Ryan Lochte’s Path to Value Redemption

Ryan Lochte is one of America’s most decorated male competitive swimmers. His accolades are plentiful with 12 Olympic medals, including six gold, three silver, and three bronze. He is the world record holder in the 200-meter individual medley, and was named American Swimmer of the Year and World Swimmer of the Year twice by Swimming World Magazine. In total, Lochte has won 70 medals in major international competitions, with 45 of them gold. In addition to his swimming abilities, Lochte’s is known for his good looks and lively personality, gaining him publicity through magazine covers and television appearances. He has appeared on the cover of Vogue and was named in People Magazine on the “Sexist Man Alive” list. He made appearances on 30 Rock and Beverly Hills 90210, and starred in his reality TV show, What Would Ryan Lochte Do?

Today, Lochte’s net worth is reportedly $6 million. While this is no small amount, it could possibly be much higher had he not been involved in a scandal at the 2016 Olympics in Rio de Janeiro. During the Olympic games, Lochte and others reported a robbery, later confessing that it was a fabricated story. Lochte’s actions cost him millions in endorsements with companies such as Speedo and Ralph Lauren immediately ending deals with him. Ending deals with a celebrity who faces bad publicity over a misdeed is a common reaction. Companies choose celebrities who are perceived positively by their target audiences because the companies want to associate their products with someone liked and admired. If these companies continue to use celebrities who have negative or undesirable publicity, it may appear to the public that these companies condone the actions of those celebrities. Therefore, they could lose consumer trust. As brand image is all about perception, companies do not like the risks that bad publicity can generate.

While most people make poor decisions at one time or another, celebrities are held to higher standards because they are public figures. Therefore, their poor decisions could turn into big financial and monetary losses. Other athletes who lost endorsement deals because of behavioral actions include Michael Phelps, Tiger Woods, and Kobe Bryant. Over time, these athletes were able to rehabilitate their image and companies began to work with them again. These athletes continued to prove their valuable skills by winning more awards and making records in their respective sport. They were also able to convince the public that they regretted their actions, and they continue to prove this by staying on their best behavior. However, their misdeeds will always follow them, making it even more work for them to convince the public that they are changed people.

Fortunately for Ryan Lochte, he has been given new opportunities since the scandal. One such break was becoming a contestant on Dancing With the Stars. This kept him in the public eye in a big way as millions of people watch the show. But perhaps the biggest break is that several companies have been willing to endorse him, despite the scandal. These companies have made Lochte a poster boy for starting anew with such campaign slogans as “Clean Start” with PowerBar, “Just Let Me Work” with swim apparel company TYR, and “When Life Happens” with Debt.com. The CEO of cough drop company Pine Bros. specifically stated that everyone makes mistakes and wanted to give Lochte a second chance, capitalizing on the company’s “forgiving” message. Fortunately for Lochte, these breaks came relatively fast after the scandal. With luck, good behavior, and continued success in his sport, Lochte may be on the path for redeeming his value in the public eye.

Athletes Capitalize on Likeness

In the sports world, many athletes become famous for their skills. Those who perform the best and win the most games receive more notoriety. Fans become attached to these players and want to see them often. These players even draw new fans as they become more famous and continue to play well. However, athletes are generally not in a sport for a lifetime. Due to age, injury, and loss of skills over time, they eventually have to retire. Retirement generally comes earlier for athletes than for professionals from other careers. Therefore, it makes sense for athletes who have become famous for their catchphrases, names, and skills to seek trademarks so others do not capitalize on something they’ve earned themselves.

Some famous athlete trademarks include the following: Tim Tebow’s “Tebowing,” LeBron James’ “King James,” Marshawn Lynch’s “Beast Mode,” Lance Armstrong’s “Livestrong,” Jeremy Lin’s “Linsanity,” and many others. As noted, athletes can trademark catchphrases, names of particular poses, nicknames, and more. Some may use their name in original ways (e.g., Lance Armstrong for Livestrong charity that raises money for cancer). If the athletes don’t trademark these things themselves, then fans and companies may capitalize on them. There have many cases where a fan uses a catchphrase associated with an athlete and tries to sell t-shirts or other products with that catchphrase.

