Is COVID-19 a Nietzschean moment for trademarks and brands?

This Kat had the luxury of studying medieval history for his 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 remains with this Kat as part of the session was reading (ever so painfully) a portion of Geoffery Chaucer’s The Canterbury Tales and learning how the Black Death, in depleting European’s available work force, 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. And while the Corona-induced impact on IP will likely not rise to the level of the decline of medieval feudalism [Merpel notes: “I hope that you are right about that”], it is still worth considering how COVID-19 may affect the role of trademarks and brands. It is suggested that it will do so by making dominant brands only stronger, maybe for the better, maybe not so much so.

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. Maybe it is now trademark and branding time for Friedrich Nietzsche— “What does not kill me makes me stronger”. In context- –

‘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’ (aphorism number 8 from the “Maxims and Arrows” 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. [Merpel notes that some add a decline in innovation as a casualty.] COVID-19 may well take this to an entirely (irreversible?) new level. If so, one can imagine two aspects to this Nietzschean world of trademarks and brands. Consider the observation by The Economist, under the title of “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 survival need not be seem solely in terms of the extinction of another competing brand. In the second scenario, the 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. 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.

More morbidly, consider that, at least in my country, COVID-19 deaths in senior citizen facilities do not seem until now to have occurred when they are wholly in private hands and operation. Whatever the reason, when the inevitable scramble will be on to try and attract new residents after the crisis passes, will these privately-owned facilities choose to leverage and strengthen their brand strength by reference to such mortality data?

So maybe it is already the time to ponder whether such a Nietzschean moment will cast its shadow on the future of trademarks and branding.

By Neil Wilkof

Picture on right is presumed to be EncycloPetey and is licensed under Creative Commons Attribution Share-Alike 3.0 Unported license.

Picture on left courtesy of Welcome Trust from drawing by Alexander Johnston (1837) and is licensed under Creative Commons 4.0 International license.