- Brands can be extremely valuable assets for companies and represent values greater than reported assets. Toys "R" Us auctioned off brands like Toys "R" Us and Babies "R" Us to cover debt from bankruptcy. - Strong brands allow companies to charge premium prices and enjoy lower marketing costs due to brand recognition. Apple is cited as an example that is able to charge high prices due to its brand value. - Some companies take extreme measures to protect brand value, like Burberry burning over $90 million of unsold goods to prevent dilution of its brand. Companies see tangible assets destroyed in order to protect more valuable intangible brand assets.

1. 20 T h e L i c e n s i n g J o u r n a l OCTOBER 2018
Brand Licensing
Sebastian Custodia
Preventing Brand
Value from Going
Up in Flames
A brand can be one of a com-
pany’s most valuable assets. As
discussed in “Geoffrey the $500M
Giraffe” (http://foresightvaluation.
com/geoffrey-the-500m-giraffe/),
the value of a brand has the poten-
tial to cover millions of dollars in
debt and fees during liquidation
events and can even represent
values greater than 100% of a
company’s reported asset values.
Such was the case when Toys
“R” Us auctioned off much of
its intellectual property, including
the Toys “R” Us name, the Babies
“R” Us brand, its collection of
domain names, and the beloved
Geoffrey the Giraffe mascot and
logo to cover its accumulated debt
and legal fees as a result of bank-
ruptcy proceedings.
Traditionally, the value that a
brand (including all accompany-
ing trademarks, copyrights, etc.)
provides to a company can be
boiled down to two main cat-
egories: the ability to charge
premium prices and the ability
to take advantage of diminish-
ing marginal marketing costs as
a company expands. A strong
brand can allow a business to
charge premium prices for its
products and/or services, above
and beyond what a consumer
would typically be willing to
pay. The most obvious example
of this branding power at play
is with Apple. Fanatics (myself
included) will argue that Apple
products are superior to the com-
petition in many different ways,
which results in higher priced
phones, computers, tablets, etc.
Although superior product fea-
tures certainly contribute to the
company’s premium prices, it
is undeniable that the brand—
which has become synonymous
with quality, design, and inno-
vation—drives consumers to pay
excessive prices. The value of the
Apple brand is on full display
when looking at industry profit
statistics. According an Investor’s
Business Daily article published
in February of this year, Apple
claimed 87% of total industry-
wide smartphone profits while
only accounting for 18% of
unit sales in the previous quar-
ter. (www.investors.com/news/
technology/click/apple-rakes-in-
bulk-of-smartphone-profits-but-
small-slice-of-unit-sales/).
Going to Great
Lengths to Protect
Brands
Given the immense value that
a well-established brand can
provide, it is unsurprising that
many companies take extreme
measures when it comes to pro-
tecting that asset. The traditional
measures that companies take to
protect their brand include set-
ting strict internal regulations on
how the brand is used, as well
as air-tight restrictions on how
the brand is used externally for
brand representatives or licens-
ees. A good example of these “tra-
ditional” brand protection efforts
is the Louis Vuitton lawsuit
against My Other Bag, claiming
that the parody handbags dilute
the “distinctive quality” of the
Louis Vuitton trademarks. In fact,
many companies actively police
the use of their trademarks and
copyrights by employing staff to
search for instances where such
use does not comply with their
standards in an effort to intervene
and avoid any lasting damage to
the brand.
Aside from these traditional
efforts, some companies take
brand protection to the next
level. According to a recent BBC
article (www.bbc.com/news/busi-
ness-44885983), luxury fashion
retailer Burberry literally burned
£28.6 million worth of clothes,
accessories, and perfumes last
year. In an effort to protect the
Burberry brand from dilution
via unwanted discount sales or
theft, the company incinerates
its excess stock in a specially
designed furnace that captures
the energy from the process for
re-use (which does little to please
the environmental proponents
who oppose this process). Over
the past five years, it is estimated
that more that £90 million worth
of Burberry goods have suffered
the fate of the furnace—which
gives us a pretty good under-
standing of just how highly the
company values its brand. For
further context, we can examine
Burberry’s most recent Annual
Report, dated June 6, 2018.
The company reports roughly
£19 million and £40 million in
“Additions” to its “Intangible
assets in the course of construc-
tion” over the last 2 years. From
this we gather that Burberry
incinerates tangible goods for
the sake of protecting its brand
that are valued at amounts nearly
equal to, if not greater than, the
amount it spends on developing
new intangible assets.