With trademarks, these athletes may be able to negotiate sponsorships, gain revenue, and/or raise awareness for something (such as Armstrong’s cancer charity). By trademarking their names, they can make their brand outlive their actual sports career. For instance, Michael Jordan is still keeping his brand strong years after he retired from basketball. In fact, he recently won a case for the rights to his Chinese name. Furthermore, by applying for trademarks, these athletes can prevent others from misusing their names or leading people to believe they endorse something that they don’t. They can also prevent others from generating revenue based on their likeness.

Athletes who move to trademark their names, likeness, and catchphrases early in the process have more control over the use of these trademarks. Some athletes even start the filing process while still in college. Although they cannot capitalize on those trademarks while still in college, they can prevent others from capitalizing on their likeness. Two such athletes include Dak Prescott and Ezekiel Elliott, both rookies for the NFL’s Dallas Cowboys. Both athletes applied for trademarks while still in college, which has proven to be a smart move. Prescott and Elliott have both had an extremely successful first year in the pros, earning their way into the playoffs. As a result, their catchphrases and nicknames have been displayed and used abundantly by their fans. With such a successful start, they are likely to land more sponsorships and sell more products associated with their trademarks. Since they already applied for trademarks, they can prevent others from exploiting their names and already have a head start on negotiating deals for sponsorships and products. It’s an overall smart strategy. It gives them more recognition both on and off the field, and provides them protection as well as other revenue avenues down the road.

Infringement Poses Many Challenges

Intellectual properties are valuable assets for their owners. They protect inventions, brands, published works, and much more by giving owners the right to sue others who try to take, replicate, or sell the protected work. Therefore, it is often in the best interest of inventors, writers, company owners, and others to invest in intellectual property so their efforts are not wasted. After all, it could take years to write a masterpiece or invent the latest and greatest digital device. In the event willful infringement takes place, IP owners could receive a considerable amount in damages, depending on the type of IP. For instance, for willful infringement on patents, a patent owner could receive up to treble damages.

While IP helps protect an owner’s assets, the effects of infringement are considerable. The following list indicates the challenges IP infringement pose.

1. Proving infringement can be challenging. Many infringement cases are not obvious or easy to detect. It may require reverse-engineering an invention or access to confidential information to prove infringement. In other cases, such as clothing designs, it may be difficult to prove that someone created a design first. Someone else could have worked on the same idea at the same time. Further, it may be impossible to detect infringement if the IP doesn’t protect a tangible product or the product is not widely available to the market with use in the public eye. In some cases, detecting infringement may not be possible with a high degree of certainty, rendering any eventual litigation risky.

2. Infringement can create considerable revenue loss. When another party infringes on IP, this party essentially takes away revenue that the IP owner could be generating. In some cases, IP owners can lose millions of dollars, e.g., pharmaceutical companies (brand name drugs), tech companies (smartphones), etc.

3. Infringement cases are costly.
They can cost hundreds of thousands of dollars and even millions. The cost of an infringement suit can be a substantial factor in determining whether enforcing IP is economically wise and ultimately whether that IP has more than some nominal value.

4. IP validity may be questioned.
An IP owner faces risks when initiating litigation against a company. For instance, a patent owner may be at risk of possibly losing the rights to the patent if the USPTO or a court finds the patent is either invalid or unenforceable, which can occur for a number of reasons.

5. Infringement cases take time.
The process of litigation is never a quick one. It takes infringement detection, lawsuit initiation, Markman hearing, trial prep, trial, and appeals. Cases can take months and even years to come to a conclusion. In the meantime, an IP owner risks losing time in the market and more revenue.

Infringement poses many problems to an IP owner and even to the infringer in the end. However, it may likely be worth the time for an IP owner to assert his rights that could ultimately lead to more revenue, damage awards, a settlement, and stopping the infringement completely. However, IP owners must know what is involved in the event of infringement to evaluate whether filing a lawsuit is the best approach.

