Hoarding names no game
Federated keeps tight grip on dearly departed department stores to protect its star brand
By Sandra Jones
Tribune staff reporter
July 23, 2006
Federated Department Stores Inc. is sitting on a treasure trove of mothballed store names, and Marshall Field's is about to join the heap.
The New York-based department store operator, which is slated to change Marshall Field's name to Macy's in September, has amassed a collection of more than 30 department store trademarks as it gobbled up regional chains.
Burdine's in Florida, Bon Marche in the Northwest, Broadway and Bullock's in Southern California, Block's in Indiana, Stern's in New Jersey, Rich's in Atlanta, Wanamaker in Philadelphia and Filene's in Boston. The list goes on.
Most of the names have been around for more than a century, a legacy of the immigrant entrepreneurs who moved to America and helped build the nation's cities. The founding families sold their stores years ago, but their monikers lived on.
Wedding dresses, baby shoes, lunches with mom, meeting places for first dates--the department stores in each town became interlaced with all sorts of family memories and personal histories.
Today, all the brands Federated has acquired over the years have disappeared, and the final 11 will be converted, along with Field's, to Macy's as part of Federated's plan to create a national department store.
Federated, for the most part, isn't using the mothballed brand names in any substantial way. And the retailer has expressed no interest in selling or licensing them. But it doesn't want competitors to gain access to the names, either. It's a common tactic, and one that has become more widespread, particularly in the technology industry, as American business consolidates.
"The value of companies today, whether it's technology or retail, is more and more about intangibles," said Ray Millien, a patent and trademark attorney at Ocean Tomo, a Chicago-based intellectual property auction firm. "Big companies will buy up patents just to take them off the market."
Exactly how much Federated's basket of store names is worth is hard to say. But at least two separate suitors have attempted to buy specific brands from Federated.
One group pursued the I. Magnin name, which Federated acquired in 1964 and stopped using in 1994, and the other sought Marshall Field's, according to people familiar with the negotiations. Both offers were spurned.
Federated spokesman Jim Sluzewski declined to comment on specific offers but said the company is "always looking for ways to use" the names.
"Those are assets we need and may use in the future, so we of course want to keep ownership of them," he said.
Federated Chairman and CEO Terry Lundgren is well-versed in the power of image. By combining a motley assortment of regional brands into one nationwide chain called Macy's, Lundgren hopes to resurrect the department store as a place to shop and fend off the relentless assault of discounters and specialty stores. The idea of keeping the local brand names alive, even if it's as simple as putting Burdine's name on a costume jewelry collection or Rich's moniker on a single boutique, would remind shoppers of the department stores they lost and make Lundgren's job that much harder.
"Federated is very intelligent in that they don't want to create their own competition," said Love Goel, chairman of Minnesota-based consulting firm Growth Ventures Group and a former Federated executive. "The money they could make by selling the brand is less material compared to the potential market share they could lose. The trade-off is pretty risky." At the same time, companies with storehouses of brand names need to use them from time to time in order to keep them alive. Federated, for example, can point to Field's plaque on the outside of the State Street store and an assortment of Field's souvenirs for sale to prove that name is still in use and prevent competitors from taking it over.
Typically, trademark names are considered abandoned under federal law if they haven't been used in three years, but there is a large swath of gray area in how to define use. Even an intention to use can keep a trademark alive in the eyes of the courts.
"The intent question is sticky," said Jerome Gilson, trademark attorney at Brinks, Hofer, Gilson and Lione in Chicago. "Many companies will do what they can to show modified use in some fashion."
Take the case of River West Brands. The Chicago-based brand revival firm waged a year-long battle starting in 2003 to gain access to the I. Magnin name by trying to convince the federal government that the trademark had been abandoned, according to documents filed with the U.S. Patent and Trademark Office.
Federated discontinued I. Magnin operations in 1994, selling some stores, including three stores in the Chicago area, and converting others to Macy's or Bullock's.
River West wanted to revive the I. Magnin brand and either license it to manufacturers of apparel and accessories, or work directly with a retail chain to develop products exclusive to that retailer, according to the patent office filings. The firm also had a preliminary agreement with the Magnin family through the estate of Cyril I. Magnin, which no longer has rights to the department store name, to share royalties in the venture, the filings said.
River West withdrew its petition in August 2004, about the same time that Federated resurrected the I. Magnin label and put it on sleepwear sold at Macy's. Officials at River West declined to comment.
Like many regional department stores, I. Magnin has a storied past. Dutch immigrants Isaac Magnin and his wife, Mary Ann, founded the store in San Francisco in 1876, bringing European fashions to society ladies and dance hall girls. Their offspring became colorful fixtures in San Francisco society, mingling with presidents and movie stars.
