Trademarkology: The Law of the Brand

Trademarkology: The Law of the Brand

Velcro Gets Creative in Protecting Its Brand from Generic Use

Posted in Trademarks

On August 28, I posted about a case involving the question whether “google” is a generic term for providing a search engine.

Now the good folks at Velcro Companies are fighting the same battle, but they’re trying to attack the problem without litigation about whether the name of their product is generic –  or possibly to provide ammunition in the event of litigation.

Yes, VELCRO is a brand, and a registered trademark.  In fact, there are 23 active U.S. registrations for trademarks including the term “Velcro.”  The oldest of those was issued in 1958 and covered goods described as a “notion-namely, a synthetic material sold in ribbon, sheet, or piece goods form, said material having complemental parts which adhere to each other when pressed together and adapted for use as a closure, fastener, or button for closing garments, curtains, or the like.” A 1975 registration uses terms that sound a little more familiar: “separable fasteners-namely, hook and loop-type fasteners and components thereof.”

The mark is also registered in a graphic form, which looks like this, which also covers “separable fasteners, namely, hook and loop-type fasteners and components thereof” and other things that sound very similar:

The trouble is, some benighted people might be out there referring to hook and loop-type fasteners made by other companies as “velcro.”  You might have done that yourself.

The normal response to this situation is for the owner of the mark to take action to remind the public that VELCRO is a brand, not a generic term, and that the generic term for this stuff is “hook and loop,” so please, please, please don’t use our brand name generically.  It works best if your campaign is one that people might like well enough to pay attention to rather than just turn past.  Velcro Companies has done that with a new campaign: “Don’t Say Velcro.”

The crown jewel of the campaign is a highly-produced video featuring people purportedly from the Velcro Companies’ legal team, singing and dancing while instructing you, with bleeped profanity, on the proper use of their mark.  In fact, some of the cast are Velcro Companies’ lawyers, but there are quite a few ringers in there, too.  You can watch the video here, and I encourage you to do so:

Velcro Companies also has a couple of registrations for a mark that at least suggests that consumers should watch for “real” VELCRO-brand products (below), but those aren’t nearly as good as a viral video.

If you like the video, there’s even a “behind the scenes” video here:

Promoter of Pugilist Products Fails to Prove Priority

Posted in Brands, Trademarks

In a case of first impression, the Trademark Trial and Appeal Board (the “TTAB”) decided that a licensee, even an exclusive licensee who has been appointed by the licensor as its representative for protecting intellectual property rights, cannot assert her licensor’s purported priority rights to prevail in a claim of likelihood of confusion. Moreno v. Pro Boxing Supplies, Inc., Opp. Nos. 91214580 and 91214877, Can. No. 92058878 (TTAB Sept. 8, 2017) [precedential]. Grab a ringside seat as we go through the blow-by-blow!

In one corner, we have Pro Boxing, Inc. who owns a registration for the mark CASANOVA for use with sporting equipment and trainer’s supplies, boxing equipment, and protective boxing gear with a claimed first use date at least as early as 1993. Pro Boxing, Inc. also owns the applications to register the marks for use with athletic, sports, and boxing equipment based on a claimed first use date of 2003.

In the other corner is Ms. Julie Moreno, who, since 2013, has been the exclusive licensee in the U.S. of the intellectual property rights of Deportes Casanova, a Mexican sole proprietorship that owns a registration for the mark in Mexico. Ms. Moreno sells boxing equipment manufactured by Deportes Casanova via the internet. The license agreement appoints her Deportes’ representative for protecting its intellectual property rights in the United States.

As the parties squared off, Ms. Moreno hit Pro Boxing, Inc. with a one-two punch when she opposed registration of Pro Boxing Inc.’s applications and petitioned to cancel its registration on the grounds of likelihood of confusion. She claimed priority based on common law use of the marks by Deportes Casanova in the United States, which she alleged dated back to at least as early as 1972. Ms. Moreno’s status as a licensee of Deportes Casanova afforded her standing in the consolidated proceedings. But she found herself on the ropes when it came to establishing priority.