Carrie Fisher’s Brand Legacy

On December 27, 2016, Carrie Fisher, best known for her role as Princess Leia in the Star Wars movies, passed away from complications after suffering a heart attack. Fisher was among the original cast members in Star Wars, which debuted in 1977. Fisher starred in Star Wars episodes 4-6; however, the storyline for episodes 1-3 did not include Fisher’s character or other famous original cast members including most notably Harrison Ford and Mark Hamill. However, in 2015, episode 7, Star Wars: The Force Awakens, brought back fans’ beloved characters, resulting in the highest-grossing Star Wars movie to date.

Although Fisher was best known for her role as Princess Leia, she also starred in numerous movies including The Blues Brothers, Scream 3, and When Harry Met Sally. In addition to her film career, she also appeared in a host of television shows including Laverne & Shirley, 30 Rock, Sex in the City, The Big Bang Theory, and others. But acting wasn’t her only talent. She proved to be a skilled writer, authoring nonfiction and fiction books, as well as screenplays.

Fisher’s talent as an author and writer kept her in the public eye. However, her publicity was also often riddled with turmoil in association with her addictions, depression, and bipolar disorder. Rather than hide or deny these issues, Fisher spoke frankly and publicly about them, becoming a devout mental health advocate. Although she may have suffered from mental health disorders, Fisher’s natural humor and wit helped her deal with them and show others they could too. In fact, Fisher’s family helped her get the last laugh, placing Fisher’s ashes in a Prozac pill-shaped urn.

At the time of her death, Fisher’s net worth was $25 million. As with the death of any celebrity, her value is likely to increase in the short term as fans demand memorabilia, her movies, and her books. In fact, just a few days after Fisher’s death, Star Wars merchandise sales associated with Carrie Fisher increased three times the amount from the week before. In addition, demand for her books skyrocketed, with the publisher anticipating ongoing demand by reprinting tens of thousands more of her books.

While celebrity value often fades after a death, Fisher’s estate may likely continue to maintain significant value for the foreseeable future, especially with the Star Wars hype. Episode 7, Star Wars: The Force Awakens reached record sales of over $2 billion in anticipation of showcasing the original Star Wars cast, in which Fisher played a significant role. This movie fueled the interest in long-time Star Wars fans from the late 70s, as well as younger crowds. It is likely that the release of episode 8 set for later this year will fare well as many fans will be willing to pay to see Fisher’s last performance. In the meantime, they will continue to buy merchandise as there is nothing like an original cast member for avid Star Wars fans. Even if Disney decides to exclude Fisher’s role in episode 9, the hype will still keep fans coming back to the original characters. Princess Leia will always be one of the main characters that fans associate with Star Wars, whether Fisher is in a film or not. Also, if Disney works out a deal with Fisher’s estate, memorabilia featuring Princess Leia will likely continue to create demand and value for years to come.

IP Valuation During Divorce Proceedings

Statistics show that anywhere from 40% to 50% of marriages end in divorce. During a divorce, the couple divides assets, including homes, furniture, vehicles, and possibly intangible assets, such as intellectual property (IP). However, discovering the value of IP can be a complicated process. It becomes even more complicated when IP owners enter an engagement with preconceived notions.

IP valuation relies on many details for an appropriate and credible result. The same holds true when IP owners face a divorce. However, the details necessary for a credible and defensible valuation in the context of divorce proceedings involves considerations that may be different from that of another context in which the IP is valued. In fact, every IP valuation involves details that are pertinent to that particular entity; thus, making every single valuation unique in its own right. However, oftentimes, an IP valuation in the context of divorce proceedings often presents its own challenges.

The following five aspects make IP valuations during a divorce challenging:

1. False expectations. Many times, IP owners assume the value of their IP is much higher than its actual worth. Therefore, they enter into an IP valuation engagement with a particular value amount in mind. However, a credible valuation analyst reviews all aspects of intellectual property to determine an accurate value. Oftentimes, the amount the IP owners expect a valuation to reveal is considerably understated compared to their expectations.

2. Stage of IP. Most often, the IP is in the early stages of development. Therefore, it is often unproven. Without a workable invention and/or market acceptance, it is likely the IP does not hold much value.

