Breaking down boundaries without busting budgets: takeaways from MTAL Europe 27 Mar 17
Last week, World Trademark Review hosted the Managing the Trademark Asset Lifecycle Europe conference in Munich. Much of the discussion on the day focused on how trademark teams can ensure that relationships across the corporate enterprise are meaningful and cooperative, rather than conflictive or inefficient. And, of course, juggling budgets to accommodate such efforts was a recurring conversation point. In this blog we present some selected takeaways from the day.
Can’t we just get along? Making friends with marketing – The opening session explored how creative professionals view the role of trademarks and the barriers that can exist between marketing and legal. It is often said that legal is seen as ‘the department that says no’ to creative colleagues and Oran Arif, in-house solicitor, marketing properties, Mars Incorporated, suggested that counsel need to understand the brand’s philosophy in a bid to not provide counsel at odds with how marketing want to communicate to consumers. In interacting with marketing, then, he points to two main areas of focus: “The first is making sure that we understand the commercial context and aims. Second, it’s important to establish early interaction and to understand the background to projects.” This isn’t always easy but by speaking marketing’s language and demonstrating a nuanced understanding of its aims, trust can be built up. This also enables legal to ask the questions it needs answers to in order to offer meaningful support, without being seen as obstructive. Alec Cameron, senior legal counsel, IP and commercial digital divisions, at Telefonica SA, also recommended ‘away days’ to build that trust: “We run workshops where we go off with people in marketing and commercial teams, and sometimes bring in external lawyers, once or twice a year. It’s a cost but they are very useful.”
Build a big (or small) book of brands – One important tool for both marketing and legal is a brand guidelines book. Arif explained: “We have brand books for all our products and it is a marketing led product. That is what we use to build our knowledge of the brands but they are also an opportunity to get involved in the brand’s evolution. Rather than a separate ‘do’s and don’ts’ legal document, if you have a brand document that encompasses everything, when it goes to local teams they have all the information they need.” While the Telefonica brand books can stretch to 60 pages, he notes that they can be shorter and available in different formats. Jennifer Chung, assistant general counsel at Time Inc, concurred: “We have information on intranet site on brands – addressing things like where we have rights, how to use a symbol, etc. It’s basic information, with link to send a question to legal.”
But consider the context – Despite the creation of a ‘brand rulebook’ that goes to different jurisdictions, sometimes counsel need to be flexible in how legal properties are used. Arif noted: “When it comes to counsel reviewing activities where brands go into new formats, you have to make sure it’s not a kneejerk reaction against the way it will be executed just because it is different to what has been done previously. You need to keep brands alive and grow them. You have to make sure counsel don’t just say ‘no’ but look at how to build new executions into the portfolio.” As an example, Cameron recalled a local puppet-based advertising campaign in Slovakia that – in terms of character and messaging – was outside the usual brand scope. He noted: “Our first reaction was that this isn’t part of our usual approach. But it was wildly popular and illustrates that you need to not kill off something that will be commercially successful. You need flexibility – it is not always the case that a legal purist view is best.”
Know your place (and goals) – The above relation-building is all predicated on an understanding of how the trademark team can and should support business colleagues. To be successful in this regard, as well as ensure that the team’s own activities meet corporate expectations, it is important to have a nuanced understanding of the company’s objectives. For example, in 2007 private equity company Pallinghurst Resources acquired Unilever’s entire global portfolio of trademarks, licenses and associated rights relating to the Fabergé brand. For the new owners the ultimate end game is to build up value for a later sale. Kevin Mutch, group legal director at Fabergé, noted that the initial step taken by the team was to terminate many licenses so the company effectively had “a sheet of paper listing trademarks”. The strategy then became focused on establishing “a broad platform of registrations around the world for a range of luxury goods and services”. This ring-fencing of the brand is a direct consequence of the desire to build the asset into a launching pad for future owners. By contrast, at Philips Intellectual Property & Standards trademark professionals are embedded in the IP legal department and adopt a ‘cross-IP’ perspective, working closely with different business units. Laure van Oudheusden, IP and standards manager, Philips Intellectual Property & Standards, explained: “The goal is to understand the aim of the business – we need to understand the product, industry trends and the competitive environment. We take the positon of ‘what is the business doing and how can we help it support its profits and margins?’ And you need to look at the different protections – whether trademarks, patents, designs, trade secrets or copyright. For us it doesn’t make sense to have separate discussions but you need to know the business. For instance, I was at a show yesterday to learn about the dental industry as I need to know about the industry and competitors.”
Do the sums – Of course the legal team also has to act as a financial manager as well as a business partner. An intimate understanding of the product pipeline and business plan means that budgeting can be managed and properly projected – particularly with regards to possible conflicts and escalating costs. van Oudheusden explained that her department operates as its own business unit, with profit and loss statements, and engages in quarterly reviews with other stakeholders to ensure that portfolio management and enforcement projections are on track. Crucially, “for big litigation, where we could spend significant amounts, we forecast in advance”. Elsewhere, in a bid to facilitate a positive relationship with financial colleagues, David Llewellyn, principal trademark counsel at ARM Limited, noted: “I warn of curve balls and unexpected costs that could come up. Normally your budget is a few lines on a spreadsheet so advanced warning of things helps build trust.”
Placing trademark counsel at the epicentre of financial development – A solid relationship with financial colleagues is also essential because corporate counsel have access to the very datasets that help the company ascertain – and exploit – the value they are sitting on. As Maximim Gourcy, legal IP manager in the plastics division at DS Smith, noted: “Sometimes a brand will be sold for a few thousand euros as the company didn’t recognise the value or have a system in place that provides the information you need to value it. It is the role of the IP specialist to build this system.” As to what elements can be tracked, he recommends four types of dataset. The first is how much has been spent on the trademark portfolio – including attorney fees, opposition costs, and the staff time spent maintaining them. The second relates to the strength of the asset and “what has the company has gone through to get trademark(s) registered”. As well as the legal foundations, another dimension is the strength of the asset in the market: “The IP team has to work closely with different teams – marketing, communications, sales – and keep a record of the trademark in the market. For instance, what has been done in terms of communications and advertising?” Finally, it is important to consider the value of the trademark incoming years. Gourcy noted: “This is tricky but one of best tools is internal licensing. In large companies, IP can be placed into a holding company and internally licensed. This allows you to put a license fee on the brand and that is an important step in terms of valuing the asset.”
The challenges of capitalisation – It is only when armed with this knowledge that direct efforts to capitalise brands pays off, whether through purchase and sale, licensing, financing or balance sheet optimisation. Of course, brand-base lending is a practice that is still, in many ways, feeling its way, with Torsten Mann, executive consultant at Biesalski & Company, noting that challenges exist for those seeking to leverage only the brand in transactions: “Banks will accept brands as collateral but usually only as part of a collateral package.” Therefore, triple-rated companies will find it easier to leverage the brand as part of a capitalisation package but the practice is growing and trademark counsel have a key role to play in preparing assets for later exploitation, whether through the bolstering of licensing operations, the creation of brand architecture or the strengthening of brand positioning. As mentioned earlier they are also well-placed to develop the data-set that illustrates value. They just need to ensure that relationships with other corporate stakeholders are operating to the max.
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