Confirmation of Tata Motor’s acquisition of Jaguar and Land Rover for a consideration of £1.15bn is a significant success story for UK intellectual property. But what happens when valuable IP changes hands in this way? What are the pitfalls and what can the new owner do to protect and enhance its value?
On the face of it, despite paying out over a billion pounds, Tata Motors appears to have secured a reasonable deal. In addition to owning UK manufacturing plants and design centres, the Indian car giant has also acquired all necessary intellectual property rights associated with the Jaguar and Land Rover marques. The acquisition will strengthen Tata’s offering considerably and it is easy to see how a car maker famous for producing the Nano – the world’s cheapest car – for its domestic market, is going to benefit from owning brands that offer real cache in more established markets around the world. In the longer term, Tata is almost certainly on to a winner.
The acquisition also makes good sense for the future of Jaguar and Land Rover too. These quintessentially British brands have been struggling to achieve sales in the depressed European and US markets. Instead, the acquisition gives them instant access to fast-developing emerging markets in the Far East, where there is a whole strata of the population, equipped with a high level of disposable income, that is keen to buy-in to British heritage and brand values.
Such synergies definitely bode well for the outcome of the acquisition but to achieve this, it is crucial that the intellectual property rights tied up in the deal are managed well and developed appropriately.
Tata has recently announced plans to invest a further £600m in the development of sustainable technologies to improve the environmental performance of Jaguar and Land Rover vehicles. This is positive news and indicates that Tata is focused on innovation and this should help the brands retain their appeal in established markets. This focus on innovation will also help Tata to free itself more quickly from licensing tie-ins with Ford that will inevitably form part of the terms of the acquisition. Of course, innovation is an investment which needs to be protected from the outset to maximise value and minimise the risk that time and money is wasted.
Protecting brand value may also involve preventing each brand identity from becoming diluted or damaged by association with other brands in the acquirer’s portfolio. For example, it may not be a good move to introduce the next new Land Rover 4×4 as a ‘Tata Land Rover’, which could be confusing to established European markets as much as to emerging markets. The Tata brand obviously sits better with the new Nano and the introduction of the ‘Tata Nano’ would be less confusing for established markets too if a decision is taken to market the £1000 car in Europe and the US in the future.
Clear guidance on the use of brand names post-merger is always critical and can bring about the success or failure of the acquisition. To illustrate what can happen when brand dilution occurs, the failed Daimler Chrysler merger involved a luxury German carmaker alongside a mid-market US manufacturer. Both brands were well known to the dominant markets but the attempt to bring the two together proved confusing and ultimately unsuccessful.
Taking a strategic approach to intellectual property management that allows both brands to thrive without confusing their individual brand identities will help Tata to avoid such pitfalls. Clear branding guidelines should be established to prevent any potential misuse and it may be necessary to extend the current protection into new territories.
However brand protection isn’t just about preservation. Brands must live and breathe and continue to evolve to meet the needs of the markets they serve. Keeping a flexible approach to intellectual property management is vital to ensure that the full rewards of Tata’s up-front investment are realised.
Dave Croston is a patent attorney at Withers & Rogers LLP