Daimler's $49 billion issue: Settling Mercedes-Benz brand rights

Daimler AG’s blockbuster breakup plan has created a small quandary that lawyers will spend time resolving sometime in the coming months: rights to the company’s $49 billion Mercedes-Benz brand.

The German manufacturer is working on a legal framework for how Mercedes and trademarks such as its famous three-pointed star logo will be used after spinning off its truck unit later this year, Chief Executive Officer Ola Kallenius said in an interview last week.

“It has to be absolutely clear who can use the brand," said Kallenius, who plans to change the carmaking entity’s name to Mercedes-Benz from Daimler.

The issue is significant because Mercedes is the world’s eighth most valuable brand, just behind Toyota and ahead of archrival BMW, according to consultancy Interbrand Corp. The ranking is led by technology giants Apple, Amazon and Microsoft.

Daimler’s marquee brand was first registered in 1902 after the Mercedes 35 hp model won the Nice racing week. The car was commissioned by businessman Emil Jellinek and named after his daughter Mercedes. The three-pointed star has meanwhile graced Mercedes vehicles ranging from coveted luxury cars to more utilitarian sets of wheels since 1910. The sons of founder Gottlieb Daimler came up with the idea.

“With the Daimler Truck spinoff, it is critical to govern and define the respective Mercedes brand rights in an unambiguous way," said Roman Mathyssek, a consultant at Arthur D. Little GmbH.

Daimler long argued it needed to keep the Mercedes brand under one roof when investors pressured the company to separate the trucks business. The growing technological divide between the car and commercial-vehicle industries forced management to rethink this. They plan to address the trademark rights issue before distributing a majority of the Daimler Truck unit to shareholders later this year.

The brand’s cachet could help stoke investor interest in the two manufacturers, which likely will both feature in Germany’s DAX Index, according to Kallenius.

Keeping tabs on brands and trademarks can be a convoluted exercise. Daimler had to pay $20 million to Ford Motor Co. in 2007 to buy back the rights to its name when it shed DaimlerChrysler following the sale of Chrysler LLC. The name had been used for some Jaguar models, a brand Ford owned at the time.

That issue stemmed from Gottlieb Daimler licensing his engine to an entity in the 19th century named Daimler Motor Company, which was later bought by the British luxury brand.