Though the license agreement appoints Ms. Moreno as Deportes’ representative for enforcing its intellectual property rights in the United States, she led with her chin by not joining Deportes as an opposer/petitioner in the action. To pursue her likelihood of confusion claim, Ms. Moreno claimed priority based on Deportes’ purported common law rights. But until now, the TTAB has never had occasion to decide whether a licensee could establish priority by relying on the licensor’s use of the licensed mark.

The TTAB observed that a licensee’s use of a mark inures to the licensor’s benefit, but there is no authority for the assertion that a licensor’s use inures to the licensee’s benefit. Furthermore, the license agreement that governed the relationship between Ms. Moreno and Deportes specifically refrained from transferring any ownership rights to her so it could not be construed as tantamount to an assignment. Therefore, the clause in the license agreement appointing Ms. Moreno as its representative for protecting Deportes’ intellectual property in the U.S. could only be construed to extend to her use of it (and not to include Deportes’ use of it at any time). In light of the foregoing, the TTAB concluded that Ms. Moreno had failed to prove priority, so it dismissed the oppositions and denied the petition to cancel.

Ms. Moreno may be down for the count after this decision, but she may not want to throw in the towel. If she could persuade Deportes to toss its hat into the ring to bring a new proceeding, it may have better luck proving priority in another bout.



Posted in Brands, Trademarks

Cheerios® may have a trademark registration for the slogan The One and Only®, but the Trademark Trial and Appeal Board shot down its attempt to register the color yellow for its box, finding that it was not the one and only cereal with a yellow box. Cheerios have been a staple on the American family’s kitchen table for decades. In case you forgot what the box looks like, it has a primarily yellow background as shown below.

General Mills sought to register just the color yellow appearing predominantly on packaging for its “O” or “toroidal-shaped” oat-based breakfast cereal.

Individual colors are capable of serving as trademarks and may be registered. Colors, however, have to be associated substantially exclusively with the applicant and must have been used so prevalently that they have acquired secondary meaning. This “secondary meaning” is a legal threshold that means that consumers associate the specific color with a specific good or service. Some of the few successful single color trademarks include UPS’s use of the color brown, the Nexium purple pill, and Tiffany’s use of the robin egg blue on its jewelry boxes and bags.

General Mills’ application was refused registration largely based on the fact that several other breakfast cereals, including some that are oat based and/or “O” shaped also use the color yellow, which is cheerful and thought to promotes the production of serotonin and happiness. Just a few cited in the Board’s decision include:


Even though General Mills was trying to limit its registration to “O” shaped oat cereal, the Board found that there was so many other products using yellow as the primary color of the cereal packaging that they could not hold that the public associated the single color yellow with Cheerios alone.

Here is a look back at the Cheerios commercial from around 1952, which apropos for today was in black and white without color:

Is “Google” generic? If only there were a way to search for the answer on the internet!

Posted in Brands, Trademarks

You know you’ve been successful when the name of your product is so prominent that the public uses it to refer to that whole class of product.  When that happens, there’s good news and bad news.  The good part is that your product must be dominating its field.  The bad part is that you may forfeit your trademark rights in your product’s name.  Google is now dealing with a claim that the word “google” has reached that point and is available for everyone to use.

A word that is the name of a type of product is the generic term for that type of product.  Generic terms get no trademark protection.  When the public generally uses the name of a specific product as a generic term, it becomes a case of “genericide” – a killing of the trademark by becoming generic.

The situation is not common, but it happens.  A number of common words began as trademarks but passed over into unprotectable generic terms.  Aspirin, for one.  And escalator.  And cellophaneDry iceThermos.  Trampoline.  For some of those, there are other words we could use for the product, but it’s easy to see why we prefer to call it “aspirin” rather than “acetylsalicylic acid.”  For others, the term is so ingrained that it’s hard to think of what else we would call the product: what’s the alternative to “trampoline”?

