The Power In A Name
By Garth Martin | December 3, 2018
Current Market Overview
You may be unfamiliar with the industry of trademarks from a legal or regulatory standpoint, but very familiar with it from a marketing standpoint. Take Nike and McDonald’s, for example. I’m sure that you immediately pictured the Nike Swoosh and “JUST DO IT,” or the Golden Arches and “I’m Lovin’ It” — two iconic trademarks with significant brand value. In a digital-driven world, trademarks are increasingly important as IP owners seek to maximize and protect the value of their brands.
As described in the U.S. Patent and Trademark Office (USPTO), a trademark is a brand name . What exactly is the definition of a brand name, you might ask? Is it a word, a picture, something else entirely? Well, actually it’s words, symbols, and may even be a combination. As defined by the USPTO:
Trademark — “any word, name, symbol, device, or any combination used or intended to be used to identify and distinguish the goods/services of one seller or provider from those of others, and to indicate the source of the goods/services. ”
Because trademarks are so integral to the identity of an enterprise, they are often intricately created, but as such, can be difficult to protect from counterfeiting, misuse, misappropriation, etc. For example, Fortune 500 management teams are continually focusing on maximizing their IP assets — 41% of management teams saw an increase in trademark budgets according to a recent survey of 440 CEOs, CFOs, CIOs, and CTOs . Budgets are increasing, but also enterprises are broadening their reach to capitalize on the potential benefits of new trademarks assisted by a simplified clearing process. According to the World Intellectual Property Organization (WIPO), 2017 saw the largest number of applications to the Madrid system (registration and management system applying to 100+ countries) with 56,200 filings, marking the 8th straight year of trademark filing growth — L’Oreal led the pack with 198 applications, compared to the second most at 117 . That’s a lot of trademarks!
With the increase in trademarks filed and a seemingly greater focus placed on trademarks by enterprises, you would also expect an increase in the monitoring of trademark abuse. Due to the complexity and time intensity of trademark monitoring across the world and across thousands of channels, many organizations lack adequate monitoring practices. An OECD report of findings released in Jul-18 stated that Italy, a country known for exporting high-end luxury goods, loses up to 3% of its entire GDP per year due to counterfeited goods. Out of total world trade, about 2.5% of goods are counterfeit or pirated, according to the same reports . A disappointing statistic for both producers and consumers.
The Role eCommerce Plays
eCommerce also plays a critical role in online branding and trademark but provides for immense opportunities for trademark abuse. Despite their best efforts to mitigate, online marketplaces such as Amazon and eBay unfortunately provide for an unprecedented opportunity for counterfeit sales through the low barriers to entry for millions of vendors with easy access to a massive distribution channel. Currently these platforms are rapidly growing — U.S. eCommerce growth is expected to hit 16% for 2018, and Amazon’s platform alone is expected to grow by 29%  — stealing market share from traditional retail channels. Not only are overall eCommerce sales rapidly increasing, but eCommerce currently presents an easier distribution channel for counterfeit goods and a greater opportunity for fraudulent behavior. For example, traditional retail channels (brick-and-mortar stores) steered clear of counterfeit sales to avoid tarnishing their own brand value. By comparison, online marketplaces offer a low-risk and low-barrier-to-entry platform where the vendor’s reputation is tarnished for selling counterfeits, typically not the platform. Companies like Birkenstock, a global footwear company, in 2016 ceased selling their products on Amazon due to the number of counterfeit products and unauthorized retailers on the site . However this rising importance of eCommerce sales and the opportunity it provides counterfeiters also presents an opportunity for organizations combating this illegal activity. World leading brands are equipping themselves to fight counterfeit and pirated goods by more appropriately monitoring expansive online channels, rapidly increasing trademark applications, and other common avenues to monitor for trademark infringement. As a result, the marketplace and demands for solution providers are evolving and attracting innovative technologies (reference Yellow Brand Protection acquisition below).
A Provider Positioned For Growth
In this environment, the landscape consists of:
- Dominant brands with massive IP assets (think Nike Swoosh / “JUST DO IT”)
- Management teams placing increasing importance on trademarks (growing trademark budgets)
- Increasing number of trademarks (improved clearing technology and #2)
- Increasing number of infringements
- Rapidly growing eCommerce channels enabling counterfeit and fraudulent activity.
These macro market conditions (1–4 listed above) present a huge opportunity for trademark solutions providers. One such leader providing trademark clearance and protection solutions is Corsearch, which equips organizations and legal teams in the establishment of new trademarks (screening/searching techniques) and in trademark protection (online protection/watch functions). Corsearch, furthering its trademark protection capabilities via acquisition, expanded its solution offerings with the acquisition of Yellow Brand Protection, a leading provider of online anti-counterfeiting and brand protection for clients and brands globally. Yellow Brand’s solutions leverage machine learning capabilities, and with automated spiders, scan and scrub web content to identify infringements, going so far as to provide enforcement. This acquisition highlights the growing need for trademark protection that utilizes artificial intelligence to allow for advanced search functionality beyond what human labor may be able to process independently. As a result of these industry factors, we expect continued attention focused on brand protection, infringement, monitoring, etc.
7MA Recent Digital Brand Solution Transactions
7 Mile Advisors represented Corsearch Inc. and its related entities, trademark and domain solutions leader, in their acquisition of Yellow Brand Protection AB of Sweden, a leading global provider of online anti-counterfeiting and brand protection services. The acquisition solidifies and further expands Corsearch’s full-service brand protection offering for clients and brands globally. Yellow Brand’s solutions leverage machine learning capabilities and automated spiders, adding to the already sophisticated platforms offered by Corsearch.
7 Mile Advisors represented Uniguest Inc. in their strategic acquisition of ONELAN Limited on May-18. Uniguest is a digital solutions provider serving clients as a cybersecurity technology specialist. ONELAN provides Uniguest with digital signage and visual communications solutions which complement its current portfolio of offerings.
7 Mile Advisors represented HelloWorld, Inc. as their exclusive sell-side advisor in their sale on Jan-18 to Merkle, a subsidiary of Dentsu Aegis Network. HelloWorld, a digital marketing solutions provider with a focus on promotion and loyalty solutions, provided Merkle an opportunity acquire an organization experienced in effectively engaging customers and driving desirable emotional and behavioral responses while also gaining access to some of the world’s largest brand names including Coca-Cola, Johnson & Johnson, and Microsoft
Author: Garth Martin, Associate at 7 Mile Advisors
 — USPTO
 — Trademark Survey
 — WIPO
 — OECD
About 7 Mile Advisors
7 Mile Advisors provides Investment Banking & Advisory Services to the Business Services & Technology Industries globally. 7 Mile Advisors advises on M&A and private capital transactions, and provides market assessments and benchmarking. As a close-knit team with a long history together and a laser focus on our target markets, 7 Mile Advisors helps its clients sell companies, raise capital, grow through acquisitions, and evaluate new markets. For more information, including research on the M&A markets, visit www.7mileadvisors.com.