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When Rebranding Means More Than Changing Names

1 November 2017
Corporate Counsel

Coach’s recent decision to change its name to Tapestry Inc. is one of many common moves by companies hoping to refresh their images in a rapidly-evolving retail sector. While the decision is a first step in a novel marketing strategy, it impacts the whole intellectual property portfolio of a company, which can be especially expansive and complex for those doing business globally.

Mayer Brown attorney Michael Adams, co-leader of the Global Brand Management & Internet Practice, sat down with Inside Counsel to discuss the legal implications of Coach’s rebranding decision. He has unique insight on how brands are managed strategically and shared with us how name changes are conducted and what they mean for the company.

While there are many possible reasons for Coach to change its name to Tapestry, Adams believe that it did so to reflect the company’s expanding portfolio of product lines (Kate Spade and Stuart Weitzman). As Coach acquires and looks to acquire more brands, it wanted to create an umbrella company not tied to a specific trademark, such as Coach. The likely reason for this is that Tapestry will include both lower-end and higher-end product lines in its portfolio.

“As a trademark is a signal to consumers regarding the quality of a product, is important for brand owners to maintain consistent quality under a specific mark,” he explained. “As more price conscious products enter the product line, Coach did not want to dilute the strong association of Coach to high-end, luxury items.”

In addition to registering its business name, Coach will need to either assign or update the ownership information associated with all its global trademarks to reflect the new ownership, per Adams. This is often an expensive project due to the high number of jurisdictions and assets likely at issue.

“Creating an umbrella company for brands that have a range of quality helps protect the brands known for high-quality from degradation by those brands owned by the company that do not have as high of a reputation for quality,” he said. “In short, it is a way to exercise quality control between various brands under common ownership.”

So, how does this type of decision impact the whole IP portfolio of a company?

Tapestry will need to enact a strategy to update its numerous global trademark records, which can represent a significant cost, which can either be borne up front or in a measured way over the period of about 10 years. Under either approach, costs will be significant; it’s really a matter of how the company wants to integrate those costs. In addition, the strategy of an IP Holding Company is one employed by numerous large companies and allows for ownership of all IP under a common umbrella while lowering risks of trademark degradation. Tapestry will also need to execute the proper inter-company licenses to allow for business use of the marks.

“The difficulty for a large international business comes in selecting the new name,” he explained. “It is very challenging to identify a name that is free and clear for use on a global scale. Once this is accomplished, the company will need to begin updating or assigning its trademarks to the new company, draft intercompany and other required licenses for the use of the brands as they are now owned by a different entity, and ensure that each of its local operations follows proper trademark procedures so that any new IP rights are acquired by the HoldCo, Tapestry, instead of a particular business line.”

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Reprinted with permission from the November 1, 2017 edition Corporate Counsel © 2017 ALM Properties, Inc. All rights reserved. Further duplication without permission is prohibited.

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    Michael D. Adams
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