Questions like “what is intellectual property,” “what constitutes a brand” and “who owns what when” have plagued us for ages.
As recently as the summer of 2021, we got a reminder from Nike about the ongoing conflict. The shoemaker went after custom designers who it claimed were deconstructing and adding to its products and then selling them for a profit.
The Nike battle with third-party designers has a long road ahead. Nevertheless, the situation left many wondering when after the point of purchase a brand officially relinquishes control of its branded products. Here are five opinions on the subject from respected professionals throughout the business world.
Brand Ownership Ends Once a Product Is Sold
Rich Lewis is no stranger to branding. The former VP of marketing at iHeart Radio has a history replete with managing branded materials. When asked what “ownership” a brand has after purchase, the marketer replied, “A brand has no ‘ownership’ once the product is sold.”
However, Lewis added, “I believe they do have a right to restrict how you use it if you expect the brand to support the product through something like repairs.”
The VP uses Apple’s iPhone as an example. If a customer expects years of repairs and a warranty, they must abide by Apple’s guidelines. However, if they “jailbreak” a phone through hacking or modifications, they void those expectations.
“You own it, and you can do with the phone as you wish. Apple has no right to it,” Lewis summarized. “But,” he added, “you also have the responsibility to use it within their guidelines if you want service after the sale.”
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Modifications? Fine. But Don't Expect a Warranty
Former CMO of Tailored Brands Bruce Hershey is well aware of the value that can come from protecting a brand’s image.
Hershey echoes the sentiment that brand “ownership” ultimately ends once it's in the hands of the customer. “The customer can do whatever they want to modify the product after they buy it,” Hershey said.
But he hedged the statement by adding that “the customer needs to understand that brands do extensive product testing and research to deliver the best product they can.” He expanded on this idea by explaining that if a customer wants to modify a product outside of its specifications, the brand is no longer responsible for the integrity of said product.
When asked if it matters if the buyer attempts to make money off of the original brand, Hershey responded that “from the brand’s perspective, yes.” However, he added that “we as a society push for entrepreneurship, right? So we can’t blame these individuals for trying to make some money.”
'The Relationship Starts With the Purchase'
There are those who can brand. Then there are those who are so good at the discipline that they can engage in the much more difficult task of rebranding an existing label. David Brier falls on the latter side of the equation. In fact, he ranks as Google’s #1 Rebranding Expert.
When asked to apply his knowledge to the concept of brand ownership after the point of sale, Brier responded firmly in favor of the customer. “The best brands become our best friends who have our back,” Brier explained, “They understand that the relationship starts with the purchase, it does not end with the purchase.”
When asked if a brand is entitled to ownership after the point of purchase, Brier said, “Great brands are like great friends and not like cockroaches that scatter frantically once the light is turned on.”
Brier went on to describe the balance of power, stating that, “Any company that operates this way has its days numbered if they continue down this path. Brands must be an extension of their customers and not be a barrier to the aspiration and goals of the customer.”
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Brands Need to Back Off Ownership, But There Is a Line
Aron Solomon often runs into branding questions. As the chief legal analyst for Esquire Digital, he's had to tackle the intellectual property question from many different angles.
When asked about the current debate over ownership after sale, Solomon initially responded in defense of the brands. “When people modify their products with the intent to resell them, this gets the brand's lawyers a bit exorcised, as it goes beyond their comfort level.”
However, as a lawyer himself, Solomon is also aware of the modern lay of the land and challenged businesses to understand they can shift their positions if they focus less on perceived legal obstacles. “Brands are going to have to learn to become more comfortable with backing off ownership once the sale happens, as any kinds of customization and modification that makes more people want to acquire the product is, on balance, good for the consumer and can ultimately represent net new revenue for the brand.”
At the end of the day, the degree of the modification seems to be the dividing line for Solomon. "I can see a brand having a powerful legal argument worth pursuing where their branding is changed," he said, "you buy a pair of Nike shoes, remove the swoosh, add a New Balance logo. That’s uncool and clearly illegal."
However, for Solomon, the concept of reselling should still be carefully navigated. “A pair of sneakers that is very much in demand and retails for $200,” he explained, “can sell for $3,000 on StockX. It’s the nature of the sneaker game. Kill it at your own risk if you're Nike.”
'Distinguish Between Brand and Physical Products'
Bernt Ullmann has spent a portion of his career as the CEO of Celebrity Lifestyle Brands. This has given him deep insight into the corporate side of branding.
Responding to the question of ownership, Ullmann was quick to make an important distinction. “I think you have to distinguish between brand and physical products.” He went on to clarify that reselling a shoe that you waited in line for is a common, accepted activity.
However, making significant alterations that can impact (and at times even tarnish) the image of the brand can get a bit hairy. “I believe that Nike actually will prevail,” concluded the CEO, adding that this is the case, “because they have a right to protect their brand equity, their brand assets, which could now be damaged in the eye of the public.”
From CEOs to marketing VPs, CMOs to legal analysts, the jury is clearly still out when it comes to brand ownership. Some lean toward giving leeway to the customer and the spirit of entrepreneurship. Others point to rights and potential besmirchment as grounds for a brand to protect its image from resellers.
With a clear consensus anything but close, it remains to be seen if cases like that of Nike can help to bring some clarity to an ongoing struggle that is as old as the hills.
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