Branding and Marketing - Role of Trademarks and Geographical Indications - May 2007, Geneva Won-Kil YOON Counsellor, SMEs Division World Intellectual Property Organization (WIPO)

1. Branding & Marketing

Reputation plays important economic role, through a distinctive sign like a brand, of signalling a certain level of quality that consumers learn to expect. By persistent maintenance of this minimum level of quality, reputation economises search costs for consumers. Consequently producers of reputable products charge a premium price, and consumers are willing to pay this premium. Many features of cleaning products are unobservable. Those features may be crucial determinants of the total value of the good for the consumers. Branding helps to identify the unobservable qualities, so that the consumers can easier make a choice. This unique shoe is synonymous with the local sport of fell running and fell racing. (The word ‘fell’ means hill). Norman Walsh’s handiwork is known by competitive trail and mountain runners worldwide. After all, he’s probably the closest thing there is to being the father of specialized trail running shoes. Norman Walsh designed and developed their own version of a fell running shoe. One of their early designs had soft black leather uppers and a light chocolate brown wavy- patterned sole. It became the approach shoe for many British rock climbers. Its designed purpose was as an “all round training shoe”.

Why does a brand matter? “Consumers are starved for time and overwhelmed by the choices available to them. They want strong brands that simplify their decision making and reduce their risks.” Consumer needs to identify reliable grocer, make profitable investment, etc. Collecting reliable information to enable these economic decisions to be made is a costly and time consuming process. Consumers rely on variety of information sources, such as previous experience, friends & family, trade journalists, public advisory bureaus and advertisements, to assess the comparative trustworthiness of potential sellers.

What is Branding? Making company image as seen by the customer Good branding : getting people to recognize your product as the best in the market Brand : what differentiates you mostly from your competitors in the market - Co-branding : useful for entering new markets (ex. LG-Phillips) - Multibranding : useful for attracting various consumers ex.) For core premium customer : Nike brand For discount shoppers : Starter brand For “lifestyle” consumers : Converse Sneaker brand

Guiding Principles to make a Good Brand Able to be protected as a trademark The best brand for your business Easy to read, write and remember Acceptable in major overseas markets Able to be registered as domain name

Best Global Brands 14% 30,131 Telecom Equipment 6. Nokia 12% 27,941 Automotive 7. Toyota -9% 32,319 Computer Hardware 5. Intel 5% 27,848 Media/Entertainment 8. Disney Diversified Computer Services Computer Software Beverages Sector Change in Brand Value 2006 Value ($m) Brand 48,907 56,201 56,926 67,000 4% -5% -1% 4. GE 3. IBM 2. Microsoft 1. Coca-Cola (Best Global Brands 2006, Interbrand, www.interbrand.com)

2. Trademarks

What is a Trademark? “A sign capable of distinguishing the goods or services produced or provided by one enterprise from those of other enterprises” Distinguish is crucial: if not distinctive: cannot get protection as TM. If TM (sign) loses its distinctive capability: TM can get cancelled (generic). Dual role of TM is (a) protecting investments in brand development and (b) be information channel. To fulfil this dual role, the TM must be distinct and differentiated.

Any Distinctive Words, Letters, Numerals, Pictures, Shapes, Colors, Logotypes, Labels or Combinations

Some Concepts of Trademarks very famous in the market and as a result benefit from stronger protection to distinguish goods or services certified by a certifying authority to distinguish goods or services by members of an association to distinguish services to distinguish goods Well-known mark Certification mark Collective mark Service mark Trade mark

Swoosh: consumer knows: Nike, + all reputation attached to it.

The Nike’s case Reflects the popularity of a well-known TM The “Swoosh” is the well-known symbol of Nike Originally Nike’s logo included also the shoemaker’s name At the end of the nineties, the Nike’s name disappeared The swoosh remained as the main identification symbol of the shoemaker Today there is no need to include the brand into this logo since the recognition of a simple swoosh automatically brings our attention to Nike

What to avoid when selecting a trademark Generic: CHAIR to sell chairs Descriptive: SWEET to sell chocolates Deceptive: “ORWOOLA” for 100% synthetic material Marks contrary to public order/morality

Less Traditional Forms Single colors 3-D signs (shapes of products/packaging) Audible signs (sounds) Olfactory signs (smells)

