Defending the brand

1. Prof. A.Sinatra , Dott. S.Croci a.a. 2011/2012 Defending the brand

2. The Brand • A name, term, sign, symbol, or design, or a combination of them, intended to identify the goods or services of one seller or group of sellers and to differentiate them from competitors. • Usually brands are registered (trademarked) with a regulatory authority and so cannot be used freely by other parties. • Trademarks are often some of the most valuable assets of a business – legend has it that Coke® is the second most well known word in the world after “hello.” The Google® brand is estimated to be worth more than $20 billion..

3. The Role of Brands • Identify the producer • Simplify decision making and reduce risk • Simplify product handling and tracing • Offer legal protection • Signify quality • Create barriers to entry • Secure a competitive advantage • Secure price premium

4. The Scope of Branding • The Brand is more than just a logo. It can refer to just about anything associated with a company business, including the name of the business, slogans, logos, color schemes, typeset , domain name, etc. • Branding: endowing products and services with the power of a brand. • It’s all about creating differences between products (producers and competitors)

5. Brand Equity • Brand equity : the added value on products and services, reflected in how customers think, feel, and act with respect to the brand, as well as in the prices, market share and profitability the brand commands for the firm. • The strenght and the value of the brand allow a competitive advantage on competiors • The brand equity assures an increase in the sales volumes and margins • It helps to strenghten the customer fidelity • It improves the results of the marketing instruments • Customer-based brand equity: the differential effect that brand knowledge has on consumer response to that brand’s marketing. • It arises from customer response. • Differences in response are a result of brand knowledge. • Differential response is reflected in perceptions, preferences, and behaviors related to the brand’s marketing.

6. Improved perceptions Greater loyalty Less vulnerable to competitors Less vulnerable to crises Increased marketing communication effectiveness Larger margins More inelastic responses to price increases More elastic responses to price decreases Greater trade cooperation Possible licensing opportunities Brand extension opportunities Marketing Advantages of Strong Brands

7. Different kinds of brand • Individual brand : the brand is used to identify a single product. Starting from a single promise, the aim is the positioning of one single product and therefore generally evoke certain functional characteristics of the product (Ferrero uses the Nutella brand to market its hazelnut cream). • Family brand : the brand is used to link similar products that meet similar needs. It starts from a singlepromise to achieve the common placement of multiple products (the Dixan brand is used to represent liquid, powder, tablets detergents...). • Umbrella brand:the brand is used to identify more products very different between them. We start with a common promise, then it’s created a promise for a specific product but the main goal is to get a certain position for each product (Sony is used to locate televisions, VCRs, game consoles, dvd and cd players …)

8. Different kinds of brand • Furtive brand: the brand that the company uses to sell its products do not have connections with the name of the company (Cinzano, SKYY vodka, Aperol, Cynar don't have references to Campari, the company that owns these brands) • Single brand across organisation: the company uses the same brand name for all the kinds of products that it sells, the brand name must be the name by which every stakeholders know the company(the Virgin Group uses the brand name "Virgin" for Virgin Cola, Virgin Records, Virgin Books ..) • Endorsed brand: the company places the master brand name in the sub-brand to give it credibility and also be able to operate in very different sectors (Nestle with KitKat) • House of brands:on the sub-brand name is given a very slight importance (or none) to the master brand (Procter & Gamble with Pampers)

9. The Madrid Agreement MADRID AGREEMENT CONCERNING THE INTERNATIONAL REGISTRATION OF MARKS of April 14, 1891

10. The Madrid Agreement The expression "international registration" contained in the title of the Madrid Agreement, does not refer to a trademark having international or supra-national effect : it is a simplified procedure of filing and renewal of the trademark The international mark has two advantages: Enables a simplification of procedures. Instead of presenting many questions to all the countries, it is fair to submit a single application to WIPO (World Intellectual Property Organization) by the competent authority of the company’s country. For an Italian firm the request should be presented by the Italian Patent and Trademark Office. 2.Lower costs The cost associated to the registration of the brand is generally lower than the national taxes a company should pay in the case of individual national deposit.

