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A trademark without brand and product

A trademark without brand and product

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

A set of high profile and high volume Slovene magazines was seized by a bank (A) from a bankrupt company a couple of years ago. Specifically, trademarks were acquired “only”, while journalists and other assets stayed by the company (B) that previously 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 afterward produced the same type of magazines separately.

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

What a mess!

First of all, Bank (A) obviously considered that trademarks have value even if detached from all other brand assets. Otherwise, they would not seriously consider selling those trademarks. Why would they evaluate a situation like that? Because they do not know the “b” of branding—and all those evaluating the situation with them, including journalists and financial institutions. They mistake a brand for a 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 from a business perspective, but it was legally highly questionable. They immediately constructed new trademarks around the remaining assets they kept in their possession. Questionable, namely, is that the new trademarks were not far from trademarks now owned by bank (A). Both the names of the “cloned” brands of Company (B) and their visual identity were so close to those owned by bank (A) that they should have never passed the trademark registration process.

Values

Leaving legal issues away from our interest, at least Company (B) “understood” that a trademark is any brand’s easiest and least valuable asset. But they missed that the brand is always a totality of all identity and asset elements. Trademarks as an identity element (and asset) are the easiest and the cheapest. But that does not mean it can be restored in the 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 a 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)? They have spent some money on something that has no value since trademarks were detached from other brand assets.

One can imagine the reasoning of Company C, though. 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 liabilities only. While each asset represents a liability on cash flow, it is also true that assets (in the form of 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 a trademark is not much more than nothing. They thought that they cut costs by buying only trademarks and avoiding taking responsibility for people who cost much more since they have higher value attached to a brand that used to have quite high value. As we know, a constant co-branding process occurs between a brand and people working for that brand. Higher brand value means higher prices for people working for that brand – and vice versa. Should you wish to have a highly valued brand, you cannot avoid the costs of such a brand. Company C avoided plunging directly into high-cost, high-brand journalists.

Lessons

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

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