World Trade Center Trade Marks Sold for $10

Twin Towers of the World
Trade Center before 9/11

As a student in New York City, before any IP law training, this Kat remembers visiting the Twin Towers of the World Trade Center in downtown Manhattan.  When standing between the buildings at dusk, the office lights 100 stories up caused the buildings to appear as two constellations in a city in which it is often difficult to see stars [At least, of the non-celebrity type, giggles Merpel.]  At the time, I was aware that there were World Trade Centers in other countries, but unaware that there were others in the US.  Thus, it seemed to be a generic term for the center of finance and trade in a country, which, incidentally, is similar to how it was described in a World Trade Center promotional video: “A World Trade Center is a physical facility with a … very specific purpose.  And that is to create a marketplace for those people who engage in international business or service international business.” 

As it turns out, “World Trade Center” is trade marked in over 100 countries.  And while the owner of the initial marks was the Port Authority of New York and New Jersey (PANYNJ), a public agency jointly run by the States of New York and New Jersey, the marks were transferred in 1986, for a mere $10 according to this NorthJersey.com article, to a not-for-profit organization called (appropriately) World Trade Centers Association (WTCA), run by Guy Tozzoli, a former executive of PANYNJ.    

As a PANYNJ senior executive, Mr Tozzoli was influential in creating the World Trade Center brand as we know it today.  During his tenure, he selected Minoru Yamasaki as the architect of the Twin Towers, helped design the iconic Windows on the Worldrestaurant, and conceived of the idea for Battery Park City, a planned neighborhood developed using construction fill from the Twin Towers site.  It was upon his retirement from PANYNJ that the agency granted the WTCA, of which Tozzoli was President, ownership of the World Trade Center trade marks.  

According to NorthJersey.com, WTCA

"charges an initial $200,000 for use of the name on a building, plus $10,000 in annual membership fees. The Port Authority, owner of the nearly completed skyscraper called One World Trade Center, pays the $10,000 fee, records show. Silverstein Properties, the firm that is building three other towers on the site that also use the name, has an undisclosed agreement with the association, Richie said.

Each year, more than 320 members, public and private, also pay. In 2011, the company’s revenues were $6.9 million.

Its members are an eclectic mix.

The one in the United Arab Emirates city of Dubai is a 39-story tower with embassies, government offices and corporate headquarters. Boston’s is a 428-room luxury hotel and large convention center on the seaport.

There is also one in a run-down storefront off Hudson Street in Hackensack. Suite 1 of the building is the home of the World Trade Center of Northern New Jersey, which doubles as a real estate office.

[…]

Members can use the facilities of other World Trade Centers around the world. And the association encourages minimum standards for all its facilities, from hosting periodic speakers’ series to hanging clocks with worldwide time zones.

But use of the name is perhaps the most valuable.”

[In fact, WTCA believes the name gained significant value after the horrific events of September 11, 2001 because the destruction of the Twin Towers made the World Trade Center name a globally-recognized household name.]

Nearly 30 years later, the 1986 transaction between PANYNJ and WTCA is being questioned by the current executives of PANYNJ and local politicians who are concerned that the transfer to Mr Tozzoli's WTCA was improper.  Kat Neil Wilkof recently posed the question of whether IP is truly an asset.  The history of the World Trade Center trade marks begs the question: if IP is an asset, is ownership over IP a reasonable form of executive compensation?  Back in 1986, certain executives at PANYNJ answered this question in the affirmative in connection with Mr Tozzoli’s employment there.  The current General Counsel of WTCA, Scott Richie, agrees, saying, “I don’t see where we have an issue where we have a public entity gifting some sort of benefit to former employees,” adding, “WTCA is a not-for-profit company.  It has not used the trade marks to generate wealth.  It has used the trade marks for the collective benefit of its members, helping them develop facilities around the world foster trade.”

One World Trade Center

The WTCA may be a not-for-profit company, but Mr Tozzoli personally earned millions in compensation as a result of the revenue generated by WTCA’s trade mark licensing activities.  Among the licensees is PANYNJ.  [So much for PANYNJ getting preferential treatment for being an indispensable benefactor of WTCA.]  This Kat thinks that if PANYNJ were a corporation, it would almost certainly have faced a shareholder lawsuit over the divestiture of the trade marks to WTCA for only $10 – especially because PANYNJ is required to pay a license fee in order to use the marks it once owned.  The re-development of the World Trade Center site in New York City is almost complete and PANYNJ wants to be able to sell merchandise branded with the World Trade Center name to generate operating revenues for the agency.  However, it can only do so if it signs a merchandise licensing agreement with WTCA, which, in turn, demanded as a license fee 9,000 square feet (828 square meters) of office space rent-free at One World Trade Center in lieu of royalties.  Based on the rates at which PANYNJ offers leases at One World Trade Center, the space requested by WTCA is valued at about $585,000 per year - a tidy sum.  On the other hand, PANYNJ expects that its annual merchandise sales will net the agency more than $23 Million.  If sales indeed reach that level, the cost to PANYNJ of giving WTCA the office space rent free would be approximately equivalent to a 2.5% royalty rate - a relative bargain considering that royalty rates in trade mark license agreements typically range from 5% - 15% depending on the products included in the license agreement. 

Still, even if PANYNJ is getting a bargain deal, there is a sense of unfairness surrounding the circumstances leading to WTCA's ownership of the trade marks.  As an asset, IP can be bought, sold, licensed or gifted just like any tangible asset.  PANYNJ thus had every right to sell (really, gift, considering the $10 price tag) its trade marks to WTCA, even if it later regrets the transaction.  To that end, maybe Neil is right in suggesting that we be wary of considering IP as an asset lest its value be taken for granted.  This Kat, for one, believes IP is an asset - a valuable one that should be treated with greater reverence considering the long term potential returns. 

9/11 Memorial here
The World Trade Center in Movies here
Banksy's opinion of One World Trade Center here