Defending the brand

1
Defending the brand

• Prof. A.Sinatra , Dott. S.Croci
  
  a.a. 2011/2012

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.
• Its 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 brands 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 brands marketing.

6
Marketing Advantages of Strong Brands

• 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

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 brandthe brand is used to identify more
  products very different between them. We start
  with a common promise, then its 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 brandson 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
  companys 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 didnt sign it because for them its
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 its
  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
The Flou Case

• Prof. A.Sinatra
  
  a.a. 2011/2012

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
PILLOWS
MATRESSES
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 theyre 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
  70s. 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 DAx!
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 dAx 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
Flous 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 its 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
The Ferrero Case

• Prof. A.Sinatra
  
  a.a. 2011/2012

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 90s 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 Ferreros
  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