Philips, made in China?

A trademark is commonly regarded as a badge of origin.

The European Court of Justice acknowledges that a trademark can have several purposes, but regards the indication of origin as the quintessential function of a trademark. Only through an exclusive and legally protected trademark right are trademark owners able to guarantee consumers the origin of their products or services.

If you were satisfied with your old Senseo® coffeemaker, it is quite reassuring to know that your new Senseo® comes from the same manufacturer and was put together in the same way, with the same quality requirements. Without the protection of trademark law, everybody can slap whatever trademark they like on a product and no one can ever be sure from which manufacturer a product originates.

The manufacturer, of the Senseo®, is Philips. And Philips recently sold its home appliances division (irons, vacuum cleaners, air fryers, coffee machines) to Chinese investor Hillhouse, for 4.4 billion euro. However, although a new Senseo® no longer originates from Philips N.V. in Eindhoven, the Netherlands, Hillhouse will continue to sell the devices under the brand name Philips. That sparked some outrage. What about that quintessential indication of origin?

A license fee of 700 million euros

In short: the indication of origin is getting a bit more complicated. The origin of the goods, the coffee machines, may change, but Philips remains the owner of the Philips trademark. Philips sold the home appliances division, but only licensed its trademark. For 15 years and a license fee of 700 million euros. To protect the reliable reputation of the Philips brand, strict quality requirements were included in the license agreement. With these strict requirements, Philips indirectly guarantees the customer that the quality of products that are sold under the Philips trademark remains the same.

Companies and trademarks are often sold together, famous Dutch retailer HEMA was sold several times in the last decades, trademarks and all. Sometimes only a trademark remains and is sold to the highest bidder, as happened after V&D, another famous Dutch retailer, went bankrupt. When everything is sold, the origin of the product changes completely. However, when a trademark is licensed under strict conditions, the trademark remains a badge of unchanged quality.

Would you like to know more about trademark licensing or transferring trademarks? Our advisors are happy to explain all options and possibilities.