COVID-19: a Nietzschean moment for trademarks and brands

27 April 2020 (Brussels, Belgium) – Yesterday was World Intellectual Property Day (an annual attempt to recognize the role that IP plays in encouraging innovation and creativity). I spent a good part of the day reading articles and participating in a few Zoom chats on how the coronavirus pandemic has led to an increasing demand for medicines and medical supplies, as production is decreasing. As panic stricken buyers stock up on medicines, the ones who need them the most may not have access at all. We talked about the importance of IP rights in protecting against the manufacturing and dissemination of counterfeit essential medical supplies, such as face masks and medicines.

The supply disruption caused by COVID-19 has caused a spike in the production and manufacturing of fake and counterfeit goods. IP practitioners and IP action groups have done an admirable job working with Facebook and Google and other social media platforms (plus governments and law enforcement agencies) to raise awareness of the economic and social harm of counterfeiting and piracy, and to help stop the production and dissemination of these dangerous counterfeit goods.

NOTE: in my recent post on the tsunami of legal work and e-discovery work to come, I left out intellectual property law for a reason. IP’s biggest impact is going to be in the development of a COVID-19 vaccine. The development of such a vaccine is a mind boggling process in and of itself. And there is huge pressure building to ensure that the IP rules that have long benefited Big Pharma do not stand in the way of that vaccine or medicine or technology needed to combat COVID-19. Nearly 150 civil society groups and activists are already calling on the World Intellectual Property Organization to support countries prioritizing public health, while encouraging IP holders to voluntarily remove restrictions. So in my upcoming piece on vaccines I decided to fold in the COVID-19 IP issues … and, boy, it’s a cesspool out there.

When I was in law school … which now feels like it dates back to the Triassic Period … I loaded up on IP courses. I was fortunate because my first IP law professor was Roger Smith, an attorney/computer engineer/inventor. He provided a very hefty dose of “real-life IP” sprinkled amongst the theory and case studies. It put me in good stead for my future career in digital media.

But of even more value was Neil Wilkof who I met years ago at DLD Tel Aviv, Israel’s mega tech conference (properly referred to as an “Innovation Festival”) where the Big Dogs like Disney, Facebook, Google, IBM, Intel, Microsoft (even Coke and L.L. Bean) unveil some of their “work-in-progress” funky tech. It’s technology you will eventually read about first in MIT Technology Review and arXiv Papers before it hits the mainstream tech media.

Neil heads the trademarks and information technology team at Israel’s premier technology law firm, and in addition to intellectual property, he’s a bit of a guru in technology transfer and computer and internet law. He has been mucking around with COVID-19 and one of his favorite fields … the role of trademark in corporate identity and market power. I’ve skimmed a few of his blog posts, added a few thoughts of my own, and present the following:

History is instructive. In the 1930’s, trademarks came under attack by economists as promoting unnecessary consumer wants by means of advertising, leading to price premiums not based on the quality of a product but rather due to the pernicious effect of advertising in creating powerful marks. Seen in this way, trademarks, especially strong trademarks, were viewed as inimical to the operation of competitive markets.

This gave way in the 1970’s to the notion that trademarks are good, the stronger the better. Trademarks are an economically efficient way to enable consumers to engage in search costs for products (imagine having to search for one’s preferred product in the absence of a mark). Stronger marks simply reflect that the marks in question do a better job in carrying out this information function for the benefit of consumers.

But the Corona crisis may have put paid to both these paradigmatic views of trademarks and brands. Neil thinks maybe it is now trademark and branding time for Friedrich Nietzsche:

Aus der Kriegsschule des Lebens: Was mich nicht umbringt, macht mich stärker.

Out of life’s school of war — What does not kill me makes me stronger

– From Aphorism Number 8 in “Maxims and Arrows”, a section of Nietzsche’s “Twilight of the Idols” (1888)

Since the Great Recession, economic focus has been on market concentration and its deleterious impact on competition, especially when network affects are also present. I’d add a decline in innovation as a casualty, too. COVID-19 may well take this to an entirely irreversible new level.

Neil imagines two aspects to this Nietzschean world of trademarks and brands. He quotes this observation in an  Economist under piece titled “Covid Carnage” :

One lasting consequence of the pandemic will almost certainly be further concentration of corporate power in the hands of a few superstar firms. The current airline carnage may leave skies everywhere resembling the uncompetitive ones above North America. JPMorgan Chase, a bank, observes that American carriers generate two-thirds of global airline profits with barely a fifth of worldwide capacity (not to mention shabby service). Similar consolidation now looks all too probable in Europe and Asia.

Here we have Nietzsche at his starkest. If it occurs as described, some airlines brands will simply disappear, while the survivors will acquire productive assets that were associated with the erstwhile brands and use them to strengthen their already robust name recognition. A superstar brand may facilitate a more efficient deployment of assets, but at the potential cost of greater industry concentration.

And what about the gig transportation and scooter rental industries? Assuming that both industries qua industries survive, will Uber acquire Lyft, incorporate its assets, and then jettison the Lyft brand; will Lime do likewise regarding its competitor, Bird?

But Neil says survival need not be seen solely in terms of the extinction of another competing brand. In the second scenario, the Economist article suggests the acquisition of ownership may allow the acquired brand to survive, but in an inferior role. As the article went on to explain:

Companies with the most resilient businesses, deepest pockets and longest investment horizons may grow more super still through cut-price acquisitions. Rumours swirl that Apple, with a gross cash pile of over $200bn and Tinseltown ambitions, may swoop in to buy Disney, whose share price has nearly halved since January.

In this situation, “death” is not the obliteration but the diminution in status. But Neil says:

Imagine the following: “Disney, an Apple company”. No doubt who would be seen as the superstar company and the superstar brand, should such an acquisition come to pass. Assets are not redeployed but are still being exploited to strengthen the brand of the acquirer at the expense of the acquired entity.

Or how about a point I raised last week about morbidity and “super branding”. In the UK and the US, the data is now showing that deaths in super-exclusive, senior citizen facilities do not seem to have occurred, the ones wholly in “Big Money” private hands and operation. So when we have the inevitable scramble to try and attract new residents after the crisis passes, will these deep pocket privately-owned facilities choose to leverage and strengthen their brand strength by reference to such mortality data? Neil is right: it is already the time to ponder whether such a Nietzschean moment will cast its shadow on the future of trademarks and branding.

Neil’s last point: the lesson of the Black Death amidst the Corona crisis is that plagues and pandemics can result in big changes to the way we live. In one post he noted:

I had the luxury of studying medieval history for my first degree, before being tasked with finding a path to gainful employment. One of the highlights was a session on the Black Death (1347-1351), which reportedly killed between 30%-60% of the population in Europe. What I took away as part of that study while reading (ever so painfully) a portion of Geoffery Chaucer’s “The Canterbury Tales” was learning how the Black Death depleted Europe’s available work force, which helped bring about the end of feudalism. Who was left to work on the manor?

The lesson of the Black Death amidst the Corona crisis is that plagues and pandemics can result in big changes to the way we live. While the Corona-induced impact may not rise to the level of the decline of medieval feudalism (some form of capitalism is secure)  it is still worth considering how COVID-19 will affect rhythms and programmed behaviour beyond the role of trademarks and brands. We all need a deep think. And isn’t that what drives innovation?