3. Battle of valuation experts. Many valuation practitioners may seem appealing. However, without good knowledge of the industry and what IP valuation entails, IP owners may mistakenly choose a firm that does not have the background needed to provide a fair value determination on the IP at issue. This may lead to a contentious legal battle among valuation experts hired by opposing parties, thus increasing the cost of litigation.

4. Personal goodwill. There might be a certain element of personal goodwill attributable to the IP. This means that one party may have more invested in the IP, such as relationships, skill, knowledge, reputation, and others that an IP valuation analyst would have to consider in the valuation. However, in the event of a divorce, the personal goodwill may not matter if a judge determines an asset should be split evenly.

5. Capitalization. IP often requires a certain degree of capitalization, which gets cut in half as soon as the divorce takes place.

As indicated, IP owners must consider aspects about their IP and a potential valuation in divorce proceedings to determine whether hiring a valuation expert is worthwhile. As listed, many of these aspects can be disappointing, which is why IP owners going through a divorce often forego an IP valuation. They may not want to split assets based on their level of individual goodwill. They may not want to spend the money for an IP valuation to discover that the IP has no value. Either way, a competent IP valuation analyst would bring up these aspects the moment IP owners request an engagement. From there, the IP owners can determine whether a valuation is worth their time and money.

Fake Ads Wreak Havoc on Reputation

Brand names play a significant role in recognition for companies. Popular brand names that live up to their reputations attract more attention from consumers than brands that are not recognized or that do not live up to their name. However, even the best brands face negative publicity or become victims of fake stories. Recently, Fisher Price became the victim of a fake ad on social media.

Social media can play a big role for companies who want to promote their brands. After all, there are more than one billion users on social media. Therefore, social media creates lots of exposure for advertisements. Further, sites such as Facebook can target specific consumers with interests that match products or services advertised.

However, social media is prone to fake ads and news. In addition, it gives consumers the opportunity to express themselves, which could further exacerbate a non-existing problem, making it a disaster. Such are the risks that companies face when they become victims of fake advertisements.

Fisher Price was recently a victim of fake advertising when an advertisement reached social media with a new toy. Showcasing a Happy Hour Playset, the ad depicts a setting of toddlers surrounding a toy bar complete with toy beer bottles. While many viewers realized the ad was fake, other viewers became offended and reached out to Fisher Price. The difficulty today is that many ads and news stories may appear to be true. Therefore, viewers may not always know what is true and what is not, especially when the ad captures the look and feel of the real thing.

The fake ad creates a lot of work for Fisher Price in trying to convince viewers that it has no part in such an ad or that it does not condone a drinking playset for children. What has been a reputable brand name for years can easily be tarnished by a fake ad that is likely meant to be harmless. Since the ad can reach hundreds of thousands of people, it can be difficult to assure all viewers that the real-looking ad is not real. As a result, it could lower the value of the brand if consumers start to view it negatively and turn to other brands instead.

While many fake ads may be created out of boredom as a humorous prank, they represent nightmares for brand names.

Arnold Palmer’s Value Lives On

On September 25, 2016, the professional golf industry and its fans lost one of the greatest golfers in history. Nicknamed The King, Arnold Palmer played a critical role in the golf industry as a trailblazer, changing the way the world viewed the sport of golf.

During Palmer’s career, spanning more than six decades, he won 62 PGA Tour titles, 7 major titles, the PGA Lifetime Achievement award, and became one of the first inductees into the World Golf Hall of Fame. While his accolades are remarkable, Palmer’s role in the golf industry was more considerable than that of a golfer, in which he earned $7 million. He devoted his life to the sport of golf by designing hundreds of golf courses around the world, making golf a televised event, co-founding The Golf Channel, owning the Bay Hill Club and Lodge, among others.

At the time of his death, Palmer’s net worth was $700 million, making him one of the top ten richest athletes in the world. As is the case with many athletes, he accumulated the majority of his wealth beyond his athleticism. As already mentioned, he delved into a variety of avenues that involved golf beyond playing on the course. However, one of the biggest ways he earned his riches was through endorsements. In fact, he is among the top three athletes to make the most money via endorsements, falling behind only Michael Jordan and Tiger Woods at $1.3 billion. His charisma, skill, and likeability made him a top choice for promoting products. Companies he worked with include the likes of Coca-Cola, United Airlines, Westin, Holiday Inn, Ford, Pennzoil, and many others. At the time of his death, Palmer was still endorsing products!

