Unlocking the value of IP

They may be intangible assets but their value can be mind-blowing.

In 2020, reported that intellectual property assets accounted for more than 80 percent of the total $25 trillion in assets of S&P 500 companies as of 2018.

According to the 2020 BrandZ top 100 Most Valuable Global Brands, Amazon led the pack at $416 billion, followed by Apple ($352 billion). Others in the top 10 are Microsoft ($327 billion), Google ($324 billion), Visa ($187 billion), Alibaba ($153 billion), Tencent ($151 billion), Facebook ($147 billion), McDonalds ($129 billion) and Mastercard ($108 billion).

Meanwhile, according to Statista Research, in 2022, Apple has become the most valuable brand in the world with a brand value of $355 billion, followed by Amazon at $350 billion, Google at $263 billion, Microsoft at $184 billion, Walmart at $111 billion, Samsung Group at $107 billion and Facebook at $101 billion.

In valuing the brand, necessarily included is the value of the trademark.

In the Philippines, it has been reported than when Jollibee Foods Corp. acquired Mang Inasal Philippines from Injap Investments, Jollibee paid about P700 million for tangible assets and P3 billion for IP-related assets which includes Mang Inasal’s trademark.

But of course, one does not acquire ownership over a trademark unless it is validly registered.

Ownership of intellectual property rights can generate huge profits for the IP owners.

It is said that the first trademark application including the words “Star Wars” was filed with the US Patent and Trademark Office in July 27, 1977 listed only two types of goods: comic magazines and toy action figures, after the first Star Wars comic book came out in July 1977.

The first record of a Star Wars-related trademark filing was an application by Lucafilm for “The Force” for T-shirts on July 14, 1977.

The German Patent and Trade Mark Office revealed that Lucasfilm has registered almost everything that has got to do with Star Wars. One report reveals that the figure of Master Yoda has been registered as a design, while Darth Vader is registered as a three-dimensional trademark. The villain’s name is also protected under the word mark Lord Darth Vader, in the same manner that the name of Obi-Wan Kenobi is registered as a word mark, which is a type of trademark.

The famous Star Wars logo is registered as a word-picture trademark. The names of various characters are also protected as trademarks for various classes of merchandising goods.

The said office said that merchandising surrounding the Star Wars films has generated over $30 billion, with director, writer and producer George Lucas securing extensive merchandising rights way back in 1977.

The character names of Princess Leia Organa, Luke Skywalker, Yoda, Darth Vader, Obi Wan Kenobi, X-3PO, R2-DS and many more are registered as trademarks under various classes in various countries. Even the phrase “May the Force be with you,” or even “May the Fourth be with you” has been registered by LucasFilm.

Even the sound made by the lightsaber is registered as a soundmark.

A number of patents has also been filed with regard to the Star Wars franchise. Patents for a “self-propelled device with magnetic coupling,” “magnetically coupled accessory for a self-propelled device,” among others, relating to the movements and mechanisms of droid character BB-8 have been filed by robotics and toy company Sphero Inc. which had a licensing deal with Disney, which acquired Lucasfilm in 2012.

The registration of these names in the Star Wars universe as trademarks, according to one report, is of course in relation to the bountiful of merchandise being sold. Before one can use any of these names, figures, images, words for commercial purposes, one has to enter into a licensing agreement with LucasFilm and pay a handsome fee at that.

Thus, before any toy company that wants to make Star Wars character action figures, any apparel maker wishing to have one of the character’s images appearing on a shirt or jacket, any comic book publisher seeking to use copyrighted materials, has to obtain a license from Lucasfilm or now Disney in order to avoid being sued for copyright, trademark, or patent infringement.

Meanwhile, in 2016, Netflix applied for registration as trademark of a sensory or sound mark “comprising a musical composition featuring two sixteenth note timpani strikes on D2 and D3, simultaneously with which are played three dotted half notes on D2, D4, and D5.” The registration is intended to cover the categories of streaming of audiovisual and multimedia content via the internet; transmission and delivery of audiovisual and multimedia content via the internet’ video-on demand transmission services, among others, according to the US Patent and Trademark Office.

This of course refers to the Ta-Dum sound that plays when the Netflix title screen appears. Similar applications have been made by Netflix Inc. in other countries.

Under the Intellectual Property Code of the Philippines, only visible signs capable of distinguishing a good or service as belonging to one can be registered as trademarks, thereby excluding non-traditional marks such as sounds, scents, and smell.

There was a proposal by IPOPhl in Congress, which hopefully will be refiled with the new Congress, that would change the definition of a mark, to “any sign or any combination of signs capable of distinguishing the goods or services of an enterprise from that of another. The proposal also seeks to exclude a stamped or marked container of goods from what can be registered as a trademark.

Under the present IP Code, a mark cannot be registered if it is identical or confusingly similar to a mark which is considered by the competent authority of the Philippines to be well-known internationally and in the Philippines, whether or not it is registered here, as being already the mark of another and used for identical or similar goods or services.

As proposed, a mark will be denied registration if it is identical or confusingly similar to a mark which is considered by the competent authority of the Philippines to be well-known internationally or in the Philippines, whether or not registered here, if the goods or services are identical or similar.

The Paris Convention for the Protection of Industrial Property to which the Philippines is a signatory protected internationally well-known marks from infringement, even if not registered in the country where the infringement occurred, provided that it was used for identical or confusingly similar goods or services.

Thus, under existing Philippines laws, a Filipino who uses in commerce without the permission of the owner a foreign trademark not registered in the Philippines, but considered by competent authority in the Philippines such as the IPOPhl as well-known internationally and in the Philippines can be held liable for trademark infringement if he uses the mark for the same goods or services as produced by the foreign entity which owns the foreign trademark.

Under the proposed expanded concept of well-known marks, one who appropriates without the permission of the owner any brand which is not registered with the IPOPhl but which is either well-known international or in the Philippines again as determined by competent authority can be liable for trademark infringement if such alleged infringer uses such mark for identical or similar goods or services.

The list of what marks cannot be registered with the IPOPhl, as proposed also includes as a separate category, those which lack distinctiveness as well as those which impair the distinctiveness or harms the reputation of a well-known mark, as declared by competent authority, whether registered or not.

As proposed, the 10-year duration of a certificate of registration will no longer be reckoned from the date of application, but instead, the date of registration.

The proposal also includes a landlord liability provision for trademarks, similar to the one currently available for copyrights, so that anyone who benefits directly or indirectly from the infringing activity of another who commits an infringement in a commercial scale, provided that the person benefitting has been given notice of the infringing activity and has the right and ability of control the activities of the other person, can be held liable for trademark infringement. This applies only for counterfeit trademark goods.

Our Trademark Law needs to incorporate a number of important changes to keep up with the times.

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