Seizing Opportunities

Julia Anne Matheson, partner, Potomac Law (US), explained that the crisis accentuated the need for all businesses to evolve.

COVID-19 has presented as much opportunity as challenge. “The brands who rose to that are stronger than ever,” she insisted. “It has forced businesses to rethink how they deliver their products and services, and how they could expand their brand offerings.” News articles offer numerous examples.

Streaming provider Spotify (Sweden) found that it had to undergo a dramatic shift and redefine its brand strategy, according to an article in Harvard Business Review. Before the pandemic, the brand’s business model was based on users who were compelled to listen to advertisements so they could stream the music of their choice free of charge.

But Spotify faced a significant challenge when advertising agencies cut their budgets amid the economic slump wrought by the pandemic. The company acted quickly, accelerating its plan to create original content by producing and offering new podcasts to its audience.

In 2020, the Stockholm-based company bought podcast companies, The Ringer, for nearly US $200 million, and Megaphone for US $235 million. It was a shrewd move: the pandemic has precipitated a boom in podcasting.

During its second quarter earnings announcement in 2021, the audio streaming company revealed that users spent 95 percent more time listening to podcasts compared with the same period last year, boosting the company’s podcast revenue by 627 percent year over year.

During this tumultuous period, The Walt Disney Company (US) successfully broke with tradition and started selling its movies via its streaming services to offset the loss of takings from the box office and theme parks, said an article in The Conversation.

In February 2021, The Walt Disney Company announced a surprise quarterly profit, in the wake of reaching more than 146 million total paid subscriptions across its streaming services at the end of the quarter. In its official earnings statement, chief executive officer Bob Chapek said, “We believe the strategic actions we’re taking to transform our company will fuel our growth and enhance shareholder value.”

According to Elizabeth Lenjo, founder and managing consultant, MYIP Legal Studio (Kenya), such rapid pivots in the digital space proved essential—and lucrative—for many brands.

“A number of businesses with effective marketing strategies evolved their products and services during the pandemic, made a killing in profits, and gained a better brand presence in the eyes of consumers,” she said.

Successful businesses expanded the scope of the goods and services they offered during the pandemic, agreed Alex Borthwick, of counsel, Powell Gilbert (UK).

He observed that this evolution was commonly embraced by restaurants, many of which offered meal collections and deliveries. For example, he said, one notable example was the three Michelin-starred London restaurant, Sketch, which introduced its “Sketch at Home” meal kits available for pick up or delivery. But Mr. Borthwick warned that such innovation demands extra and swift legal scrutiny.

Assuming such businesses intend to continue these goods and services, in addition to “restaurant services,” they should obtain registrations for “food delivery services” and “prepared meals” or the like, to facilitate any future enforcement actions.

“Businesses that have launched in new territories should ensure they have protected their brands,” he cautioned.

Cultural Changes

Elsewhere, companies embraced the remote working enforced by the COVID-19 lockdowns as a long-term and cost-saving business strategy.

According to Forbes, IBM (US) championed remote working until 2017, but then it U-turned that year and required the majority of workers to return to the office. During the pandemic, the company pivoted once again and began shifting 20 percent of its workforce, roughly 75,000 employees, to remote working. The resulting reduced real estate and office space reportedly generated massive savings for the firm, up to US $50 million, according to Forbes.

Other companies, including Facebook, Shopify, and Twitter have publicly announced that they will make remote work permanent after the threat of the pandemic subsides.

These developments come as little surprise to Ms. Lenjo, who believes work output has been much higher during the pandemic.

“The work-from-home model has been tried and tested, and it is now a popular and preferred choice of many brands,” she said. “It has proved to be effective and has led to brands and their guardians becoming more innovative to ensure that work remains high.”

In addition to agility, ensuring the visibility and delivery of corporate social responsibility goals is no longer a “nice to have” bonus for brands and their counsel in this new era of consumer scrutiny. The reputations of brands that offered nimble and positive contributions to pandemic relief efforts fared particularly well, according to Mr. Borthwick.

Luxury brands Armani (Italy) and Prada (Italy) converted their manufacturing sites to make disposable lab coats and masks for health workers, and LVMH (France) produced hand sanitizer. In the United States, auto makers Ford, General Motors, and Tesla Inc. produced ventilators, while Nike Inc. converted portions of its factories to manufacture air-purifying respirators.

“In addition to the social benefits of such endeavors, they are beneficial for the brands, particularly in an era where corporate responsibility increasingly affects consumer behavior,” explained Mr. Borthwick

New Threats

There was a dark side to these transitions and transformations, however. For one, counterfeit activities especially in the e-commerce space, stole the spotlight.

“While such innovations represented a great opportunity to offset disastrous economic losses, they represented a risk for brand protection since there was an increase of counterfeit products and other illegal activities,” noted Lorenzo Litta, legal counsel, BrandIt.com (Switzerland).

The concerns about counterfeiting are borne out by a joint report from the European Intellectual Property Office (EUIPO) and the Organisation for Economic Co-operation and Development, published in October 2021. According to the study ”Misuse of E-Commerce for Trade in Counterfeits,” 56 percent of all customs seizures at EU borders are e-commerce goods, while criminal networks reacted quickly to the health crisis by adapting their strategies to exploit the surge in online consumption.

“Brand guardians should now ensure that the protection of intellectual property (IP) is maintained, especially in the growing online ecosystem. The key is to ensure trust between users and the brand, but also between brands and IP lawyers,” Mr.Litta said.

While Ms. Lenjo agreed that the rise of counterfeits has been a downside of the growth in e-commerce, in her view, the positive side of this development has been much greater.

“In regions where e-commerce was struggling, the potential was realized,” she said. “Some brands were able to effectively police their brands and shut down pages that sold counterfeits and knock-offs using digital software that identifies similar or same pictures being used online.”

In many ways, Ms. Matheson explained, the pandemic merely accelerated the inevitable decline of some businesses that had failed to meet new marketplace demands.

“Brick-and-mortar retail was facing huge challenges to survive before COVID-19. The pandemic may have accelerated the demise of some of these businesses—but that is not a ‘brand’ issue as much as it is evolution of the marketplace,” she reasoned.