As I read Amy Zipkin’s article in yesterday’s New York Times about the litany of formerly defunct brand names that have been re-introduced to the market, I kept noodling on the same question: is it easier to launch a new brand name or to reconfigure an old one?
The naming consultant in me would like to think that it is easier to introduce a new brand name. That is, after all, how I make my living. But building brand recognition is expensive, and folks like Sharper Image and Circuit City have spent oodles on their brands over the years. Just because their business models didn’t work doesn’t mean their brands can’t still pull in big bucks. I bet most folks don’t even know that these companies have gone under. I do know these companies are belly up, and yet, if I saw a Sharper Image product on the shelf tomorrow, I’d still give it all the positive associations I had with that brand before they went under. That’s gotta be worth something.
Burt, great insights and great question. The Zipkin article definately demonstrates the enormous commercial value associated with brands, even those that have gone belly up, so to speak.
From a legal perspective, the question is fascinating too, because those who attempt to revive or reconfigure an old brand, must be well-advised to know the rules on trademark abandonment. Legal abandonment of a trademark occurs in two ways: (1) Non-use without a bona fide intent to resume use; and (2) abandonment may be presumed upon three consecutive years of non-use.
So, depending on the facts, whether legal abandonment has occurred (or even if it is arguable) should play an important role in the value of the deal. Putting aside the more complicated issue of a possible unfair competition claim based on “lingering goodwill,” once legal abandonment has happened, the prior trademark rights are extinguished, and may become available for others to use and attempt to create their own rights in.