11. The Madrid Protocol Many European and extra-European countries join the Madrid Agreement, but many other important countries didn’t sign it because for them it’s economically disadvantageous. To overcome this limitation was born on the Madrid Protocol, ratified by the Italian State January 17, 2000 and entered into force on April 17, 2000. Countries which have acceded to Protocol are: United Kingdom, Sweden, Norway, Denmark, Estonia, Finland, Georgia, Iceland, Japan, Turkmenistan, Turkey, Antigua and Barbuda.

12. Why Register a Trademark? • it identifies the origin of goods. • it guarantees consistent quality by showing an organisation's commitment to its users and consumers. • It is a form of communication, a basis for publicity and advertising. • A trade mark can become one of the most important assets of a company. • Trademark registration is one of the strongest ways to defend a brand; • Trademarks influence consumer decisions every day. A strong trademark creates an identity, builds trust, distinguishes you from the competition, and makes communication between seller and buyer simpler.

13. Register a Trademark • Italian trademarks The registration grants exclusive rights on the trademark in the entire Italian territory and in the State of San Marino. • Community trademarks Registration protects the trademark in the entire territory of the European Union: 27 Countries. • International trademarks

14. The International network The first thing companies need to do is to identify the elements of their brand, the ones that are unique and should be protected. This can include things such as their company name, logo or symbol, and other distinct elements of their business. WIPO The World Intellectual Property Organization is one of the 17 specialized agencies of the United Nations. WIPO was created in 1967 "to encourage creative activity, to promote the protection of intellectual property throughout the world.” WIPO currently has 185 member states and is headquartered in Geneva, Switzerland. 184 of the UN Members as well as the Holy See are Members of WIPO. Non-members are the states of Cook Islands, Kiribati, Marshall Islands, Federated States of Micronesia, Nauru, Niue, Palau, Solomon Islands, Timor-Leste, Tuvalu, and the states with limited recognition. Palestine has an observer status

15. The International network UAMI The Office for harmonisation in the internal market is the European Union's official subject for trademarks, designs and models. It provides for the registration of Community trade marks and registered Community designs, essential elements of a European single market. Registration allows companies to protect trademarks, designs and models throughout the European Union, namely 27 countries and almost 500 million people; in addition, the Office works in close cooperation with the national intellectual property offices of Member States of the EU, with international offices and with the European Commission, on a range of issues affecting the owners and users of intellectual property rights.

16. The International network EUROPEAN PATENT OFFICE The European Patent Office (EPO) offers inventors a uniform application procedure which enables them to seek patent protection in up to 40 European countries. It supports innovation, competitiveness and economic growth across Europe through a commitment to high quality and efficient services delivered under the European Patent Convention. The Office's core activity is the examination of patent applications and the grant of European patents.

17. The International network USPTO The United States Patent and Trademark Office is the Feder agency for granting U.S. patents and registering trademarks. The USPTO registers trademarks based on the Commerce Clause of the Constitution (Article I, Section 8, Clause 3). Under this system of protection, American industry has flourished: new products have been invented, new uses for old ones discovered, and employment opportunities created for millions of Americans. The strength and vitality of the U.S. economy depends directly on effective mechanisms that protect new ideas and investments in innovation and creativity.

18. CHINA : How to protect brands and trademarks • The gradual and constant growth of economic exchanges and international cooperation with China underlines the importance of the protection of trademarks and patents in this country to safeguard the competitiveness of the company.  • It frequently happens that Chinese companies exploit inventions, utility models and design of other firms that are not protected in China, to sell directly in the domestic market and abroad.  • Sometimes Chinese enterprises make abusive registrations of the other firms brands that are already covered elsewhere (in this case, when the real owner of the brand comes to market in China will have a bitter surprise to find his distinctive sign adopted by local companies that exploit his notoriety).

19. The importance of registering the brand in China • Currently China has signed many international conventions on industrial and intellectual property with a remarkable development of internal legislation with regard to the protection of trademarks and patents. • The registration of trademarks and patents in China is the essential condition for the application of standards and defence instruments provided in case of infringement. • Otherwise, in the absence of registration, companies will only have to protect themselves with the Unfair Competition Law that involves greater difficulties to obtain effective protection.