By 14 Mostafa&zeyad (Own work) [CC BY-SA 4.0 (], via Wikimedia Commons

For obvious reasons, owners of dominant trademarks are not keen to have their marks cross over the line to become generic terms.  When that happens, their formerly valuable mark, which only they were allowed to use on their product, becomes fair game for everybody to use.  That is why the owners of dominant marks often make efforts to “police” use of their marks, or at least to remind the public that it’s a trademark, not a generic term.  We used to see ads every so often reminding us that “Xerox” was a trademark, so you could ask someone to “make a photocopy” of a document, but you shouldn’t ask them to “xerox” it.  (The growth of major competitors to Xerox probably alleviated that problem.)  Other product names that have fought this battle include “Kleenex,” “Clorox,” “Gore-Tex” and “BoTox.”

Which brings us to Google.  On August 14, 2017, David Elliott and Chris Gillespie filed papers asking the Supreme Court to consider whether the term “Google” has become generic.  The dispute arose when Elliott and Gillespie (who I’ll call E&G) registered over 700 domain names including the word “google” plus names of companies, products, people, places, etc. – such as “” and “”  Google objected and won, and E&G countered by trying to get Google’s registrations for the GOOGLE trademark cancelled on the ground that it is a generic term.

Their argument in Arizona federal court was that, because people use “google” as a verb meaning “to perform an internet search,” the mark has become generic.  Google’s response was that even if people use the term generically as a verb, that doesn’t mean that it is generic for search engines.  The federal trademark law allows a registration to be cancelled when the mark “becomes the generic name for the goods or services . . . for which it is registered,” but as Google pointed out, its registrations cover “computer hardware; computer software for creating indexes of information, indexes of web sites and indexes of other information resources” and other, longer descriptions – but the point is that the registrations cover providing a search engine, not the act of searching the internet.  Because all of E&G’s evidence went to use as a verb rather than use as the name of the goods and services Google’s mark is registered for, Google argued that the evidence didn’t prove anything about the real question in the case.  The district court in Arizona agreed and dismissed the case, and the Court of Appeals for the Ninth Circuit affirmed the dismissal.  (See here and here.)

So now E&G are taking their last shot by filing a petition for writ of certiorari at the U.S. Supreme Court.  It will be a while before we know anything about whether the Court will take the case.  The Court denies most petitions without even requesting a response from the other party.  If the Court is at least somewhat interested it will ask Google to file a response, and then determine whether to take the case.  Even if the Court decides to hear the case, that’s no guarantee that E&G would win.  There’s a long way to go before we ditch the term “search engine” and start referring to Bing as a “google.”

The Beyhive® is buzzing . . . about Trademarks!?

Posted in Trademarks

Beyoncé, also referred to as “Queen Bey”, has cultivated and inspired arguably the largest and most influential fan group in the world, known as the “Beyhive”. Beyoncé’s devoted legion of fans have become well-known for stirring a “buzz” on social media platforms like Twitter. The “hive” is always on high alert for all things Beyoncé and, on multiple occasions, it has even gone on attack to defend the music and pop culture icon. (See this U.S. Magazine article for 12 Times the Beyhive Attacked to Defend Beyoncé: The Beyhive has been buzzing with activity throughout 2017 and you might just be surprised to find out one of the hive’s most trusted news sources . . .

2017 has been “buzzing” with activity:

Beyoncé herself got the Beyhive buzzing back in February of this year when she broke the Internet with her pregnancy announcement. Beyoncé announced that she was pregnant with twins via Instagram and her infamous post has accrued over 11 million likes!

Social media has since become a “hive” of activity surrounding the topic and Queen Bey fans across the globe have been thirsting for news about the twins ever since. This is especially true due to the enormous efforts that Beyoncé and her husband, Jay-Z, take to maintain privacy.

In June, Beyoncé’s father, Matthew Knowles, reportedly broke the news of the twins’ birth via Twitter on June 18, 2017. However, according to TMZ, the twins’ birth certificates reveal they were born on June 13, 2017.

“Say my name, say my name . . .”

As the Beyhive swarmed with excitement about the news of their birth, secrecy continued to surround the twins’ names until . . . (drumroll) . . . the media stumbled upon two trademark applications for “RUMI CARTER” and “SIR CARTER”.