Application: single color? In principle, single color is considered as not distinctive Exceptionally, if it gets secondary meaning it may receive TM protection * secondary meaning : acquired strong distinctiveness through use However, colors are in limited supply … - allowing companies to appropriate colors will soon lead to the "depletion" of all attractive colors in each product line - preventing use of color would put competitors at a significant disadvantage Color is an important element in branding and corporate identification. That colors are so used and relied upon by the public is beyond doubt. Consumers can distinguish a particular product or service from the color Ex Violet for milka chocolats. Whether a specific, single color has the ability to function as a trademark, is a question of fact in each case. functionality test

Single color? Blue Frozen Desserts (Ambrit v. Kraft) US Courts Royal blue is a “cool color”. It is suggestive of coldness and used by a multitude of ice cream and frozen dessert producers Royal blue when used to package frozen desserts is functional and can not be monopolized in a trademark Blue Frozen Desserts (Ambrit v. Kraft) Ambrit, a frozen food company, had sold their frozen desserts in royal blue packaging. Kraft Foods used same color on their packaging for frozen desserts. Ambrit sued to prevent Kraft from using blue. Does Ambrit - who first used this color - own the rights to blue on frozen desserts? The U.S. courts denied Ambrit's request for protection of blue, on basis that royal blue when used to package frozen desserts was functional and could not be monopolized in a TM. The ruling stated: "Royal blue is a 'cool color;' it is suggestive of coldness and used by a multitude of ice cream and frozen dessert producers." Although the ruling acknowledged the issue of protecting the consumer from confusion, preventing a monopoly of a functional color was a greater issue. Preventing the use of a color would put a competitor (Kraft) at a significant disadvantage. When a color’s associations relate to the product in a literal or abstract way, this is considered to be functional. For example, green is frequently used in packaging of organic, healthy and natural products because if the association with trees, grass and nature. Source: www.colormatters.com/color_trademark.html

Application: 3D trademark? Lego: Patent expired in 1988 - competitors (Tyko, Mega Bloks, COKO): identical "legos" that are interchangeable and compatible with Lego system The Lego brand is all they have left … Tried 3-dim Mark Canadian court + OHIM: No TM rights in purely functional elements of a product. If LEGO is unable to rely upon patent protection for those utilitarian features, then those features are available for all to use. www.canton.elegal.ca/archives/2005/12/lego_loses_mono.html “LEGO indicia” – a geometrically arranged knobbed or studded upper surface on each building brick that was intended to fit snugly into the underside of companion bricks. LEGO indicia: patent protection in many countries, incl Canada. Patents expired in 1980s. After expiry, Ritvik (Canada) manufactured own brand of toy construction bricks incorporating the same knob or studded locking mechanism that it marketed under “ MICRO MEGA BLOKS”. LEGO attempted to convert its former patent rights into trademark rights. While patents grant an inventor a time-limited monopoly, TM rights offer potentially perpetual monopoly so long as the mark continues to serve as an indicator of source of origin of a product/service. It was LEGO’s contention that the LEGO indicia had acquired distinctiveness and that anyone who examined a building brick that incorporated the LEGO indicia would think that the product was made or authorized by LEGO. This argument was not accepted by the Canadian IPO and it rejected LEGO’s application to register the LEGO indicia as a TM in Canada. The Registrar of TM took position that no one could claim TM rights in purely functional elements of a product. If LEGO was unable to rely upon patent protection for those utilitarian features, then those features were available for all to use. A similar position was adopted by the Cancellation Division of the OHIM when it cancelled LEGO’s Community TM registration for the LEGO indicia. ?

Ways to Use Trademarks as Business Assets Marketing tool Source of revenue through licensing Crucial component of franchising agreements May be useful for obtaining finance Sale of TM itself

4. Publication & Opposition Registering a Trademark – Step by Step 1. Making a Mark & Trademark Search 2. Application 5. Registration & Renewal 3. Formality Check & Examination 먼저, 특허청의 지식관리체계를 설명 드리겠습니다. 4. Publication & Opposition

Scope of rights Exclusive right to use the mark (and allow use) Right to prevent others from using an identical or similar mark for identical or similar goods or services if well-known: also for goods or services of different kind

3 Ways for International Application The National Route The Regional Route The Madrid Route - Application to the countries of Union or WIPO - One international application, in one language, subject to one set of fees and deadlines - Application to countries in the required language - Priority right of 6 months under Paris Convention - Application to regional trademark offices - The African Regional Industrial Property Office, OHIM for the EU, etc.