20. Identification of the infringer • First of all companies must be certain of the identity of the infringer to move a "sure shot”: unfortunately in China often happens that the company indicated in catalogues or in the web site does not exist, or the company address is false.  • Therefore it is advisable to go back exactly to the identity of the infringer of China and find all the useful information (company name, the name of the legal representative, its head office and the locality where the warehouse is set).  • From these surveys is also possible to understand whether the company that is implementing the counterfeit is a large or a small size firm : all valuable informations will help companies to evaluate the best defensive strategy. • This information can be found at the AIC (Administration of Industry and Commerce) responsible for issuing documents in that territory. It is comparable to the “certified survey” of Italian Chambers of Commerce.

21. The protection of brand in China • There are two ways to obtain the protection of trademarks and patents registered in China: the recourse to Administrative Authorities or recourse to the Judicial Authority.  • The Administrative Authority is the Administration for Industry and Commerce (AIC) and the patent and Trademark Office competent for that territory. • Advantages : speed and cost-effectiveness of the intervention : in some cases the interest to block quickly can prevail on the impossibility to obtain a compensation. • Disadvantages: poor sanctions for the infringer ; there is no compensation for damages • The civil Judicial Authority is the competent Chinese Court. • Advantages: more effective and complete protection of trademarks and patents; it’s possible to obtain compensation for damages • Disadvantages: burden of cost and loss of time for the opening of proceedings.

22. International examples • RITZ vs RITS  • The Ritz-Carlton Hotel Company LLC. is the owner of the trade mark "RITZ", also recorded in China, to distinguish the prestigious hotel chain. The chinese company Shanghai Lichi Fitness co. had adopted the brand name "RITS" for services of sauna, massage and beauty shops. • In 2008 the Chinese court has recognized the confusability of signs "RITZ" and "RITS” and ordered to Shanghai Lichi Fitness to cease use of the sign contested with the condemnation for damages in favour of Ritz-Carlton Hotel Company. • APPLE INC. vs APPLE NEW CONCEPT DIGITAL TECHNOLOGY (SHENZHEN) CO. • Apple Inc. is the owner of the trade mark depicting a bitten apple, also recorded in China.The Chinese company Apple New Concept Digital Technology (Shenzhen) co., Ltd. used, for the same field, a brand depicting a bitten apple with wings. • The Chinese court has ensured the counterfeiting of trademarks and inhibited the use of the sign and sentenced for the chinese company to answer for damages.

23. Prof. A.Sinatra a.a. 2011/2012 The Flou Case

24. Knowing FlouThe Man - R. Messina “The bed is a special place where the future is born, where couples connect, where families are created, where people think about their tomorrows. That is my opinion today as it was when I founded Flou many years ago”. Rosario Messina

25. The Company • Flou produces single or double beds, mattresses, upholstered furniture, and accessories for the bedroom, all signed by big names in design. • The reason of the Flou success comes from a fabulous insight for the years ‘ 70: the basic concept was that the beds duvet, its softness and its colours could be extended to the entire mobile-bed, leaving behind the rigorous white. • It was a winning idea, which revolutionized the way of understanding the bedroom and his mobii, hitherto quite traditional in appearance.

26. The Company • In the history of the modern bed, the year 1978 was a milestone. It was the year that Flou was founded. • A company with the straight goal of innovating the bedroom and create a new ‘sleep culture’. • Some infos about the company: • 135 employees • 35 millions € of Revenues • 350 customers on domestic market • 150 worldwide

27. The Products LINEN PRODUCTS MATRESSES PILLOWS COVERS DOWS BED LINEN NIGHT CLOTHING

28. The Products – Beds Tadao Nathalie Magnolia

29. The Products – Furnitures

30. The Products – Wardrobes

31. The design of Flou • The idea that always moves the wires of Flou is to produce quality beds, affordable and innovative design, that make the bedroom the house protagonist. • To constantly reach its goals Flou counts among its designers some important names of the “Made in Italy”: • Mario Bellini • Pinuccio Borgonovo • Carlo Colombo • Gabriella Zecca • Rodolfo Dordoni • Riccardo Giovanetti • Massimo Iosa Ghini • Luigi Lanzi • Vico Magistretti • Enzo Mari • Designers from Operadesign • Paolo Piva • Vittorio Prato • Patrizia Scarzella

32. The Philosophy of Flou Quality beds with excellent materials, obtained and processed in respect of the environment, and built according to the rules of the healthy sleep; Prices compared to quality: they’re honest and righteous, to make good sleeping accessible to everyone; Design to turn the bedroom into the home protagonist that can be visited and enjoyed even in the daytime. Bedrooms visited by guests, not closed and inaccessible as it had been up to the 70’s. Colorful, innovative, well-made beds designed by the best designers. Sleeping well over the aesthetic appeal, for Flou it is important that the customer can rest in the most correct way that is possible, offering nets and mattresses designed especially for the human body; This is the reason why Flou created a center of research & development for the healthy and comfortable sleep.