The applications were filed on June 26, 2017, by BGK Trademark Holdings, LLC, the same company that owns numerous federal trademark registrations for marks such as BLUE IVY CARTER, BEYONCÉ, and BEYHIVE, just to name a few. (Fun fact: “BGK” refers to the initials of Beyoncé Giselle Knowles-Carter.)

The USPTO may not be your first thought when it comes to sources of breaking pop culture news. However, Beyoncé and Jay-Z are no strangers to the world of intellectual property rights. They both routinely seek federal protection of their names, taglines, album titles, tour names, etc. Significantly, Beyoncé and Jay-Z previously also filed a trademark application for “BLUE IVY CARTER”, the name of their first daughter who is now 5-years old.

Beyoncé released the first image of her twins and confirmed their names via an Instagram post on July 14, 2017.

Challenges Facing BLUE IVY CARTER®

Interestingly, Beyoncé and Jay-Z first applied for the mark “BLUE IVY CARTER” on a Section 1(b), intent-to-use, basis back in 2012, shortly after their daughter was born. However, according to the USPTO, that initial application was abandoned in 2016 due to the applicant’s failure to file a statement of use or request an extension of time.

Beyoncé and Jay-Z filed a second application for “BLUE IVY CARTER” on January 22, 2016, which is currently facing opposition from a New England-based event planning company that already owns a registered trademark for “BLUE IVY”. The owner of Blue Ivy Events, initiated opposition proceedings on May 10, 2017, asserting three grounds for opposition: (1) priority and likelihood of confusion, (2) no bona fide intent to use the mark in commerce, and (3) fraud on the UPSTO. The second and third grounds for opposition are based, in part, on the alleged disparities between the Declaration of Mr. Jonathan Schwartz (the former VP of BGK Trademark Holdings, LLC) and the statements Jay-Z made to Vanity Fair during a 2013 interview.

In the 2013 Vanity Fair interview, Jay-Z defended the controversial move of trademarking their daughter, Blue Ivy’s, name by telling Vanity Fair they did so to prevent others from profiting off of their family: “People wanted to make products based on our child’s name and you don’t want anybody trying to benefit off your baby’s name. It wasn’t for us to do anything, as you see, we haven’t done anything.”

Even though Jay-Z and Beyoncé haven’t done anything . . . yet . . . there is no denying the strength behind the powerhouse couples’ respective brands. In fact, in May 2017, Forbes announced that Beyoncé and Jay-Z are officially a billion-dollar couple, with Beyoncé worth around $350 million and Jay Z $810 million. (Link to Forbes article:

There’s no telling how many more bucks could roll in if fans were given the opportunity to purchase Beyoncé-approved merchandise branded with her children’s names. I can picture the Beyhive swarming now . . . a Blue Ivy Carter clothing line . . . Rumi and Sir baby products. . . a Beyoncé-designed baby stroller and carriers. . . seriously, the sky would be the limit!

In an effort to keep the excitement and anticipation at a manageable level, it is important to note that, for now, the trademark applications for BLUE IVY CARTER, RUMI CARTER, and SIR CARTER are all still pending with the USPTO. Stay tuned for trademark updates! If you haven’t done so already, go ahead and subscribe to the Trademarkology blog now. By subscribing, you will receive a notification and email link to every new blog post as soon as they are released.


University Licensing Programs

Posted in Trademarks

Can you believe summer is almost over and students are heading back to school? Already some local high schools have begun their fall semester. And college students will be back on campus soon. When I began my freshman year of college, I promptly purchased a sweatshirt with the university’s name emblazoned across the front. That sweatshirt remains in my closet to this day. The bleach stains and holes in the sleeves prevent it from seeing the light of day as often as it once did. But they also show how well-worn and loved it is, and in no way detract from the comfort of wearing it.