In addition to his earnings as a professional golfer, his endorsements, and his golf course designing projects, Palmer launched wine and apparel products. He also had a drink named after him, in which the Arizona Beverage company distributes today, earning $200 million in 2015 alone.

As with the death of any notable athlete or celebrity, value tends to rise in the short term due to nostalgia. Nobody likes to lose a person; therefore, fans grab as much product as they can immediately following a death so they can hold on to something in remembrance. In Palmer’s case, his wine, apparel, and tea are likely to experience a spike in sales. In addition, he has a book that is set for release on October 25. Sales are likely to be higher than anticipated as a result of his death. In fact, the book soared to #1 on Amazon at the news of his death, despite the fact that it hadn’t been released yet.

Palmer leaves behind a big footprint in the golf industry. His name, products, and legacy will live on for years as a result, contributing to his value long after his death.

Olympic Mishap Affects Brand Image

The Olympics can bring much fame to athletes, especially to those who score medals. Ryan Lochte is such an athlete. He is one of the world’s most famous swimmers, earning 12 medals in the Olympics with six gold, three silver, and three bronze medals. His earnings make him one of the most decorated swimmers in Olympic history. All of this bodes well for brand image. However, Lochte’s actions while at the 2016 Olympics affect his brand image differently.

Brand image is all about perception. Consumers choose brands based on good experiences with products or people. If a brand touts that it is superior to other brands, and consumers find that this is true or believe it to be true, they continue to trust that particular brand. However, when a product fails, consumers begin to question its validity and seek another brand to take its place. This is why it is important for celebrities, such as Ryan Lochte, to maintain a good image.

At this year’s Olympic games, Lochte made up a story that made national news. Later, he confessed to embellishing the story. This leaves the public questioning his validity, making it harder for them to support him. Therefore, Lochte lost four major endorsements from Speedo, Ralph Lauren Corp., Syneron-Candela, and Airweave. Companies notoriously drop celebrities for bad behavior as they do not want to be associated with it or appear that they condone it. If they condone the bad behavior, then the public is likely to question the companies’ choice in a spokesperson, making it more likely that the public will choose other products in disagreement.

Therefore, Lochte’s actions affect his own brand image, making him less marketable. While he has earned many awards, people often remember other people more for their misdeeds because these come more shockingly. Thus, Lochte may be a decorated swimmer, but the shock value of his misdeed may harm his brand image for years to come. However, some celebrities overcome misdeeds (e.g., Tiger Woods, Michael Phelps, etc.) and eventually recover. Yet, this takes time. Ryan Lochte may have a bit of a break as he is slated to compete on “Dancing With the Stars.” This highly popular show will keep him in the limelight, for which he must be on his best behavior in order to redeem himself. Further, Pine Bros., a cough drop company, recently endorsed Lochte, claiming that the corporate world is too reactive and harsh.

Time will tell the damage to Lochte’s brand image. For now, he gets a few lucky breaks, but he doesn’t completely escape the havoc already done to his image. Perception is everything to a brand.

5 Ways P&A Is a Thought Leader in the IP Valuation Industry

As you know, Pellegrino and Associates is a premier intellectual property firm. We provide a variety of IP valuation services including copyright valuations, patent valuations, trade secret valuations, trademark valuations, early-stage valuations for both entrepreneurs and investors, software valuations, and tax valuations. We also determine royalty rates, testify in court as expert witnesses, and much more. While other IP valuation firms offer similar services, we thought we would highlight some of the criteria that make us a thought leader in the IP valuation industry.

1. Increased presence in the litigation setting.
Over the past few years, the number of law firms seeking our services has increased exponentially. This reaffirms how important IP valuations are in settling disputes. It also indicates our IP valuations and expert witness testimonies withstand scrutiny. In fact, one North Carolina Court stated that our firm’s work is “clearly in the mainstream of IP valuation methodologies” and that our qualifications are “outstanding.”

