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02 Feb 2021
BY Rowan Forster

The trade mark – a saleable, robust and flexible asset

Two recent trade mark news stories are worth discussing. The first because it shows that a trade mark is more than simply an indicator of source, it is also a saleable asset. The second because it suggests that the trade mark may be far more robust than we think it is.

 

A saleable asset

The first story involves the well-known UK retailer Marks & Spencer (M&S). The company is struggling because people don’t shop much anymore. As a result, the retailer’s clothing sales have fallen by a quarter. Although there is one area of clothing where the company is still doing quite well, and that’s pyjamas, or, as they’re now known in these days of remote working, workwear.

In order to help ease its woes, M&S has decided to buy the well-known fashion brand Jaeger. This it can do because the company behind the brand, Jaeger Retail Limited, is in liquidation. Curiously, M&S and Jaeger Retail were both founded in 1884, although only one of these old-timers is able to keep going.

So, why does M&S want to buy the brand Jaeger? According to a BBC report, M&S regards Jaeger as a “complementary brand”. In an interesting combination of corporate and Boris Johnson-speak, an M&S spokesman said this : “We have set out our plans to sell complementary third-party brands …to accelerate our transformation and turbocharge online growth…in line with this, we have bought the Jaeger brand.” M&S has, in fact, not only bought the Jaeger brand, but it has also bought a number of other brands that it regards as being both useful and complementary: Early Learning Centre, Nobody’s Child and Ghost London.

An M&S spokesman is quoted as saying that the company has “bought the Jaeger brand and are in the final stages of agreeing the purchase of product and supporting marketing assets from the administrators of Jaeger Retail Limited.” But it seems very likely that it is primarily buying the brand – the reference to “product” presumably refers to a limited number of unsold branded goods, whereas the term “supporting marketing assets” is not defined but presumably refers to trade mark registrations. What is quite clear from the news report is that M&S is not taking on the Jaeger shops or concessions.

So, what M&S has bought is a trade mark that it will in future be applying to goods that it either makes or has made for it. The trade mark will therefore be an asset that the company believes will produce a revenue stream. In short, a business asset.

 

A robust and flexible asset

The second story refers to the concept of brand extension, in other words, the practice of taking an existing brand and using it in relation to goods or services other than those for which it has been used in the past. Many companies like brand extension because it introduces new revenue streams, but companies generally don’t undertake brand extension lightly.

Before undertaking brand extension, a brand owner should consider various issues:

  • The business case: is there money to be made?
  • The legal issues: is the brand (name, logo) available in respect of the extended goods or services (this will be determined by way of a clearance search, something that can be an expensive exercise)?
  • Protection: if the trade mark is available, should it be registered for those goods and services (cost will often play a role here)?
  • Reputation: is there any risk that the extension will dilute or tarnish the brand?

Let’s consider the last issue. In a recent article by marketing expert Mark Ritson, “Damaging brand image is rarely harmful because it matters so little” (14 January 2021), the author suggests that companies may be completely overthinking the reputation thing. According to Ritson, brands are far more robust than we like to give them credit for. Ritson suggests that most consumers don’t really care about things like brand image or values. He gives examples: Ben & Jerry’s started out as a dog food before becoming an uber successful ice-cream; Porsche, which took considerable flak when it first brought out its monster 4x4, now sells more off-road vehicles than sexy sports cars. Ritson’s somewhat depressing conclusion: “In the age of Trump, what people think of you is far less important than the more brutal objective of getting people to think about you.”

Leaving aside the fact that the age of Trump is over, there’s food for thought here. Especially as the concepts of dilution and tarnishing have application to the issue of trade mark infringement too. But we’ll leave that for another time.

Rowan Forster

IP | Patent Attorney | Executive

rforster@ENSafrica.com

+27 83 440 3170