I carefully selected that sweatshirt from a wide array of licensed merchandise available in the on campus bookstore. Many colleges and universities have programs and departments dedicated to managing the licensed use of their marks. These programs both promote and protect the school brands. Sometimes schools work with outside companies to help manage the licensing program. And the licensing programs extend far beyond apparel like my sweatshirt. A university may license its mark for use on office products, fitness equipment, health and beauty products, and a range of other goods marketed to consumers.

According to an article published by the Licensing Industry Merchandisers Association just a few years ago, college licensed merchandise accounted for approximately $4.62 billion worth of retail sales. This suggests the market opportunity for university licensing programs may be lucrative. Sometimes they are. But it is unlikely that every university will reap the extraordinary monetary rewards that certain schools (like University of Texas and University of Michigan, who frequently appear towards the top of lists of top selling institutions) enjoy. Nevertheless, university licensing programs abound. So why do universities typically initiate such licensing programs?

Promote sense of community. Students purchase university branded merchandise to show pride in being associated with the school. Branded merchandise also offers schools a way to stay connected and with alumni. Employees, donors, and other stakeholders in the university also like to display their connection with the school. Sporting branded merchandise is one way individuals promote a sense of community associated with the school.

Exercise control over brand. By starting a licensing program, the university exercises control over the quality of the goods and services offered under the mark and ensures that the students, alumni, prospective students, and other school supporters are receiving the same quality they expect to be associated with the school’s brand.

Channel of communication. Licensing programs offer another way to communicate with the school’s constituents consistently and effectively. In turn, the purchase, use, and display of those licensed products communicates with the broader public. In this way, a university may raise its profile and highlight its mission.

Supplement revenue stream. The royalty stream associated with licensing programs also supplements the revenues universities derive from other sources, and may be used to support the university’s mission through scholarships or other programs.

This fall, my college roommates and I will be attending our twentieth reunion. Undoubtedly we will commemorate that with the purchase of licensed merchandise. While nothing can replace the well-worn sweatshirt from my freshman year, perhaps I can find it a worthwhile companion.

CAN YOU SPOT A FAKE INVOICE? Don’t Lose Out by Paying Official-Looking Trademark Registration Renewal and Maintenance Invoices.

Posted in Trademarks

Today, we have a public service announcement in hopes you don’t fall victim to this ever-growing problem. If you have filed a federal trademark application or own a trademark registration with the U.S. Patent and Trademark Office (USPTO), you are probably going to receive—if you haven’t already—fake or misleading invoices. These scams are on the rise. Several of our clients have reported receiving these misleading invoices. They are often very convincing and look like they come from official government offices and they reference your particular trademark registration number and mark. DON’T BE FOOLED. The USPTO does NOT issue any invoices to trademark owners.

These private companies are generating the official-looking invoices based on the owner name and address shown on the USPTO records for trademark registrations and applications. These invoices usually purport to come from companies that use names that appear to be government offices. For example, some have come from U.S. Trademark Compliance Office or the Patent and Trademark Bureau. The USPTO maintains a copies of fake invoices that people have reported receiving. Click here if you would like to see some examples.

The invoices sometimes claim they are renewal fees or registration fees that place your mark in a useless database. Some may offer private services like monitoring or customs recordations. You are not required to use any of these private services. The invoices may contain tiny, fine print that explains what they are actually doing and that they are not part of the USPTO, but this is often overlooked.

Because the invoices look official, they are being routed to accounting departments who may not know about this issue. Make sure to discuss this important issue with your accounting staff and anyone else who may be responsible for receiving or paying invoices to make sure no one pays these scam invoices.

In some cases, people are misled and pay the invoices thinking they are paying renewal fees or other maintenance fees that are due to the USPTO. This can have dire consequences. If you fail to file the required renewal and maintenance filings with the USPTO and pay these private companies instead, your trademark registration could be cancelled.

The USPTO is making strides to educate people about these misleading invoices. They enclose information about these fake invoices with registration certificates and have additional information on their website to help people better understand the difference including a short video.