33. Is it you, Nathalie?

34. Is it you, Nathalie? Nathalie Bed by Flou? NO! ”Mimosa” Bed by Chateau D’Ax!

35. What problems have been faced by Flou about the brand protection? • Flou had to register its brand and similar marks in the spelling, pronunciation, and name. • In the graphical representation there can be no logo that can imitate flou, which has a unique character , handwriting and shading. • For assonance Flou has registered defensive brands such as: • Flu • Flo • Fru • Frou

36. Who has been the main antagonist of Flou? • Companies that don't know Flou at all, producers from other sectors that have mistakenly deposited the brand that Flou has successfully defended with a series of legal instruments. • In the furniture market everyone knows Flou. In Italy Flou has a country full of strong competitors, marketing copies of Flou products. • For example Chateau d’Ax for the customer is an important brand because it appears in pages of important magazines, has television spots and testimonials. It is seen as a strong brand and the lack of expertise of the customer is the main reason why he is not be able to distinguish a Flou product (with a certain price level) from the ones of the imitator. This is why Flou has the need to protect its brand and products

37. Problems related with the imitation • The market is full of similar products. For Flou “Nathalie” and “Tadao” are symbols and are on the market since a long time. • The problems arose when the “20 years term” covering the ornamental patent have expired. • Also it has been a problem linked to a legal vacuum until 2011 when was transposed in Italy a European directive for the protection of “series design products”. The imitators can produce undisturbed until 2006 because of the italian government moratorium of 5 years • The italian parliament has also signed the so-called Decree "thousand extensions" in contravention of European directive that has extended to 2013 the moratorium.  

38. Analysis and solution of the dispute. • Flou is taking legal actions against all imitators, especially of the Nathalie bed that is recognized as a true design object. • The company has sent warning letters to a group of producers that mislead the consumer: they make products that have nothing to do with the original Flou items. • Law actions have been backed by FEDERLEGNO (association of the italian furniture sector) who made an appeal to the European Commission to act with a procedure against the italian government. It also joined INDICAM (Association for the protection of productions and brands), ADI (Association of designers) and the National Council of Architects. • It also started movements of owners, employees of design products companies to protect themselves against politicians, senators who voted for the amendment • The real damaged subject is the customer, especially in this economic period.

39. Flou’s strategies in order to defend its brand • The most significant action is to register the brand anywhere in the world, wherever is possible, but even with actions to support their notoriety as for example advertising. • With the help of consultants and professional studios it’s important to implement a continuous and a very narrow vigilance: there are consultant companies that protect brands using the “patent office”, that are worldwide database where they can monitor what has been deposited

40. Prof. A.Sinatra a.a. 2011/2012 The Ferrero Case

41. Ferrero – the company Ferrero is an Italian manufacturer of chocolate and other confectionery products. It was founded by confectioner Pietro Ferrero in 1946 in Alba, Piedmont, Italy. The company saw a period of tremendous growth and success under Pietro's son Michele Ferrero, who in turn handed over the daily operations to his sons. Reputation Institute's 2009 survey ranks Ferrero as the most reputable company in the world. Ferrero SpA is a private company owned by the Ferrero family and has been described as "one of the world's most secretive firms”. The Ferrero Group worldwide – now headed by CEO Giovanni Ferrero – includes 38 trading companies, 18 factories and approximately 21,500 employees. Ferrero International SA's seat is in Luxembourg.

42. Ferrero and Nutella In 1946, Pietro Ferrero invented a cream of hazelnuts and cocoa, derived from Gianduja and to be spread on bread, and called it Pasta Gianduja. Ferrero created the new company to produce and market it. Later on his sons became joint chief executives. Michele Ferrero modified his father's recipe to produce Nutella, which was first sold in 1964 and has become popular around the world.The company places great emphasis on secrecy, reportedly to guard against industrial espionage. It has never held a press conference and does not allow media visits to its plants. Ferrero's products are made with machines designed by an in-house engineering department.

