Trademarks are not just legal tools; they are critical assets that can significantly influence your business's valuation and market presence. The dramatic story of WeWork, as detailed in the documentary "WeWork: Or the Making and Breaking of a $47 Billion Unicorn," provides a stark lesson in the complexities of trademark valuation. When I watched the movie, I was shocked to see just how valuable some people consider their trademarks to be.
When WeWork filed its S-1 with the SEC, a startling detail emerged: the company had paid $5.9 million to its founder Adam Neumann for trademark rights. This transaction, involving just a handful of trademark applications, later had to be reversed. Although an outlier, this case underscores how intangible assets can sometimes be overvalued, skewing the perceived stability and worth of a business. In the WeWork situation, the high valuation was a red flag to investors seeking to determine the true value of the company. Because it relied so much on short-term leases and had humongous marketing and design expenses, the company had to inflate their value somehow. In that situation, they chose to add a few extra zeros to the value of their trademarks.
Key Takeaways for Your Business:
Realistic Valuations: Trademarks are a valuable asset to any business. Trademarks must be valued based on tangible metrics such as market recognition, enforcement history, and licensing agreements. Overvaluation, as seen with WeWork, can signal red flags to investors and stakeholders. Some factors that make trademarks more valuable include licensing agreements, successful efforts at fending off imposters, a "family" of marks that have become incontestable due to long and continuous use.
Strategic Trademark Portfolio Management: For new ventures, focus on creating strong, distinctive marks that can be legally protected. For family businesses, it’s vital to continually innovate and adapt existing trademarks to current market conditions while maintaining the heritage value.
Intellectual Property Evaluation: Ensure your IP evaluations are grounded in reality. This involves regular audits and consultations with IP professionals to align your trademark strategy with your business goals.
Are the WeWork trademarks strong? Somewhat. They are not "fanciful" -- made up words that will lay the foundation for the strongest brands (think Starbucks, Kajabi (which used to host my trademark class), Lululemon). But, WeWork has worked hard over the years to monitor and enforce their trademarks. They have more than two dozen proceedings before the Trademark Trial and Appeal Board.
These considerations matter for trademarks. At the time they filed the S-1, some of the marks subject of the multi-million dollar valuation had not even achieved registration yet. Intellectual Property evaluations should be grounded in reality; this was apparently not the case for WeWork.
Whether you're scaling a new startup or stewarding a multi-generational enterprise, understanding and strategically managing your trademarks is essential. Assess your current trademark strategy and consider how it aligns with your long-term business objectives. For personalized advice and a deeper dive into optimizing your trademark assets, feel free to reach out.
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