Benefits of Registration

Posted in Brands, Trademark Basics, Trademarks

Recently, Amazon rolled out its revamped brand registry. This is a recent example of an online marketplace encouraging intellectual property owners to embrace the platform by taking steps to protect such owners’ rights. Amazon encourages participation in the brand registry by noting that those who enroll “can work together [with Amazon] to reduce potential intellectual property rights violations and promote an accurate representation of [their] brand on Amazon.” But at the moment, not all brands may be enrolled with Amazon. To be eligible, the mark must be a standard character mark, must be the subject of a registration, and must match the brand printed on products or packaging.

This illustrates one more benefit of federal trademark registration. Registration on the principal register of the U.S. Patent and Trademark Office accords mark owners the following benefits under federal statutes and regulations:

  • Right to use the ® symbol to notify third parties the mark is federally registered;
  • Right to claim certain advantages in seeking registration of the mark abroad under certain international treaties;
  • Registration constitutes constructive use of the mark as of the date of the application and a right of nationwide priority against others (with certain exceptions) in connection with the goods and services identified in the registration;
  • Right to record the mark with U.S. Customs & Border Protection to block importation of products/materials bearing infringing or counterfeit marks;
  • Registration constitutes prima facie evidence of validity of the registered mark, of registration of the mark, of the registrant’s ownership of the mark, and of the registrant’s exclusive right to use the registered mark with the goods and services set forth in the certificate;
  • After the fifth anniversary of the registration date, the grounds for cancellation of the registration are limited;

In addition to the foregoing, there are some practical benefits to registration. To the extent a brand owner seeks to use enforcement tools made available by third parties or alternative dispute resolution proceedings, trademark registration may be necessary or desirable. In the case of some privately administered enforcement programs, like Amazon’s brand registry, registration may be a prerequisite.

Similarly, if a brand owner needs to enforce trademark rights against a cybersquatter through a Uniform Dispute Resolution Proceeding, registration of the mark is desirable because that evidence goes a long way towards proving one of the elements of the claim, namely, that the claimant owns rights in the mark. But if the claimant wants to enforce its rights through the Uniform Rapid Suspension system, registration of the mark is necessary (unless the mark has been validated through court proceedings or is the subject of specific protection under a statute or treaty).

Increasingly, federal trademark registration is not just something nice to have, but something necessary to allow a brand owner access to the full panoply of enforcement tools, especially online enforcement tools. If you have not yet registered your most important brands, consider consulting with a trademark attorney today.

Genericide of the Fidget Spinner

Posted in Trademark Basics, Trademarks

It seems everywhere I look, I see stores, gas stations, mall kiosks and even boutiques in Gatlinburg selling Fidget Spinners.  Every kid I know has one (or probably more than one).  So is FIDGET SPINNER a type of toy or a brand?

If you are not yet familiar with Fidget Spinners, then you must live in a retirement community or post land where kids are not allowed.  Fidget Spinners are small, palm-sized devices with two or three weighted arms.  You can pinch the center of the spinner with your thumb and index finger and then spin it.  Because the arms are weighted, it will continue to spin for quite some time.  Yep, that’s it.  It just spins.  The purpose is to promote calm and focus.  I have even seen adults with their own Fidget Spinners.  I have to admit I pick up my kids’ Fidget Spinners on occasion.

Fidget Spinners now come in a swath of colors and designs, with NFL and college team logos, super heroes, and other licensed characters.  Here are some examples available at the NFL Shop [Go STEELERS®!]:

After kids started getting interested in these stress-relieving devices, stores couldn’t keep them in stock fast enough.  It’s no surprise that a flurry of trademark applications were filed by different people trying to capitalize on the name FIDGET SPINNER.   They didn’t do it fast enough. The world was already calling all toys of this variety of spinning toy FIDGET SPINNERS.

In the last few months, nine different folks filed federal trademark applications to try to claim exclusive trademark rights to the name FIDGET SPINNER.  The first was filed on March 1, 2017, Serial No. 87/353,729.  The Trademark Office refused registration on the ground that the name FIDGET SPINNER was widely used by others to refer to the type of toy such that the words could not qualify as a trademark brand.  The applicant has not yet responded, but it appears the application will spin out.

