How much did you say your trademark portfolio is worth? Yes, trademarks are a valuable asset to any business. When I recently watched WeWork: Or the Making and Breaking of a $47 Billion Unicorn, however, I was shocked to see just how valuable some people consider their trademarks to be. When they filed the S-1 statement with the Securities and Exchange Commission, THE WE COMPANY MC LLC revealed that it had paid founder Adam Neumann's personal partnership compensation of $5.9 million in exchange for an assignment rights. At the time, there were fewer than two dozen trademark applications and registrations in the company's name. While this transaction was later unwound, it is an extreme example of trademarks being very highly valued as an asset.
Now, this type of valuation at the very high end of the spectrum is not typical. In fact, in the WeWork situation, the high valuation was a red flag to investors seeking to determine the true value of the company. Because it relied so much on short-term leases and has humongous marketing and design expenses, the company had to inflate their value somehow. In that situation, they chose to add a few extra zeros to the value of their trademarks.
Are the WeWork trademarks strong? Somewhat. They are not "fanciful" -- made up words that will lay the foundation for the strongest brands (think Starbucks, Kajabi (which hosts my trademark class), Lululemon). But, WeWork has worked hard over the years to monitor and enforce their trademarks. They have more than two dozen proceedings before the Trademark Trial and Appeal Board.
Because trademarks are intangible assets, assigning a value to them can be challenging. However, it should be based in reality: are there license agreements, successful efforts at fending off imposters, a "family" of marks that have become incontestable due to long and continuous use?
These considerations matter for trademarks. At the time they filed the S-1, some of the marks subject of the multi-million dollar valuation had not even achieved registration yet. Intellectual Property evaluations should be grounded in reality; this was apparently not the case for WeWork.
Cover Photo by Grant Ritchie on Unsplash