2. More than 350 engagements. Our firm boasts more than 350 engagements for more than 200 clients within every major industry sector. We have worked with Fortune 100, Fortune 500 companies, early-stage companies, individuals, law firms, and others. A few of the companies we have worked with include IBM, GE, Lockheed Martin, and others. The broad range of companies and repeat companies who seek our services affirms our position in the IP valuation industry.

3. IP valuation guide. Pellegrino & Associates president Mike Pellegrino has authored two editions of BVR’s Guide to Intellectual Property Valuation. He objectively captures the process for the valuation of intellectual properties in these guides, revealing the techniques that result in credible, defensible, and precise IP valuations. More than 700 of the guides have sold to a variety of customers, including attorneys, business valuation firms, competing IP valuation firms, tech transfer officers, and more. Given that few IP valuation guides exist on the market that detail the nuances associated with the valuation process further proves that our expertise is top level.

4. International presence. Our reputation as a premier IP valuation firm has landed us many opportunities on an international level. We have taught on IP valuation to officials from the governments of Brazil, Azerbaijan, Estonia, Thailand, Guatemala, and New Zealand on behalf of the U.S. State Department. Our finance- and software-related articles appear in internationally and nationally recognized outlets, such as IAM Magazine, CFO Magazine, MSNBC.com, FoxNews, and others. Also, a law firm has hired us to assist in international litigation.

5. Industry standards. We help set industry standards. Company president Mike Pellegrino was instrumental in helping to change Indiana law regarding the valuation of embedded application software for personal property tax reporting purposes and for the taxation of patent-derived income. He also authored a substantial portion of the administrative rules that Indiana’s Department of Local Government and Finance now uses to administer the evaluation of software appraisals for property tax matters.

These five criteria are just a few ways that our company holds thought leadership status and provides exceptional services in the IP valuation industry. Browse our website or contact us today to learn more.

Five Reasons to Hire an IP Valuation Firm

Intellectual property creates tremendous value for companies and individuals. The value amount varies among the different types of intellectual property. Therefore, determining the value of the entire intellectual property industry is impossible. Intellectual properties exist in several forms, including patents, trade secrets, trademarks, and copyrights, which equates to millions of assets. Without performing due diligence on each and every asset in existence, determining the value of the entire industry is unrealistic. This is because the purpose of the assets, the benefits they bring to consumers/companies, the type of assets, and many other reasons determine value. For instance, a trademark for a soft drink may not command near the value applied to a car that it does for fruit-flavored, sugar-sweetened water. To use a soft drink brand transaction as a basis for establishing the value of a car’s brand is not appropriate either–the two are altogether different in their application and industry.

While determining the value of the entire intellectual property industry is unrealistic, determining the value of individual assets and/or portfolios is paramount. Companies seek IP valuations for a variety of reasons. The following identifies five reasons to seek IP valuation services.

1. Capital formation. Many businesses or individuals seek to raise capital in order to develop an idea, start a business, or to get an invention to market. Capital formation is an especially important step for startups. However, in order to get investors to invest in a particular idea or business, IP asset owners must provide an idea of what their assets are worth. Otherwise, investors won’t invest in something for which the value is not known. It is too risky.

2. Bankruptcy. Just because a company goes bankrupt doesn’t mean that its assets are no longer valuable. By obtaining an IP valuation, a company can determine whether to sell assets to pay creditors or how to properly divide its assets among parties.

3. Expert Witness Testimony. IP valuations provide strong evidence in the court of law. IP valuation analysts spend considerable time reviewing and understanding the assets under consideration. They have to in order to provide a credible valuation. Therefore, hiring an IP valuation analyst can help provide strong evidence in the court of law.

4. Litigation consulting. Law firms hire IP valuation analysts to assist them in determining the worth of assets. Lawyers, plaintiffs, and defendants alike use valuations to give an accurate, unbiased view to present to the court system.

5. Tax valuation. Tax disputes arise often when parties disagree on an asset’s worth. IP valuation analysts provide an unbiased view that can help settle such disputes. IP valuations are also ideal for moving assets that could have tax implications.

As you can see, there are strong reasons to seek an IP valuation firm. At Pellegrino & Associates, we have conducted IP valuations for all of these reasons and more. To learn more about how we can help, contact us today!