Michael Reich, CEO of Brands USA Holdings, has spent years accumulating moribund trademarks, or at least the right to use them. And while some of the trademarked names he controls were sold outright in the auction, many of them were packaged as intent-to-use applications, which means the holders will be issued trademarks only if they're making products by a specified date.
In the case of Meister Brau, that shouldn't be too hard. The iconic pale lager, which Miller used to own, still has some brand recognition. After all, it sold for $32,500. Now, its new owner has until Aug. 17, 2013 -- more than two years -- to start brewing beer.
Other auction winners, though, are likely to face uphill battles in their attempts to resurrect once-famous brands. For example, Victrola, which sold for $1,000, was a household name -- in the 1920s. Although it survived as an RCA record label until the early 1970s, the company's new owners will need to find a way to promote a brand that has been out of commission for almost four decades. To make things tougher, they have only until Aug. 19 to turn Victrola into a going concern.
Intent-to-Use Confusion May Have Kept Buyers Away
Asked why someone might want to buy a dead trademark, Reich responds that, even in the absence of wide consumer recognition, many of these brand names are a good deal. "If you are in a business where one of our brands fits," he notes, "It may be more cost-efficient to buy an established brand rather than buying a going concern." And, as some analysts have pointed out, using an established name that has already proven successful can save money on market testing and other startup expenses.
This is likely to be the case with less-familiar names such as the Linen Closet, Computer City, and the Financial Corporation of America, all of which sold for $2,000 apiece. For that matter, General Cinema, a generic-sounding theater name, went for $1,000 and is likely to do quite well for its new owners -- assuming that they can open doors on a movie house by May 5.
Part of the confusion may also have resulted from a lack of understanding of intent-to-use rights, which amount to a sort of functional ownership of a brand name. It's worth noting that the highest sale price -- $45,000 -- went for Shearson, the former brokerage and investment bank. In addition to a recognizable name, the brand came with free-and-clear trademark ownership.
Reich emphasizes that the brands that didn't sell on Dec. 8 are still available, and their prices are open to negotiation. "Who knows?" he said. "Maybe buying a brand will be simpler now that the auction is over."