It is important to note that
Burberry is not alone in the prac-
tice of destroying its unsold goods
for the purpose of protecting its

2. OCTOBER 2018 T h e L i c e n s i n g J o u r n a l 21
brand. Constant pressure from
shareholders for expansion and
production often pushes fashion
companies to produce excess
stock—presenting them with
the choice between costly inven-
tory repurchases (regularly fol-
lowed by destruction) or running
the risk of brand dilution and
devaluation. The measures that
these companies go to in order
to protect their brand is a clear
indication of just how valuable
they are. Burberry and its peers
watch tangible value go up in
flames to secure the massive
future cash flows made possible
by their intangible assets.
Sebastian Custodia is an
Associate at Foresight Valuation
Group, a Silicon Valley–based
intellectual property advisory
firm, where he specializes in the
valuation of intellectual property
assets including patents, brands,
trade secrets and software.
His experience in finance also
includes work in M&A advisory,
high-tech compensation consult-
ing, and solar energy financing.
He holds a B.S. in Finance from
Santa Clara University and is
currently pursuing his MBA
at the USC Marshall School of
Business.
Right of Publicity
Adam S. Baldridge and Nicole
Berkowitz
In March of 2018, tennis great
Roger Federer ended his twenty-
one-year relationship with Nike,
and in June 2018, entered into
a $300 million deal with Uniqlo,
a Japanese clothing company.
Although Nike no longer has a
clothing contract with Federer,
Nike still owns the trademark
registration in the iconic styl-
ized RF logo in various registries
across the world in classes of use
covering clothing and footwear.
See U.S. Trademark Reg. No.
3,838,371. During a press con-
ference at Wimbledon, Federer
suggested that he would one day
gain the rights to the RF mark,
stating:
The RF logo is with Nike at
the moment, but it will come
to me at some point. I hope
rather sooner than later, that
Nike can be nice and helpful
in the process to bring it over
to me. It’s also something
that was very important for
me, for the fans really. Look,
it’s the process. But the good
news is that it will come to
me at one point. They are my
initials. They are mine. The
good thing is it’s not theirs
forever. In a short period of
time, it will come to me.
RogerFederer,PressConference
(July 2, 2018), http://www.
wimbledon.com/en_GB/news/
articles/2018-07-02/2018-07-02_
roger_federer_first_round.html.
Federer’s
Uncertain Hope in
Obtaining the RF
Logo from Nike
From a legal perspective, it is
not clear why Federer is so opti-
mistic about recovering the RF
trademark. Perhaps some provi-
sion of his contract with Nike
provided him the right to one day
receive these rights. Federer is
one of the most famous athletes
of all time. He currently has won
more majors than any male ten-
nis player in the “Open Era,” and
he is admired all over the world,
not only for his excellence on
the court but also for his humble
attitude and family man persona
off the court. See FP Staff, Federer
Most Trusted, Respected After
Mandela in the World, FirstPost
(September 21, 2011), https://
www.firstpost.com/sports/federer-
most-trusted-respected-after-man-
dela-in-the-world-survey-88642.
html.
Short of a contractual provi-
sion, Federer may be attempting
to look to his right of public-
ity for the logo which includes
his initials. Jurisdictions within
the United States, however, are
divided over whether foreign indi-
viduals, like Roger Federer, can
claim a right of publicity in the
United States. Whether a person’s
initials are entitled to the same
protection as one’s name may be
another issue as well as whether
he could satisfy the elements of
an actionable claim. Likely the
biggest issue is whether Federer
gave Nike consent in his contract
to use his initials when Nike origi-
nally developed the RF logo and
applied for the trademark regis-
tration in 2008. Whether Nike’s
continued use of the RF logo after
the expiration of its agreement
with Federer exceeds the scope of
Federer’s consent would depend
on the specific language in the
agreement. See, e.g., Sharman v.
C. Schmidt & Sons, Inc., 216 F.
Supp. 401, 405-06 (E.D. Pa. 1963)
(considering whether the use of
plaintiff’s photograph exceeded
the authorization of his release
to use the photograph); Cepeda
v. Swift & Co., 415 F.2d 1205,
1207-08 (8th Cir. 1969) (finding