On January 31, 1990, the world bore witness to the remarkable power that can be found in a simple logo.
It began on a wintry night – 4am on a Wednesday – when Russians gathered at Pushkin Square in Moscow. By morning a line had formed, running for hundreds of meters, barely held in order by hastily arranged metal barricades and police tape.
At the very front a big, red ribbon was cut, then the crowd began piling into Russia’s first McDonald’s.
Lenin rolled over in his grave. Thirty thousand Russians ordered burgers, fries, and shakes on that first day alone, paying through the nose (six or seven rubles) for the opportunity.
Of course, in the end, it was just McDonald’s. As one teenager told reporters, soda in hand: “It’s very beautiful, but I expected more.”
The quality of McDonald’s food was not what drew the crowd that day. McDonald’s Moscow was a case study in the power of brand. The golden arches on the marquee represented something so powerful that food quality was almost beside the point. It was so powerful that the yellow “M” has maintained its cultural significance until just a few weeks ago.
On March 8 – 32 years and 36 days after the Pushkin Square opening – McDonald’s announced it would be pulling out of Russia in response to the invasion of Ukraine. The Pushkin location, as well as all 846 others in the country, went dark. In May, it announced the retreat was permanent. It was a dramatic move that made global headlines, but what happened as a result was far more interesting.
You see, the day prior, Russia had effectively legalised intellectual property theft. No longer would Russian companies have to provide compensation for their use of patents, designs and other such assets originating from “unfriendly” nations. It was an unprecedented decision with massive implications for global markets. At the same time, it revealed something much deeper about where value derives in our global economy.
We tend to think of value as something we earn in return for an act: a company creates an innovative technology, then they make a profit from it. In reality, the act of creating the assets is only part of the story.
Assets, after they’re created, must be protected in some way or another, lest a malicious actor attempt to steal them.
The process of protection can take many forms: a company might protect its assets by keeping them secret – for example, by maintaining the recipe for Big Mac sauce hidden behind layers of security. We’ll call this a “soft” right in that it doesn’t rely on enforcement of a legal process to be effective.
On the other hand, some assets are public by nature and can’t be kept secret. McDonald’s can’t technically on its own prevent someone from replicating the golden arches. Instead, it relies on legal protections enforced through the courts and ultimately government power to protect those assets.
These are registered as “hard” rights, such as patents and trademarks. They exist as a social contract: the firm abides by certain rules the government lays down and in return the government promises to provide legal protection. Think of it as a very specialised protection racket.