Brand transplants: breathing new life into business
All momentous historical events have had an impact on the way society lives and works. From a branding perspective, the COVID-19 pandemic has highlighted the importance of consumer confidence and trust in a product, but it has also exposed the difficulties many companies have experienced as the arterial routes to customers – namely shops, restaurants, leisure facilities – were temporarily closed. For some businesses, switching to online retail; experiencing an overnight drop in demand; or being forced to mothball enterprise until life can gradually return to normal, has stretched finances to the limit and forced closure.
It seems that an unfortunate by-product of the crisis will see a number of long-established businesses in this position. But does this mean that the brands which have been part of much of the populations’ lives for years, if not decades, are destined to be lost? Not necessarily.
Intellectual Property (IP) can make up a sizeable portion of a business’ value even after it has ceased trading, allowing the goodwill in a business’ branding to live on for a number of years, making it an attractive prospect to new purchasers. Evidence of this can be seen in the recent acquisition of Thomas Cook – the oldest brand in world tourism – to Fosun for £11m, preventing its demise into obscurity. The purchase did not include any physical assets, only Thomas Cook’s trade marks, websites, and social media accounts. The 555 physical stores of Thomas Cook were sold separately to Hays Travel. Another early retail casualty of the coronavirus, Cath Kidson, was bought in a pre-packaged administration for an undisclosed sum as the brand moved online.
Unlocking the value of a company’s IP is vital when considering the sale of a company. Potential buyers will expect to see proof of a current and robust IP portfolio in all the markets where that company trades. Therefore, in order to achieve maximum leverage, the seller needs to demonstrate the years of reputation-building have been protected through trade marks, patents and design rights.
When looking to purchase a portfolio of IP, potential buyers need to ensure that the company they are purchasing the IP from is in a position to assign the IP. In the UK, for example, it is imperative that if a company is looking to sell its IP that it sells the IP and executes all relevant documentation prior to the company formally being wound up. If the IP is not sold prior to the company formally being wound up then it will revert to The Crown. In addition, even if the IP is sold in a timely manner, some overseas countries will require additional documentation to be executed by the seller before being able to record an assignment of the IP. The potential buyer therefore needs to be confident that the seller will still be in a position to execute any additional documentation required before the company is wound up.
Factors for potential buyers to consider when purchasing the branding of a company include:
1. Are they buying a registered or unregistered trade mark?
- If the mark is registered, is it for an up to date version of the mark? Does it cover the core goods or services of interest to the potential buyer? Has the mark been put to genuine use in the country where it is registered, or is it potentially vulnerable to a third party challenge on the grounds of non-use? What name and address does the registration stand in? Do various updates need to be recorded against the current registrant’s name and/or address on the trade mark register before the assignment of the mark to the potential buyer can be recorded? If so, who will pay for these additional recordals? Are there any charges or debentures currently recorded against the registrations? If so, have these charges or debentures now been cancelled and who will be responsible for their removal on the register (if recorded)? Are any of the registrations subject to a licence agreement? Is the registration currently subject to any third party challenges? If so, what is the status of that challenge?
- If the mark is pending, what is its current status? Is it subject to an examination objection or a third party opposition? If so, what is the current status of these objections and what deadlines need to be met to keep the application live? Does the application cover a current version of the mark and cover the relevant goods and/or services of interest to the potential buyer?
2. Is the seller of the trade mark currently taking legal action against any other third parties who might be infringing their mark?
3. Is the potential buyer purchasing the goodwill associated with the mark?
4. Is the potential buyer purchasing the copyright associated with any designs or logos?
5. Are the marks protected in all of the potential buyer’s countries of interest or will the potential buyer need to invest in clearance searches and trade mark applications in new countries?
6. Is the potential buyer also buying any company names or domain names incorporating the trade marks?
7. Is the potential buyer buying any social media accounts associated with the IP or branding?
As a leading firm of IP specialists, Barker Brettell is very experienced in conducting due diligence of a company’s IP rights and advising clients looking to sell their IP, or prospective purchasers seeking to purchase IP.
Whilst a number of businesses have in recent months been unfortunately affected by the global pandemic, the fact that they have previously invested in and maintained a strong IP portfolio has stood them in good stead to ensure that the sale of their IP could raise much needed funds for the business whilst ensuring that the brand, which they have worked so hard for so many years to build up a reputation in, can continue to live on in plain sight of their consumers. Even in difficult times such as those we are currently in, IP should not be overlooked as it always has been and continues to be, one of the most valuable assets that a business can own.
Should you have any questions regarding this article or require our assistance in relation to any aspect of your IP then please do not hesitate to contact the author of this article, Lisa King, or your usual Barker Brettell attorney.