Similar tales surround department stores in other cities, putting Federated in the unusual position of owning well-established commercial names that connect romantically to their cities.
Nowhere is the attachment as strong as in Chicago where shoppers have threatened to cut up their credit cards and hold boycotts once the big store from New York swoops into town.
"I hate to think that department stores play as important role in our cultural memory as churches and colleges, but perhaps we've reached that point," said Siva Vaidhyanathan, assistant professor of culture and communication at New York University. "The Wanamaker's near me is now a big Kmart. It's the Kmart in Manhattan. We shop there because Kmart gives us stuff cheap. These are the brutal ebbs and flows of capitalism."
Whether there is a sustainable market for defunct department store names is still a question. But a few entrepreneurs have made a go of it.
A couple in Florida bought the Jacobson's name for $25,000 out of bankruptcy court last year and opened up one shop in Winter Park. The upscale Michigan-based department store chain shut its doors in 2002 after 134 years. It had 23 stores in Michigan, Indiana, Ohio, Kentucky and Florida. Owners Jon and Tammy Giaimo are looking to open more Jacobson's stores in the former markets.
"The reason I bought the name is that it represented quality and tradition," said Tammy Giaimo. "That warm and fuzzy feeling they got from [the old] Jacobson's gets people back in my store. They had such a loyal following."
Susie Hilfiger, the former wife of designer Tommy Hilfiger, resurrected Best & Co., a name familiar to wealthy New Yorkers. The upscale department store went out of business in 1971. A generation later, Susie Hilfiger acquired the abandoned trademark rights for free, opening a luxury children's store by that name in 1997 in leafy Greenwich, Conn., and a second outpost in 2001 at Bergdorf Goodman in New York.
Even River West, the group that lost its fight for the I. Magnin name, bought the North American rights to the name of Bonwit Teller, the defunct luxury department store, and plans to roll out fashion merchandise under the legendary name later this year.
"At a human level, I think [Federated] is making a mistake," says Al Gini, professor of business ethics at Loyola University's business school. "People want big-box stores for better pricing. But they also want that familiarity. The MBAs are saying we want a homogeneous brand, but psychologically, customers feel like they lost a friend."
----------
smjones@tribune.com
Copyright © 2006, Chicago Tribune
By Sandra Jones
Tribune staff reporter
July 23, 2006
Federated Department Stores Inc. is sitting on a treasure trove of mothballed store names, and Marshall Field's is about to join the heap.
The New York-based department store operator, which is slated to change Marshall Field's name to Macy's in September, has amassed a collection of more than 30 department store trademarks as it gobbled up regional chains.
Burdine's in Florida, Bon Marche in the Northwest, Broadway and Bullock's in Southern California, Block's in Indiana, Stern's in New Jersey, Rich's in Atlanta, Wanamaker in Philadelphia and Filene's in Boston. The list goes on.
Most of the names have been around for more than a century, a legacy of the immigrant entrepreneurs who moved to America and helped build the nation's cities. The founding families sold their stores years ago, but their monikers lived on.
Wedding dresses, baby shoes, lunches with mom, meeting places for first dates--the department stores in each town became interlaced with all sorts of family memories and personal histories.
Today, all the brands Federated has acquired over the years have disappeared, and the final 11 will be converted, along with Field's, to Macy's as part of Federated's plan to create a national department store.
Federated, for the most part, isn't using the mothballed brand names in any substantial way. And the retailer has expressed no interest in selling or licensing them. But it doesn't want competitors to gain access to the names, either. It's a common tactic, and one that has become more widespread, particularly in the technology industry, as American business consolidates.
"The value of companies today, whether it's technology or retail, is more and more about intangibles," said Ray Millien, a patent and trademark attorney at Ocean Tomo, a Chicago-based intellectual property auction firm. "Big companies will buy up patents just to take them off the market."
Exactly how much Federated's basket of store names is worth is hard to say. But at least two separate suitors have attempted to buy specific brands from Federated.
One group pursued the I. Magnin name, which Federated acquired in 1964 and stopped using in 1994, and the other sought Marshall Field's, according to people familiar with the negotiations. Both offers were spurned.
Federated spokesman Jim Sluzewski declined to comment on specific offers but said the company is "always looking for ways to use" the names.
"Those are assets we need and may use in the future, so we of course want to keep ownership of them," he said.