3. Geographical Indications

What is a Geographical Indicaton? Sign used on goods that have a specific geographical origin and possess qualities or a reputation that are due to that place of origin - Source identifiers - Indicators of quality - ask examples of GIs (champagne, cognac, roquefort, havana, burgundy, tequilla - what do they have in common? Famous places + relate to products of certain quality and nature - in commerce: valuable assets, able to acquire high reputation, often exposed to counterfeiting, protection is highly desired

Mostly: name of place of origin Country, region, city E.g. Champagne (France) Some countries: also figurative element E.g. Eiffel tower, Egyptian pyramid Matterhorn, Switzerland Eiffel Tower, Paris Tower Bridge, London - ask examples of GIs (champagne, cognac, roquefort, havana, burgundy, tequilla - what do they have in common? Famous places + relate to products of certain quality and nature - in commerce: valuable assets, able to acquire high reputation, often exposed to counterfeiting, protection is highly desired

How does a GI work? Basically, each enterprise located in the area has right to use GI freely For some products, Subject to certain quality requirements, only authorized persons may use the GI Link between product and place Place where product is produced (industrial products, crafts) Place where product is extracted (clay, salt) Place where product is elaborated (liquor,cheese)

Unauthorized persons should not use GIs since it could mislead public as to true origin of the product for not originating from geographical place, for not complying with prescribed quality standards - Sanctions: Court injunctions preventing unauthorized use Payment of damages Fines Imprisonment

Typical examples: Agricultural products that have qualities that derive from their place of production and are influenced by specific local factors, such as climate, type of soil, altitude, etc E.g. wine, champagne, cognac, port, sherry, whiskey E.g. cheese, yoghurt E.g. olive oil, ham, potatoes, honey, rice

Also: handicrafts and medium-tech goods Typical examples: Also: handicrafts and medium-tech goods E.g. ‘Hereke’ (Turkey) for carpets E.g. ‘Limoges’ (France) for porcelain E.g. ‘Swiss’ for watches E.g. ‘Arita’ (Japan) for ceramics

National legislation to protect Geographical Indications Special system for protection Registration with IP office (Russia, Slovenia) Decree (France) Special laws for the protection of GIs (India) Certification marks or collective marks Cert: e.g. in the U.S.A.: Darjeeling, Swiss, Stilton Coll: e.g. Japan; agricultural label in France Passing-off, UC, Consumer Protection If reputation + misleading Pass off: e.g. Scotch whisky – Peter Scot in India Cons prot: e.g. ‘made in Japan’; Egyptian cotton Passing off: even if not registered As regards the enforcement of GIs in India, the Khoday Distilleries case shows how sensitive the Indian courts are towards protecting world famous GIs. In this case the Scotch Whisky Association, based in Scotland, argued that the use of the word Scot in relation to whisky by an Indian company passes off the reputation of Scotch Whisky, which is geographically indicative. The mark in question was Peter Scot. This mark was registered in India in the name of Khoday Distilleries Limited (registration 273203 in class 33) in 1971. The Scotch Whisky Association asked the Trade Marks Registrar in India to remove the mark Peter Scot from the Register. The Registrar allowed the application. Khoday Distilleries subsequently appealed to the High Court. While hearing the appeal, the judge in the Madras High Court said that even the use of the word "Scot" by an Indian Distillery in relation to whisky is unacceptable.

Protection on international level No legally binding international register for all GIs Bilateral agreements e.g. EU-Bulgaria for wine names International treaties TRIPS - does not prevent GIs from becoming generic - does not prevent abuse of GI name by trademark holder

- TRIPS: - Lisbon: minimum standard of protection for WTO members if misleading or act of unfair competition enhanced level of protection for wines and spirits no protection if GI is generic term for the goods in the member state - Lisbon: international registration system member countries must prohibit imitations, including terms like “type” or “kind” cannot become generic, as long as protected country of origin TRIPS - does not prevent GIs from becoming generic - does not prevent abuse of GI name by trademark holder

Benefits for SMEs Collective branding and marketing For good reputation, GIs shift focus of production to quality  increased production and local job creation Reward producers with higher income in return for efforts to improve quality Provide consumers with high-quality products whose origin and mode of production is guaranteed

Thank You ! WIPO SMEs Web-Site Won-Kil YOON “www.wipo.int/sme” “Making a Mark” in Publications “IP Panorama” in Multimedia “E-NEWSLETTER” Won-Kil YOON yoon@wipo.int Tel)+41-22-338-8159 Fax)+41-22-338-8760