Toys R Us Comeback Cites Brands as Valuable Collateral

In September 2017, Toys R Us representatives announced that the company was filing for bankruptcy protection. The company closed and sold all 735 stores in the United States and shutdown its website. What remained was to auction off its intellectual property. But that plan was abruptly put to an end on Monday when the controlling lenders ended the auction.

The lenders determined that any bids they would receive in the auction for – primarily – the brands, would be significantly less than the value they could create by leveraging the brands themselves. The reorganization plan contemplates a new Toys R Us and Babies R Us branding company that will maintain its global licenses and can invent in or create new, domestic retail operating businesses.

This is a great story about the power and value a brand possesses. Too often, trademarks take a back seat to patents and copyrights. Businesses, especially startups, see value in the patent and not the trademark. Patents are not appropriate for every type of business, but every business has a brand. Every business has something consumers rely on to distinguish it from other goods or services in the marketplace.

This is why selecting a strong trademark to begin with is so important, and why working with a naming company could be some of the best money a business can spend. It is also why making sure the name you choose is protectable by doing a trademark search is so important.

Finally, this is why protecting the scope of your trademark rights is important. The more capable a trademark is of identifying the owner as the source of goods and services, the more valuable it becomes. Having a thoughtful enforcement strategy will directly increase in the value of a brand. The money spent should be thought of as an investment instead of a cost.

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