Federated Chairman and CEO Terry Lundgren is well-versed in the power of image. By combining a motley assortment of regional brands into one nationwide chain called Macy's, Lundgren hopes to resurrect the department store as a place to shop and fend off the relentless assault of discounters and specialty stores. The idea of keeping the local brand names alive, even if it's as simple as putting Burdine's name on a costume jewelry collection or Rich's moniker on a single boutique, would remind shoppers of the department stores they lost and make Lundgren's job that much harder.
"Federated is very intelligent in that they don't want to create their own competition," said Love Goel, chairman of Minnesota-based consulting firm Growth Ventures Group and a former Federated executive. "The money they could make by selling the brand is less material compared to the potential market share they could lose. The trade-off is pretty risky." At the same time, companies with storehouses of brand names need to use them from time to time in order to keep them alive. Federated, for example, can point to Field's plaque on the outside of the State Street store and an assortment of Field's souvenirs for sale to prove that name is still in use and prevent competitors from taking it over.
Typically, trademark names are considered abandoned under federal law if they haven't been used in three years, but there is a large swath of gray area in how to define use. Even an intention to use can keep a trademark alive in the eyes of the courts.
"The intent question is sticky," said Jerome Gilson, trademark attorney at Brinks, Hofer, Gilson and Lione in Chicago. "Many companies will do what they can to show modified use in some fashion."
Take the case of River West Brands. The Chicago-based brand revival firm waged a year-long battle starting in 2003 to gain access to the I. Magnin name by trying to convince the federal government that the trademark had been abandoned, according to documents filed with the U.S. Patent and Trademark Office.
Federated discontinued I. Magnin operations in 1994, selling some stores, including three stores in the Chicago area, and converting others to Macy's or Bullock's.
River West wanted to revive the I. Magnin brand and either license it to manufacturers of apparel and accessories, or work directly with a retail chain to develop products exclusive to that retailer, according to the patent office filings. The firm also had a preliminary agreement with the Magnin family through the estate of Cyril I. Magnin, which no longer has rights to the department store name, to share royalties in the venture, the filings said.
River West withdrew its petition in August 2004, about the same time that Federated resurrected the I. Magnin label and put it on sleepwear sold at Macy's. Officials at River West declined to comment.
Like many regional department stores, I. Magnin has a storied past. Dutch immigrants Isaac Magnin and his wife, Mary Ann, founded the store in San Francisco in 1876, bringing European fashions to society ladies and dance hall girls. Their offspring became colorful fixtures in San Francisco society, mingling with presidents and movie stars.
Similar tales surround department stores in other cities, putting Federated in the unusual position of owning well-established commercial names that connect romantically to their cities.
Nowhere is the attachment as strong as in Chicago where shoppers have threatened to cut up their credit cards and hold boycotts once the big store from New York swoops into town.
"I hate to think that department stores play as important role in our cultural memory as churches and colleges, but perhaps we've reached that point," said Siva Vaidhyanathan, assistant professor of culture and communication at New York University. "The Wanamaker's near me is now a big Kmart. It's the Kmart in Manhattan. We shop there because Kmart gives us stuff cheap. These are the brutal ebbs and flows of capitalism."
Whether there is a sustainable market for defunct department store names is still a question. But a few entrepreneurs have made a go of it.
A couple in Florida bought the Jacobson's name for $25,000 out of bankruptcy court last year and opened up one shop in Winter Park. The upscale Michigan-based department store chain shut its doors in 2002 after 134 years. It had 23 stores in Michigan, Indiana, Ohio, Kentucky and Florida. Owners Jon and Tammy Giaimo are looking to open more Jacobson's stores in the former markets.
"The reason I bought the name is that it represented quality and tradition," said Tammy Giaimo. "That warm and fuzzy feeling they got from [the old] Jacobson's gets people back in my store. They had such a loyal following."
Susie Hilfiger, the former wife of designer Tommy Hilfiger, resurrected Best & Co., a name familiar to wealthy New Yorkers. The upscale department store went out of business in 1971. A generation later, Susie Hilfiger acquired the abandoned trademark rights for free, opening a luxury children's store by that name in 1997 in leafy Greenwich, Conn., and a second outpost in 2001 at Bergdorf Goodman in New York.
Even River West, the group that lost its fight for the I. Magnin name, bought the North American rights to the name of Bonwit Teller, the defunct luxury department store, and plans to roll out fashion merchandise under the legendary name later this year.
"At a human level, I think [Federated] is making a mistake," says Al Gini, professor of business ethics at Loyola University's business school. "People want big-box stores for better pricing. But they also want that familiarity. The MBAs are saying we want a homogeneous brand, but psychologically, customers feel like they lost a friend."
----------
smjones@tribune.com
Copyright © 2006, Chicago Tribune
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