In the constellation of business accolades, it usually doesn’t hurt to come in on top, but this one probably will. We discuss why Elon Musk’s rebranding of Twitter to X is probably the most expensive rebranding in history and how business owners can avoid the same fate by getting their intellectual property (IP) ducks in a row.

Elon Musk acquired X Corp. (which was then Twitter) in October 2022, and roughly a year later in October 2023, the first of many lawsuits are rolling in. X Corp. is being sued by a Florida legal marketing company called X Social Media for trademark infringement over the name it has been using since 2016. X Social Media seeks damages equivalent to three times its losses or the defendant's profits.

Additionally, X Corp. competitors like Microsoft and Meta already have IP rights to the letter in various classes. Microsoft has owned an X trademark related to its Xbox console since 2003. Meta Platforms - whose Threads platform is a X rival - owns a federal trademark registered in 2019 covering a blue and white letter ‘X’ for fields including software and social media. 

That.Legal estimates that almost 900 companies have US trademarks on ‘X’. Additionally, there are around 260 ‘X’s registered as trademarks with the EU’s Intellectual Property Office, not to mention hundreds more in jurisdictions around the world.

While not all of these will be legitimate claims, and most of these disputes will be settled out of court, the large field of potential plaintiffs is eye watering.

Sentiment is expensive, even for a billionaire

Elon Musk’s fascination with the letter X predates his purchase and subsequent rebranding of Twitter as X Corp. His long-standing obsession with the 24th letter of the alphabet dates back to at least 1999, when he acquired the X.com domain for the online bank he co-founded. 

Musk envisioned an “everything app” that would handle all of a person’s financial transactions and social connections, and the name X captured the nexus between these services. When his company merged with a payment service co-founded by Peter Thiel, he fought to keep X as the name of the combined company.

After a series of internal focus groups revealed that many would confuse the X.com domain name with adult websites, Musk lost the rebranding battle and the merged company took on the much friendlier-sounding name, PayPal. 

While his attempt failed, Musk remained enamoured with the name. In 2017, he purchased X.com back from PayPal, stating on what was then Twitter that it had ‘great sentimental value’ to him. 

Musk has since worked “X” into the names of his businesses, like SpaceX and xAI, as well as naming one of his children X Æ A-12, or X for short. Even the conference rooms in the former Twitter’s San Francisco headquarters have recently been renamed in leetspeak, like "eXposure," "eXult" and "s3Xy."

As Musk has been captivated with the letter X despite advice to the contrary, it comes as no surprise that even Tesla has not been spared - put together, the model names of Tesla cars spell the word “S3XY.” (Musk wanted to name the Model 3 the Model E, but Ford threatened to sue Tesla over the name.) 

With his takeover of Twitter, Musk is taking advantage of an opportunity to resurrect his “everything app” idea of over 25 years ago, which will offer services akin to China’s WeChat and India’s PayTM. 

While Musk owns the X.com domain, X Corp’s legal team have a huge task on their hands to secure the necessary trademark protections from scratch. Additionally, X Corp. faces significantly steeper competition than what Musk was up against 25 years ago, when Android Pay and Apple Pay didn’t yet exist.

 

Throwing years of brand equity away

It’s not just that X Corp’s upcoming legal battles will be expensive - by setting Twitter aside, Musk’s rebranding wiped out anywhere between $4 billion and $20 billion in brand value, according to analysts and brand agencies.

It’s rare for corporate brands to become verbs, like ‘tweet’ and ‘google’. It’s rarer still for the owner of such a brand to announce plans to intentionally discard such valuable IP assets.

Other tech companies have rebranded themselves in recent years. Google became Alphabet to encompass different businesses within the company. Facebook became Meta Platforms to emphasise the company’s commitment to the metaverse. However, the product names remained and we still google by going to Google. (Fun fact: Google was previously known as BackRub.)

Arguably, Musk’s personal brand is even more powerful than the Twitter brand or that of any other tech tycoon, and the star power he lends to the X brand cannot be underestimated. However, the fact remains that it’s pretty challenging to turn the letter X into a verb - I X’ed about Deadpool 3 today and was re-X’ed by Ryan Reynolds, anyone?

Get your ducks in a row for a rebranding

Rebranding can be a monumental task and you should think long and hard about it before embarking on this endeavour - You will potentially lose a significant portion of whatever reputation, notoriety and goodwill was garnered by the initial brand. Musk has arguably enough star power to overcome the hurdle of losing the Twitter brand, but you need to ask yourself whether the new brand is worth the loss of the old one.  

That said, if you decide to rebrand, what should you do to prepare? Before applying to register your trade mark, you should check if your trade mark fulfils the registration criteria. These are some guidelines for determining the registrability of your trade mark:

1. Does Your Trade Mark Meet the Registration Criteria?

To register your trade mark, your trade mark must:

• Be capable of being represented graphically

• Be distinctive and capable of distinguishing your goods or services from other traders

• Not consist entirely of signs which are descriptive of your goods or services (e.g. best, cheap)

• Not consist entirely of signs which are customary in current language or established practices of trade (e.g. the mark “Escalator” has become so well-accepted that it is used to describe power-driven staircases for carrying passengers, and can no longer be used to distinguish the trader selling such goods)

• Not be identical or confusingly similar to existing trade mark(s)

  2. Have You Searched for Similar Existing Marks?

Before applying for a trade mark, you should conduct a Similar Mark Search on IPOS Digital Hub to ensure that there are no existing marks on the Register belonging to another party that are identical or similar to yours.

If there is a similar or an identical mark found and this mark is protected for similar/identical goods and/or services as specified in your trade mark application, it is possible that your application will face an objection.

3. Have You Classified Your Trade Mark Appropriately?

The scope of your trade mark protection is determined by the goods and/or services listed in the application. You are required to state the exact class number and the appropriate description(s) of the goods and/or services according to the Nice Classification. Under the Nice Classification, there are 45 classes of goods and services.

Use IPOS’ Classification Database to search for the appropriate descriptions to avoid facing an objection against your trade mark application. 

4. Have your considered professional advice?

While engaging a lawyer to file your trade mark application is not a requirement, you may benefit from specialised expertise on whether your trade mark is registrable, to determine the appropriate classification of your goods and services, to assist in similar mark searches, and to manage the administration of your trade mark portfolio, especially if you are filing overseas.

Let’s talk about your challenge

At That.Legal, we help you avoid making expensive IP mistakes so you can focus on building your brand. Let’s talk about your challenge here.

After the acquisition, Musk himself joked about how Twitter has plunged in value since his $44 billion takeover:

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Disclaimer

This article does not constitute legal advice or a legal opinion on any matter discussed and, accordingly, it should not be relied upon. It should not be regarded as a comprehensive statement of the law and practice in this area. That.Legal LLC represents neither party in this dispute and is not privy to any confidential information pertaining to the parties. All facts stated herein are compiled from publicly available sources. If you require any advice or information, please speak to a practising lawyer in your jurisdiction. No individual who is a member, partner, shareholder or consultant of, in or to any constituent part of That.Legal LLC accepts or assumes responsibility, or has any liability, to any person in respect of this article.