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June 2008

Tinker Toys & Trademark Programs; Both Need Planning To Build Something Meaningful

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The Licensing Journal
June, 2008
Danny Simon, Editor
FROM THE ENTERTAINMENT DESK

Some introduction is necessary, as this is my first column inThe Licensing Journal as the new Entertainment Editor. First off, I must inform you that I am not a lawyer. Why the folks at this magazine would have a non-legal as head of the Entertainment Desk is a good question. I suspect that perhaps it was to provide at least one article from a layman’s perspective – but I could be wrong. But that is what I will be delivering, articles dealing with various entertainment based issues from the perspective of someone with 30 years of licensing experience.

What I hope to accomplish is to provide you the reader with interesting articles on a variety of entertainment topics related, most of which will be related in some fashion to merchandising, marketing, and licensing in general, tied of course to the legal world. My goal is to make these articles not only informative, but useful. I welcome suggestions of topics, and feedback on anything I have written, or what I should write about. If your comments on something I have written prove interesting I just might want to share them with all the readers – naturally without attribution.

This first article, “Tinker Toys & Trademark Programs; Both Need Planning To Build Something Meaningful,” came to mind as I reflected on the number of times I have had to build trademark programs for various entertainment properties. Each time I begun the task, I had no assurance that the program would hold up – meaning that it would have staying power in the marketplace. Each time I had to balance the need to obtain trademark protection with the real world issues of doing so with things like staying within a limited budget. Having done this for properties such as DALLAS, DYNASTY, M*A*S*H, RAMBO, T2 and most recently the US Secret Service licensing program, AMERICA’S LEGACY, I thought that from what I have learned about the steps necessary to accomplish this goal might just be the right stuff for an article. I hope you agree. But like I said above, let me know if you don’t.
The Editor’s Note

TINKER TOYS & TRADEMARK PROGRAMS;
BOTH NEED PLANNING TO BUILD SOMETHING MEANINGFUL

Facing the prospect of launching a new property into the marketplace can seem like an overwhelming task. The effort should include: evaluating the appropriate core demographic to which the property will appeal; determining what will emerge as the property’s central focus; building a marketing program; creating the basic licensing tools such as the property’s style guide, and the list goes on.

There is also one other essential element that also has to planned with equal care, and ideally at the start of any licensing program; the development of a well planned trademark program. All too often, whether it is a film, television show, video game or other piece of entertainment, plans regarding creation of the trademark program seem to often go over looked, or left until it becomes an absolute necessity to do something about it. This lack of planning often results in what I call “panic filling,” or let’s file for whatever and wherever we can. The outcome is often that far more money is spent on needless filings for useless categories. Unless you are an in-house attorney, panic filling can be great for your monthly billings, but in the end you are going to face an unhappy client when they finally realize what they have spent on the property’s trademark program.

What I am suggesting is a smarter approach to building a trademark program for any new property. It is not based any legal tables, theories, or other legal textbook ideologies. The self-titled “Simon Theory of Trademark Filing” is driven strictly by matching marketing needs with what categories you, and in what markets you file. If after all trademark protection exists for the most part to provide protection for goods in the marketplace that bear unique imagery, such as cartoon characters, designer names, patterns, corporate identities, etc., then a well planned trademark program must anticipate what product categories a licensing program will likely include and where, and then obtain protection in those specific categories and geographic markets. What I am offering here are simple steps that will help make the whole process easier, and hopefully less costly.


STEP ONE

Licensor and Lawyer must work together. In order to take the first step and all others thereafter, under my self-titled trademark program, it is an imperative that both work closely on the development of a trademark program. Each party brings to the table a unique skill set that is essential in building a sound a program.

With the licensor having done the work of defining the market for the property, which must be accomplished before hand – this includes identification of the core consumer(s), and understanding as to how the property will be marketed on geographic basis — there should also be the development of a list of what the licensor believes are or will be those categories of goods that are likely to be licensed. It is also helpful if the list is arranged in order of priority, from most important to lest important categories.
STEP TWO

Compile a product category list. Using the product category list complied by the licensor as a base, both licensor and lawyer are now in a position to work through that list in order to determine exactly which Classes will be filed and when – at the beginning of the trademark program, shortly thereafter, or sometime later on. For example, if the property is feature film being released 18 months from now, with material that will appeal to young boys – let’s say it is an action adventure film – with a big budget and well known talent, and will be supported with a big advertising/marketing campaign, then there is every reason to believe that it is likely that it will appeal to the toy and video game markets. Therefore, it is both logical and prudent that these classes be covered immediately. There is the lead time need to by both industries to build product, and if the material is good, it is logical to presume that a licensing agreement for either or both categories can be obtained, and therefore protection is necessary. Due to the long lead times need by both industry, it is certain that it will be among the first categories pitched by the licensor.

