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Put 15 New Yorkers in a crowded conference room for a couple hours with a professional provocateur, and you’re likely to produce five headaches, seven arguments, and, on a good day, 150 opinions. At least that’s what Allan Feldman, the president of Leveraged Marketing Corporation of America, would like to happen. LMCA develops licensing strategies for companies like Eastman Kodak Company, Mack Trucks, Inc., and Melitta North America. And the vocal New Yorkers are Feldman’s secret R&D team in the hunt for new trademark revenue. These companies are not looking for quick hits, as when the Walt Disney Company licenses characters from a hit movie to McDonald’s, or when Anheuser-Busch, Incorporated, sponsors a racing team or touts Budweiser as the “official beer of NASCAR.” Instead they want to extend their brands into new markets and create new products for the long term. LMCA identifies new products and markets for old, established brands through brainstorming sessions in its midtown Manhattan office. The company brings in 15 or so creative types. A moderator encourages them to think far outside the box. “You have permission to be crazy,” the moderator, Bryan Mattimore, said at a recent session. The session was conducted on behalf of a well-known national company providing services to homeowners. The company prefers to remain anonymous until its licensing strategy is announced, but for illustrative purposes pretend that it’s Lawn Doctor. In the room were a group of strangers: a computer consultant, a ballroom dance instructor, a playwright, a costume designer, a screenwriter, a basement inventor, and me, among others. Several participants were members of Mensa, an LMCA client. The members of the group each received $100 and lunch for their time. I passed on the money but enjoyed the mozzarella and sun-dried-tomato sandwich. We paired off and made lists, and then compiled an Uber-list with more than 100 product ideas. The environment was often kinetic, with Mattimore, the moderator, struggling to scribble down the ideas ricocheting around the room. Occasionally it was hostile, with one member berating nearly every idea but her own. (She must have been a Mensa member.) Most of the ideas were worthless. Does the world really need a branded dust mask or bug zapper? But a few dozen showed promise, and a few of those dozens may prove to be winners. The brainstorming was fun. But once it was done, LMCA started the tough work of researching profitable opportunities and negotiating deals. The concept is simple. You export a brand to a connected market that the brand owner does not have the manufacturing, distribution, or marketing expertise to enter on its own. The licensing deals that Feldman has been helping companies strike since 1983 are good examples of the connections made between products: � Kodak licenses the use of its trademark to a contact lenses manufacturer, Signet Armorlite, Incorporated. (Photography, lenses — get it?) � Odor control is one of the key qualities of Church & Dwight Co., Incorporated’s Arm & Hammer baking powder. It is also one of the key selling points behind Precisionaire’s Arm & Hammer branded home air filters. � Melitta makes great coffee filters but not home appliances, so it hooked up with a coffee pot manufacturer. LMCA’s Feldman estimates that $80 billion of products are sold each year in North America under these types of licenses. The brand owner generally receives a royalty of 2 percent to 15 percent, depending on the strength of the brand and the profit margins of the licensed product. Most often, the new markets are in the real world, not the Internet. But the concept works in meatspace or cyberspace. The Internet is “another canvas to create new ideas for,” says Feldman. Whether it’s called brand extension, strategic licensing, or leveraged marketing, companies are finding it a potentially profitable way to enter new businesses without putting capital at risk. Licensing, however, is not a free lunch. The goodwill associated with brand names can be invaluable. And once it’s gone, it’s hard to get back. It’ll be a long time before someone introduces a product called Edsel or names an airborne vessel Hindenburg. More realistically, Calvin Klein Inc. is fighting with one of its main licensees, Warnaco Group Inc., over brand dilution. “You are dealing with tremendous brand names built over many years at tremendous cost,” says Feldman. These concerns were played out recently at Polaroid Corporation. The company’s marketers were frustrated that the typical Polaroid customer was a member of the G (as in gray) Generation. They were bent on finding a product for Generation X and Y and whatever comes after them. The solution, according to a recent front-page story in The Wall Street Journal, was the $25 I-Zone Instant Pocket camera. The toy camera produces grainy photos the size of a postage stamp that can be peeled off and stuck to a surface, like a composition book, school locker, or mirror. Polaroid traditionalists were so concerned by the camera’s low quality that the company originally sold it only in Japan in partnership with Tomy Company, a large Japanese toy maker. The Tomy name was prominently displayed, while Polaroid’s was played down. Only after sales of the camera soared in Japan did Polaroid introduce the camera in the U.S. It quickly became this country’s best-selling camera — and Polaroid’s ticket into the youth market. The average age of a Polaroid camera owner is now early- to mid-thirties. Rather than trying to change its demographics, Nike Incorporated is trying to expand the concept of the sports equipment market. Nike traditionally licensed its name and trademark swoosh in promotional ways — on hats, shirts, and other apparel. But it recently introduced a line of sports-related electronics, including a digital audio player made by S3 Incorporated, which sells the popular Rio player. Nike also teamed with Dynastream Innovations Incorporated to create a device that attaches to shoelaces and that measures running speed and distance on unmarked courses. Nike “will pioneer products that fuse sports and technology for the benefit of today’s digital athlete,” says Claire Hamill, a Nike vice president. There’s good news in all this activity for in-house trademark lawyers: They can convert themselves from a costly item of overhead into a profit center. LMCA recently surveyed 750 major companies around the world. At nearly half of them, in-house lawyers have primary responsibility for licensing trademarks. No big surprise there. But here’s the catch: In North America, nearly 60 percent of the licensing programs are motivated by business, rather than legal, concerns. Rather than merely protect their brands, these companies are trying to extend their market reach and expand profits, according to the survey. Trademark lawyers of corporations, rejoice: Your days of writing cease-and-desist letters may be over.

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