When you launch a new kind of product, the cardinal rule for trademark protection is to educate the public about what kind of product your have.  You have to assign it a generic name as well as your specific trademark.  The word used to identify the toy species should be a noun.  The word used to identify the brand of toy—the trademark—should be treated as an adjective.  If the kind of product doesn’t yet exist, consumers are likely to use your trademark brand name to identify the kind of product.  In trademark law, this is called “genericide”.  ASPIRIN is a classic example of a product that first started out as a trademark [adjective] for a type of pain reliever [noun] but became used by the general public as the noun, ultimately resulting in loss of its trademark rights.

A simple Google® search reveals a lot of third party use of FIDGET SPINNER as a noun to identify the generic type of toy involved.  There is even a Wikipedia page dedicated to the Fidget Spinner.  If the first company to market a Fidget Spinner was thinking about trademarks, they should have marketed the toy name FIDGET SPINNER [adjective] along with the wording they wanted people to use for the type of toy  [noun], perhaps “FIDGET SPINNER brand of hand spinners or spinning toy.  It might not have saved them, but it would at least have given them a shot to try to develop rights in the words.  Other examples of marks fighting against use of their brand names as generic nouns include BAND-AID® , with advertising focused on getting consumers to know they are the BAND-AID brand of bandages, and Coca-Cola, working to ensure that COKE® is not generically used for all types of soda, especially its rival PEPSI®.

In the meantime, embrace the craze and try a Fidget Spinner yourself.  You might just like it.  The STEELERS® Fidget Spinners above cost less than $10, but there are some crazy expensive Fidget Spinners out there for the serious connoisseurs.

Coach + Kate Spade = Quirky, Preppy, Playfully Sophisticated Grippables

Posted in Brands, Trademarks

Coach logo

Coach, the maker of luxury handbags and various other grippable accessories, announced that it will buy Kate Spade, a competitor in the luxury handbag arena. Both companies also sell clothing and other products, but they are probably best known for the bags.

Kate Spade logo

According to reports in the press, Kate Spade is more popular with younger purchasers, partly because of its designs (variously described as quirky, preppy, and playfully sophisticated), but also because it offers occasional “flash” sales online, where you can satisfy your quirky-preppy-playfully sophisticated luxury handbag needs at deep discounts. Coach apparently intends to cut way back on the flash sales.

One analyst said the move reflects the “woes” of the industry, at least part of which come from reliance on the “beleaguered” department-store trade channel. Just reading about it is enough to make you want to drown your sorrows in some luxury leather goods. The companies also apparently have difficulty getting consumers to pay full price. Looking over the Coach website in particular, it’s not hard to see why that might be a struggle. Both companies make some very attractive products, but their product lines in some cases, let’s say, extend beyond the attractive. But they’re not cheap, and at least to my eye, there is not a close correlation between price and attractiveness. I suppose people who like ugly handbags are also entitled to pay hundreds of dollars for one, and if Coach can get them to pay full price, more power to them.

The whole sector is a testament to the power of trademarks. That particularly applies to handbags, some of which seem to have been designed less for aesthetics and more for the effectiveness of conveying the brand name.

The announcement seems to have given Coach’s stock a boost. It had been trading around $39/share before the announcement and jumped to around $45/share. Both companies are off from where they stood in the 2013-2014 period, but both have jumped with rumors and then actual news of the deal. It would be shocking if the rationale behind the acquisition did not involve use of the word “synergies,” and it is certainly possible that the rationale is correct.

According to a release by Coach, the company plans to “create the first New York-based house of modern luxury lifestyle brands, defined by authentic, distinctive products and fashion innovation.” This may be the heart of the deal: a plan to bring together a group of brands, each of which has substantial appeal, under one organization that can efficiently use its expertise in the luxury goods market. LVMH, which includes the Louis Vuitton, Moët, and Hennessy brands that give it its initials, along with others such as Christian Dior and Tag Heuer, has pursued that strategy. Judging from its stock price over the last 5 years, it has done so successfully. Coach would have a long way to go to match the LVMH stable of brands, but you have to start somewhere.