Ghost Brands

The L.A. Times recently ran an article regarding the increasing practice of clever marketers acquiring brands that have fallen into disuse but still have some collateral good will attached to them in the minds of consumers. Here’s the core premise of the article: “Rebooting old names makes sense in a market crammed with products vying for consumers’ attention; building a new brand can cost millions in advertising and there’s no guarantee of success.”

The article refers to these opportunists as “trademark trolls”, and I guess there is some truth to that. However, in contrast to “patent trolls” and “copyright trolls”, who are more bent on monetizing creative work or inventions to block or charge tribute from unsuspecting folks in the marketplace, the trademark opportunists are leveraging off a unique feature of trademarks–namely that brands are only as valuable as the good will or market association that the consuming public associates with them. It is not a new phenomenon. Sometimes brands are cast aside because the underlying business has failed (hello KODAK  and HOSTESS). Other times, the brand falls into disuse because the owner has determined that another, more relevant brand should take the fore.

Trademarks-as-property present a unique issue, which is separate and apart from issues of exclusivity arising in copyright and patent law. Long ago (1918), the U.S. Supreme Court held that “[t]there is no such thing as property in a trademark except as a right appurtenant to an established business or trade in connection which the mark is employed.” 248. U.S. 90,97 (1918). Whilst true in the legal context (i.e. that a trademark cannot be viewed separate from its underlying goodwill), the fact remains that marks have an ongoing latency in the collective consciousness of the consumer, and it is this latency that the trademark opportunists are trying to exploit.

Take for example POLAROID. On October 11, 2001, Polaroid Corporation filed for Chapter 11 bankruptcy protection. Almost all the company’s assets (including the “Polaroid” name itself, which had become almost synonymous with instant photographs) were sold to a subsidiary of Bank One. A new company, which also operates under the name “Polaroid Corporation” arose. It stopped making Polaroid cameras in 2007 and stopped selling Polaroid film after 2009.

To somebody of a certain age (e.g. your humble writer), POLAROID was a powerful mark and stood for technological innovation evidenced by the instant camera, which Polaroid’s founder, Edwin Land, developed. Through innovation (not to mention aggressive patent enforcement), Polaroid was the market maker in instant photos. Think of it, younger readers, you could take a picture and two minutes later, a smelly chemical-laden photo would emerge from the bottom of the device. If you don’t believe this crazy talk, take a look at this guy. Of course, digital technology makes the Polaroid model seem quaint, however wondrous it appeared to be in the 50’s and 60’s.

More to the point, there are still plenty of people around for whom “Polaroid” resonates, not as a product identifier, but as a symbol for technology innovation. It matters not whether substance in the 20-Teens matches reality. The residual glow of Polaroid is leveraged by its current owners to this day, to the point where Polaroid has licensed its name for an iOs app. Woot.com seems to have an endless offering of cameras, camcorders, tablets, mp3players, copiers, view-finders and other technological geegaws that have the Polaroid name slapped on them. You can also find Polaroid paper (!) and digital picture frames, among others.

To a lesser extent, we have previously discussed the sad tale of HOSTESS BRANDS, where a whole portfolio of tasty names is up for sale. The difference with Hostess is that the business was a going concern up until 4 months ago; the parallel is that Hostess had lost its way and the business was in the dumper, but the residual value in the brands remains.

If a brand has residual value to consumers, then it has value in the marketplace. The L.A. Times article took things a step further to discuss folks who search out disused brands and try to breathe market life into them from the embers of past glory. The Times states “But for as little as a $275 fee to the U.S. Patent & Trademark Office, one can buy a brand that, albeit dusty, is already familiar to millions of potential customers.”

Sorry, but that is an oversimplification. What the Times is referring to is the cost of a TEAS-Plus application at the USPTO. The idea is that you comb old, expired registrations and file a new application for the same mark. As a legal matter, the new owner has no claim on the residual good will. But, as a practical matter, carry-over may exist. Yet, the article ignores (at least in this respect) bringing the new/old product to market and promoting it to regenerate the public’s synapses associating the old good will with the new product. It’s possible, but you are looking at more than a PTO application fee.

Is all this wrong? Not legally. And not in world of caveat emptor. But, understand this: you can put lipstick on a pig (or put POLAROID on an .mp3 player), but underneath, it’s still a pig.

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