I recently blogged about the TRUMP brand and its power (see “DONALD TRUMP: a rich trademark portfolio” here). I noted that the TRUMP brand has been extended well beyond real estate and that the TRUMP brand is quite valuable.
Now it seems that some of the ventures attached to the TRUMP brand have run into problems. And they are getting sued. And so is “the Donald.”
Legally, the primary issue in these cases appears to be how insulated Mr. Trump is from any lawsuits and damages related to ventures where he licensed the Trump brand. My guess is that Mr. Trump and his experienced attorneys placed language in each license agreement that sufficiently distances his fortunes from the venture and protects him in exactly these types of cases. A license agreement can take many shapes and forms. It is principally permission to use a brand name for certain purposes (for a fee of course). But generally the brand name owner is not involved in running the business and does not accept the liability for problems.
Designer brands often license their names to extend their product lines. I don’t think that Porsche makes sunglasses. Disney probably does not make paints. Rather, they license their brand to a sunglasses manufacturer. But if the manufacturer backs out of a contract or make poor quality products, in general the licensor (in this example, Porsche) is not going to be liable. The licensor essentially reaps all the rewards ($$) with little or none of the risk. That is why licensing is often very profitable. Other than building and golf courses, it is likely that just about everything associated with Trump brand is done under license. Fragrances? Alcoholic beverages? Clothing? Why get involved in making them if you can license them. Of course, the tricky thing about licensing is to protect the brand’s quality and image – which is exactly the problem these lawsuits are now creating for Trump.
It will be interesting to see if these lawsuits damage the Trump brand and affect any future licensing (or political?) ventures.