obtaining IP protection, venture its brand into new markets without incurring the expensive R & D costs and, most importantly, has the potential to generate significant revenue.  The licensee is able to expand its market niche with the benefit of operating under an already established well-known brand.  It does not have to expend as much effort in generating consumer awareness of its product. 

Know Your Position: Conducting IP Audits

Ultimately, IP is a shield and a sword and, frankly, could be a cash cow.  The critical component in employing trade-marks in any of these methods is to know the trade-mark portfolio.  Conducting sporadic IP audits is important to establish what a company’s IP assets consist of, what the holes are, which rights have been maintained and which rights have lapsed.  From that point, a company can look outward to build a profitable IP strategy.  Is the brand still relevant to the consumer?  Should it consider re-branding?  Can the brand be used to differentiate or weaken competitors?  Would the acquisition of another company’s brand to the trade-mark portfolio create new opportunities?  Is there a market the brand could be exposed to through licensing?