Lesson 4: Learning from Examples: Case Studies on IP Licensing and IP Enforcement

The following three examples illustrate how some companies use licensing and/or enforcement strategies for competitive advantage.

While these companies are all large companies, remember that they all had a ‘beginning’ – and would have started small. They would have begun with a modest IP portfolio and would have developed more sophisticated IP strategies as their businesses grew.

Example 1: Licensing: Hasbro Inc: MY LITTLE PONY

pony

“reinvent, reignite, reimagine” —Brian Goldner, CEO

Hasbro Inc (“Hasbro”) is a multinational corporation which, according to its website, is “committed to Creating the World’s Best Play Experiences.” It produces toys and board games as well as television programs and digital games for children and families. Hasbro has an extensive IP portfolio and it is acutely aware of the value of its IP and the need to protect it. Hasbro uses a mixture of enforcement and licensing strategies to protect its rights.

In their own words:

We rely on a combination of trade secret, copyright, trademark, patent and other proprietary rights laws to protect our rights to valuable intellectual property related to our brands in the United States and around the world. …Our failure to successfully protect our intellectual property rights could significantly harm our business and competitive position." 1

Hasbro has adapted its traditional enforcement and licensing strategies in light of the evolving needs of the industry within which it operates. The company has remained nimble and responsive to a changing environment brought about by the popularity of some of its toys and television programs.

One of its very popular brands is the MY LITTLE PONY series of toys, games and cartoon programs. Although its target audience is younger children, MY LITTLE PONY has become an almost ‘cult-like’ favourite among teens and young adults. These fans of MY LITTLE PONY have developed their own ponies in drawings or in three-dimensional sculptures and have written fan fiction stories involving the Hasbro pony characters. They have posted some of their fan fiction on YouTube and have circulated their stories through fan fiction websites. Hasbro has generally taken a liberal view of these activities and has not made claims in respect of its IP except where it has had serious concerns that a particular activity was diluting its trademarks.

Recently, fans have begun to use 3D printing technology to manufacture their own pony characters to complement Hasbro’s existing ones. These activities would generally be considered to be infringing on Hasbro’s copyright rights. However, in the toy and entertainment industries in which the company operates, aggressive enforcement strategies against fans can be counter-productive - you don’t want to lose your fan base but you also don’t want to allow rampant disregard for your IP.

SO, IF YOU ‘CAN’T BEAT THEM, JOIN THEM’

“One can stamp on molehills – shut down websites, deliver takedown notices to YouTube, ultimately sue your potential audience. Or one can find ways to use the momentum to promote the brand.” 2
Hasbro is innovative in the way it handles its fan base while preserving its IP interests. For example, Hasbro has recently partnered with Shapeways, an online 3D printing company. As fans design their own ponies, they can have them printed by this Hasbro authorized 3D printing facility and they can sell them through legitimate channels, authorized and controlled by Hasbro. These third party designers of pony characters are subject to Hasbro’s style guidelines. In this way, Hasbro retains control over its brand and the quality of the products bearing its trademarks.

Hasbro has entered into a similar relationship with an online clothing retailer, WeLoveFine whose motto is “for fans, by fans”. This retailer sub-licenses with the artists on behalf of Hasbro. The site then sells licensed clothing bearing the fans' designs.
With these strategic partnerships, Hasbro’s strong trademark and goodwill in MY LITTLE PONY and its other toy characters remain intact. In fact, Hasbro’s reputation and brand value are strengthened by collaborating with fans instead of preventing them from engaging in these activities. Similar to Apple’s strategy, Hasbro is also expanding its range of MY LITTLE PONY figurines through the creativity of these third party designers, whether they are designing new three-dimensional pony toys or t-shirts and other items of clothing. In addition, Hasbro receives a percentage of sales for the licensing rights thereby generating new revenue streams for the company.
Hasbro is using its mix of IP creatively in order to achieve its strategic business goals. It is choosing to enhance the strength of its trademarks by allowing some managed loss of control over its copyright.

1 From Hasbro’s 2014 Annual Report at p. 36

2 Forbes, SOPA, Skyrim and My Little Pony – Infringement is Magic? January 19, 2012 -
http://www.forbes.com/sites/danielnyegriffiths/2012/01/19/skyrim-ponies-sopa/

Last modified: Monday, 25 September 2017, 2:50 PM