Twinkies Trademark for Sale
Hostess trademarks for sale! Get your Twinkies trademark right here!
Sadly, trademarks are not usually sold by old-timey ballpark vendors, although if someone wants to start that trend, I’m happy to sign the petition. But today’s news that Hostess Brands, Inc. is going out of business means that Hostess’ portfolio of brand names, along with the company’s other assets, is, in fact, on the market. What does it mean to sell a trademark, and how does it work?
A search of the U.S. Patent and Trademark Office records shows 272 trademark registrations or applications owned by Hostess. These include such iconic brands as Twinkies, Ding Dongs, and Wonder Bread, along with many others and a lot of variations. Bear in mind that some of these are dead, but there are still what appears to be several hundred trademarks associated with Hostess’ various brands.
In a February bankruptcy court filing, the company estimated the value of its intellectual property at $134.6 million. I’m assuming this primarily relates to their trademark portfolio. The specific formulations of their products are presumably trade secrets as well, but those recipes have little value when separated from the underlying brand names, and separating the two may destroy the validity of the trademarks anyway. This is because when a trademark is sold, the underlying goodwill associated with the mark must be transferred along with it.
How to Sell a Trademark
So how does a trademark get sold? The process is fairly simple. A contract is created which states that the mark is being sold, along with the underlying goodwill, the amount it’s being sold for, and various other standard contact terms. A Trademark Assignment is filed with the USPTO, attaching the contract as proof of the sale. The assignment is recorded by the USPTO, and that’s about it. The key here is goodwill. “A trade name or mark is merely a symbol of goodwill; it has no independent significance apart from the goodwill it symbolizes…[A] a trademark cannot be sold or assigned apart from to goodwill it symbolizes.” Marshak v. Green, 746 F.2d 927 (2nd Cir. 1984), citing Lanham Act, Sec. 10, 15 U.S.C.S. Sec. 1060.
A trademark is simply a brand name that has acquired some value in the marketplace because consumers associate the mark with a certain type of good or service. Hence, trademarks are a form of “intellectual” property, as opposed to real property. It wouldn’t make sense to sell a trademark without the goodwill of the business it was associated with. Attempts to sell trademarks without anything else attached are referred to as “naked transfers,” and are invalid.
What does all of this mean for Twinkies?
My guess is that the Twinkies brand name, along with some of Hostess’ other IP assets, has enough value that somebody will want to acquire the name and continue to sell the high-calorie, low-nutrition snacks. The Wall Street Journal article linked to above states:
Adam Hanft, a branding strategist behind Hanft Projects, sees the potential for new life in the liquidation of the decades-old company. A fresh owner of the intellectual property, which includes everything from names to recipes to graphics, could revitalize the Hostess brands, which Mr. Hanft sees as weakened but not lacking potential. He envisioned new flavors, limited-edition Twinkies, products co-branded with independent music groups and the potential for an international reach.
Twinkies co-branded with independent music groups? Wilco-flavored Wonder Bread? I don’t see it. But anyone who does acquire one or more of Hostess’ brands would be wise to acquire the recipes and the rights to all branding elements (such as product packaging) in order to avoid a claim of an invalid, naked transfer. Hopefully they know how to sell a trademark.
A few more points – what about the Hostess name itself? That is, of course, a trademark, which I’d assume has some value even when separated from the individual underlying brands. It’s conceivable that one party could acquire the Hostess name and produce food products (or “food” products) under that mark, while someone else entirely could keep Twinkies alive. Although, as an aside, the “Hostess” brand name feels a bit outdated from a gender perspective.
Finally, what happens if Hostess Brands fails to sell its portfolio of trademarks? Marks that are not used in commerce for several years (three years is the generally-accepted rule of thumb) are considered abandoned. When a mark retains some level of fame, but no individual entity has rights in it due to abandonment, it can become a “Zombie Trademark” – kept alive in the public’s imagination but not in the marketplace. In theory, another party (or parties, which is where it gets confusing and potentially litigious) could come along and lay claim to it. I’ll have to tackle zombie marks in another blog post. For now, let’s keep an eye on what happens to those Hostess brand names.