Business is changing, but one thing remains constant – IP is where it’s at

The UK’s Chartered Institute of Trade Mark Attorneys published an interesting article that deals with the importance and value of brands and intellectual property (“IP”) in general. There are important lessons for brand owners.

The article

The article is entitled “The game has changed” and it was written by Esther Jolly of the UK-based IP firm Stobbs. It deals with the fact that traditional retail is dying a not-so-slow death, certainly in the UK where shell-shocked Brits are returning from their extended involuntary confinement to depressingly empty high streets and malls. Retail as we know it is very quickly being replaced with new online business models.

These new online models depend heavily on strong brands. Brands that are only valuable if they are registered. So, IP, and more particular trade marks, are more important than ever. We should mention that Jolly uses the wider term “intangible assets”, but we will use the narrower term IP. Jolly says that companies are looking to “snap up the revenue-generating aspects of a business – the website, licensing and franchise contracts and customer databases – while leaving liabilities behind.”

Some examples

Jolly offers these examples:

Boohoo is an online retailer that, as its name might suggest, sells clothing to the younger set. The company has bought a number of retail brands including Oasis, Coast and Karen Millen. It also bought three old-school UK clothing retail brands, Dorothy Perkins, Burton and Wallis, for GBP25.2 million in 2021. The attraction? These three brands had some two million active customers in 2020, who between them spent some GBP180-million during that year. Jolly suggests that “in gaining access to that many new, active customers for GBP25.2-million, I imagine Boohoo felt that it got a very good deal.”

Boohoo has also bought the long-established, but now deceased, Debenhams brand for GBP55-million. If you wonder what a trendy online retailer wants with another fuddy-duddy retail and clothing brand, Jolly suggests an answer: a household name, trade mark registrations, an online customer base of six million, a wide range of products, and a busy website. Jolly further suggests that Booboo may want to transform Debenhams, a predominantly British brand, to a global brand. She says this: “The purchasers know that the value is not in the unprofitable stores, but in the IA, which includes the IP, goodwill and access to customers.”

ASOS is another online retailer. This company recently bought the brands Topshop, Topman and Miss Selfridge from the failed Arcadia Group for GBP330-million.

Gordon Brothers is an advisory and financial firm. This firm bought the assets of Laura Ashley when that company went into administration. There were no physical stores involved in the deal, simply the brand and the IP related to it. But there are franchise agreements with stores outside of the UK and these stores are now generating income for the firm. The firm has also done a deal with the retail chain Next, as a result of which Laura Ashley homeware will be sold in some 500 Next stores and on the Next website.

A recurring theme

We have, in the past, discussed the fact that UK retail giant Marks & Spencer (“M&S”), a company that is also struggling as a result of changing conditions, bought the fashion brand Jaeger after the owner of that brand went into liquidation. Once again it is important to note that the company simply bought the brand, not the shops or concessions. M&S has also purchased other brands including Early Learning Centre. The company bought these trade marks because it perceived these to be assets that will produce revenue streams.

The importance of IP

The game has indeed changed as a result of digitalisation and, of course, COVID-19. Most notably, it has changed for retail, but no doubt for many other industries too. Online shopping is here to stay and this will be bad news for high streets and retail parks. It is more important than ever for companies to be aware of their IP rights such as their trade marks, rights that can be used, licensed and sold.

Clearly, trade marks should be registered because the goodwill and reputation associated with unregistered marks are hard to enforce. They should be registered for the goods and services that may be relevant. They should be registered in all the countries that may be relevant. The registrations must be kept in force. Where necessary, trade mark licence agreements must be drawn up.

If you would like to discuss any issues relating to the commercialisation of your IP please give us a call.

Waldo Steyn

IP | Executive

wsteyn@ENSafrica.com

+27 82 382 6404