43. Ferrero – the products • In addition to Nutella, Ferrero produces many other products, including Ferrero Rocher, Pocket Coffee, Mon Chéri, Giotto, Confetteria Raffaello coconut cream candy, Hanuta chocolate hazelnut filled wafers, the Kinder line of products as well as the Tic Tac breath mints. We can also find the Ferrero Rondnoir, the Confetteria Raffaello, the Garden. • Ferrero also produces the Kinder product series, including Kinder Surprise or Kinder Sorpresa in Italian (also known as "Kinder Eggs"), Fiesta Ferrero, Kinder Chocolate bars, Kinder Happy Hippo, Kinder Maxi, Kinder Duplo, Kinder Délice and Kinder

44. Ferrero in China • Ferrero works in China since 1984 with “Ferrero Asia Ltd”. In defence of its brands, Ferrero has a large deposit of marks (hundreds of brand registrations , both in Latin characters, both in Pin Yin) and gets annually, in cooperation with officials of the “Administration of Industry and Commerce” , a series of cases of illicitly imitating products , first of all those of well-known FERRERO ROCHER (about 60 "Raids" conducted between 1991 and 2004).

45. The Montresor issue - 1 The company named Montresor (Zhangjiagang) Food Co. Ltd of Jiangsu represents the largest Ferrero unfair competitor in China, having used the following practices: • At the beginning of the 90’s montresor begun to use the brand JINSHA (in Chinese characters), used by Ferrero in advertising since the early 1980s to distinguish the FERRERO ROCHER product in all the chinese speaking countries. Ferrero tried to defend its right at the TRAB (the ”brands court") to repossess of that brand, without success.

46. The Montresor issue - 2 • From the mid 90 's, taking advantage of the Ferrero wordwide advertising and distribution investments, Montresor started its production copying the items launched by Ferrero, in a systematic campaign of counterfeit marks and servile imitation. • In the most recent years, in order to take advantage of their parasitic competition with the Ferrero products, Montresor attempts to reach the status of Ferrero chinese importer, applying false indications of origion on its products such as "Belgian chocolate” . For this reason Montresor is sentenced and fined by AIC in Shanghai in July 2004. • Montresor adopts evocative brands of a false European origin on its products (TRESOR DOREE) and literally following the last restyling of the packaging of FERRERO ROCHER, replace Ferrero in many major outlets such as the Shanghai International Airport.

47. The Montresor issue - 3 • Taking advantage on the attitude of the Chinese authorities to pay much attention to the protection of the intellectual property of foreign companies (in particular as a result of China's access to WTO) in the summer of 2003 Ferrero, represented by “Jun He Law” offices in Beijing, has sued the Montresor (Zhangjiagang) Food Co. Ltd at the “Second Intermediate Court” in Tianjin, to put an end to unacceptable definitely unfair practices of Montresor. • Unfortunately, despite the amount of the documentation produced by Ferrero in support of its arguments, moving more from a subjective and opportunistic impression , in February 2005 the “Second Intermediate Court” in Tianjin have ruled against Ferrero. • That judgment was absolutely unacceptable to Ferrero: if not corrected on a second level judgement, it would risk to undermine the defense of most of the Ferrero Industrial Property in China. So Ferrero appealed to the High Court of Tianjin .

48. The Montresor issue - 4 • The judgment of January 9, 2006 respected the Ferrero's rights in China and the principles of the existing international law conventions. In particular, the sentence contains: • A full recognition of the history and the commercial success of Ferrero in China. • A clear denunciation of the usurpation of the rights of Ferrero by Montresor (Zhangjiagang) Food Co. • The recognition of the FERRERO ROCHER brand 's reputation abroad, as in China, long time before the imitations products of Montresor • The singularity and uniqueness of the Ferrero’s packaging whose characteristics can no longer be copied. • A “symbolic” payment to Ferrero of a recognition of 700.000 RMB . The Court of Tianjin has demonstrated professionalism and competence, an objectivity and an impartiality worthy of mention especially if we consider that the decision was issued against an important local industry.

49. Strategic Issues of Made in Italy QUESTIONS? Prof. Alessandro Sinatra a.a. 2011/2012