Wednesday 13 March 2024

Darren Olivier

Van's Aircraft let down by its IP Policies as well

Van's Aircraft is a very successful producer of experimental aircraft and aircraft kits based in the US. Their fleet of RVs (as they are known) have, over the past 50 odd years, become a major player in general aviation, the term used to describe aviation for private pilots and basically everything outside of commercial air transport. In 2023, over 1100 of their fleet were flying worldwide and are popular in Africa. Robin Coss Aviation Vans Aircraft Cape Town is their highly regarded distributor.

However, despite their success in the tangible world, their investment in intangible rights to protect and nurture their innovation appears to have been strangely absent, vastly undervaluing their company at a significant time of need in their history.

In December 2023, Van's Aircraft made a surprising announcement that they had severe cash flow problems and had been forced to file for Chapter 11 Bankruptcy protection - a legal way of retaining ownership of their assets under a plan to restructure and remain in business. Their woes relate to supply chain challenges, problems with laser cut parts, and faulty primers. 

The Chapter 11 process requires Van's to publicly disclose their financial position for scrutiny. It is here that we make the observation that their intangible asset value is set at ZERO, and that there are no disclosures of any registered or unregistered intellectual property relating to the brand or designs of aircraft. They are simply recorded as "unknown". 

A check of the national registers using TM View's database confirm their lack of protection, not listing a single trade mark in their primary market - the United States. Indeed, in class 12 (the class covering aircraft), it would appear that Vans Footwear have the jump on them. It would also appear that they do not have registers recording unregistered rights in their designs and knowhow in their various kit planes. 

To understand the significance of this, for over fifty years Dick VanGrunsven has grown this company, yet those efforts reflect as ZERO in the brand value section on the balance sheet. 

Despite the challenges of valuing brands and intangible assets accurately, few who know this company, would deny that its intangible value is substantially more than "nothing". The reality then is that the company is undervalued at a critical time when it is trying to regain trust from their stakeholders, which include their own customers. 

Some may argue that by reflecting the brand as ZERO they deter potential creditors from seeking to bankrupt the company and secure the trade marks or other IP at auction at some time in the future, but this is misguided. In fact, it may just do the opposite because the auction value would be low using the valuation the company has placed on its intangibles.

By contrast, Cessna the bastion of the traditional, non-experimental trainer and small airplane market, has a swathe of trade mark registrations supporting its brand value. The reason for this is because brand valuation, properly executed, entails an assessment of the integrity of the rights in the company's intellectual property. This illustrates the while the experimental aircraft segment is flourishing, one should not experiment with IP if you want to your brand valuation to flourish. In a world where safety means everything, overlooking intellectual property governance and protection is particularly ironic.

Darren Olivier

Darren Olivier

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