However, if the film is six months from opening, is a touching story about a young girl who comes of age in harsh environment of the Upper East Side of New York who has to do battle with over protective nannies and strudel peddling Jewish Mothers, then it is doubtful that we have much chance for either toys or video games with this property. Therefore, why would anyone bother to seek trademark protection in either the toy or video game classes? Neither class relates to the property, nor is there really the time to develop product even if the property did relate. Therefore it is a real long shot that filing in either class is really neither necessary nor a wise investment, at least at this time. If, after the film’s release, you find for some reason that a toy market does relate to the film, then go for it. Chances are it will still be available as the same logic will apply to others who review the property – where is the audience for the product?

Do remember that a product category list developed by the licensor is just a guide. It should not be looked at as something written in stone, but in fact should be continually questioned by both parties both before and after the film opens or a television show airs.
STEP THREE

Plan waves of trademark filings. I believe that you do not rush out and trademark all the classes that you think relate to your property at the beginning of a trademark program. Rather, you should plan your filing program in waves of filings, with the key or essential product categories being covered in the first wave. Thereafter, you then file the next most important, etc. My reasoning is based not only the cost factors associated with filing, but let’s face it, what if the property bombs? This is particularly true for theatrical films, where there is a small window that determines if the property is successful or not. Why spend for protection in a vast number of categories or geographic markets only find that it was money wasted as the movie did not have legs, and the licensing program was going to phase out quickly. Also, let’s be realistic, after day one of a film’s opening, with a few filings in place, if you see that the property is a runaway hit, you still have time to fill in
other categories. Just make sure that you stay on top of both the national and/or worldwide opening box office numbers, and move quickly once you see that the movie is/will be successful.
STEP FOUR

Planning the international markets. The international market deserves as much attention as the US market, given the increased sales of licensed goods in so many markets outside the US in recent years. Trademark coverage is needed in those markets where you are likely to sell licensed goods, either through local licensees or via importation of US (or other market) goods. Unlike the US, in certain markets you can file for multiple classes, which greatly reduces the cost of filing. In Europe, there is the ability now to file one trademark per class to cover the EC market, a move that can create significant cost savings in filing trademarks in these markets. But in overall, an international trademark program can get very expensive very quickly. Make certain that property warrants the effort – is the popularity of the property in a particular country worth the expense and effort of filing for the class or classes?

As most licensors employ sub-agents to represents their interests in markets outside the US, often these sub-agents can be an excellent source of honest information as to a property’s licensing potential in that local market. As these sub-agents all work on commission, retaining a percentage of the royalty income generated from the sale of the property’s licensed merchandise in their market, usually they will put their efforts behind only those properties that have the potential of generating local licensees. Therefore, they will quickly abandon those properties that afford no or little licensing revenue. Thus, they are the best source for such information.

Like the US market, plan your filings in waves, seeking protection in only the key classes first, unless of course you are allowed to file for multiple classes under the same filing. If in fact your property is a popular property conducive to licensing, then most likely a fair number of the key product categories such as toys and video games will have been granted on worldwide bases. This means that the majority of international licenses will be smaller categories such as apparel, paper goods, novelties, etc.
STEP FIVE

Planning the international markets: pirate markets. Trademark protection is also needed in markets that are known to be likely markets in which pirated goods are often manufactured. Without having filed in such countries it will be significantly harder, if not impossible, to take action to stop such activity if discovered. However, with a trademark on file in a country where pirating of your property is found, obtaining legal instruments such seizure and/or confiscation of the pirated good is a good deal easier to acquire from the courts.

The countries which are most often listed as markets likely to manufacture pirated goods are the following: China, Sri Lanka, Vietnam, Thailand, Indonesia and Pakistan. Their may be others, but this list is a good start. Items most likely to be pirated are those such as apparel, bags, simple toys, paper goods, novelties, and non articulated figures. The more complex the product is the less likely it is to be pirated. This is true for most entertainment based products. Given the often short shelf life of a large percentage of entertainment licensed goods, usually the effort to duplicate complex products is not warranted. However, this is certainly not the case in other categories of licensing.
CONCLUSION

Does the property really need it, and is it worth the expense? This is the phrase to remember. The development of a good trademark program is built mostly on common sense; file for the classes needed and in the territories required. I am not suggesting that for the cost of filing a trademark you place a mark in jeopardy. No, that is clearly not the message I wish to communicate here. What is the message; a smart trademark program is not one in which protection is obtained by the shear volume of class filings in random territories throughout the world. Rather, it protection achieved from implementation of a well planned trademark program, where filings are made in pre-selected classes that parallel the property’s development and growth in the consumer market. This type of program creates a winning solution for both the property and your client.

Wishing you Happy Trademarking…