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Selling a trademark without brand and product

Although this story is very much local, it is worth to reflect couple of consequences.

A set of high profile and high volume slovene magazines was seized by a bank (A) from a bankrupt company couple of years ago. To be precise: trademarks were acquired “only”, while journalists and other assets stayed by the company (B) that beforehand leased those brands from the later bankrupt company. A new player (C) bought trademarks from a bank (A). both companies B and C each one afterwards produced same type of magazines separately.

While I do not want to and do not dare to give any opinion on legal dimension of this issue other than: “everything was wrong from the very beginning”, there is an interesting branding dimension that is worth to take look at.

What a mess!

First of all bank (A) obviously considered that trademark has a value even if detached from all other brand assets. Otherwise they would not seriously count on option to sell those trademarks. Why would they evaluate situation like that? Because they do not know “b” of branding – and all those evaluating situation with them, including journalists and financial institutions. They mistake brand for trademark. While Bank (A) in fact acquired trademarks, they thought and also publicly claimed as if they would have acquired brands.

Company (B) did what was necessary step from a business perspective, but legally highly questionable. They immediately constructed new trademarks around the rest of assets that they kept in their possession. Questionable namely is that new trademarks were not far from trademarks now owned by bank (A). Both names of “cloned” brands of Company (B) and their visual identity was so close to those owned by bank (A) that they should have never passed trademark registration process.

Values

Leaving legal issue away from our interest, at least Company (B) “understood” that trademark is the easiest and least valuable asset of any brand. But what they missed is that brand is always a totality of all identity and asset elements. Trademark as identity element (and asset) is the easiest and the cheapest. But that does not mean it can be restored in brand’s totality overnight. This is even more so for old trademarks (owned by bank A) still exist, meaning that they still represent certain value for customers even though they they as products are not available on the market for more than one year. New brands behind newly established trademarks (of company C) cannot expect fast jump to the value position of old brands with old but memetically still existing old trademarks.

What could we say about Company (C) buying trademarks from Bank (A)? What else than that they have spend some money for something that has in fact no value since trademarks were detached from other brand assets.

One can though imagine reasoning of Company C. I guess they take assets like people and different types of knowledge and expertise accumulated in any brand (and not in a frozen trademark) as liability only. While it is true that each asset represent a liability on cash flow, it is also true that assets (in the form of a capital) are necessary for any value creation. Here we have to repeat that brands create value, while trademarks can never!

You cannot get much from nothing. And trademark is not much more than nothing. They thought that they cut costs by buying only trademarks and by avoiding to take responsibility for people that cost much more since they have higher value being attached to a brand that used to have quite high value. As we know a constant co-branding process takes place between a brand and people working for that brand. Higher brand value, higher the price for people working for that brand – and vice versa. Should you wish to have high valued brand, you cannot avoid having costs that necessary come with such a brand. Company C avoided to plunge directly into high cost high brand journalists.

Lessons

  1. Brands are complex entities that exist on memetic level, but can not be detached from their physical existence.
  2. Physical existence is expressed as brand asset, but such brand asset has certain value only as much as is placed in memetic reality. If one reality loses a connection with another, brand loses its value.
  3. Brand exist only if all identity elements synchronize. If certain identity elements disappear or if some are much weaker than another, then brand loses its power.
  4. A product (or service)  is a physical entity that is necessary element of any brand as much as trademark.

Expected conclusion?

To finish this local story: A year or so later company C acquired all brands from a successor of company B so all brands and trademarks are now concentrated under company C. As the matter of fact this was the only viable solution for both companies, since now one owner manages previously competing brands and what is even more important: with almost no saff and even less journalists.

Andrej Drapal

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