WIPO NATIONAL SEMINAR ON ENHANCING AWARENESS AND BUILDING CAPACITY OF SMES TO BENEFIT FROM THE INTELLECTUAL PROPERTY SYSTEM Kuala Lumpur, Malaysia, Sep 7 and 8, 2006

Marketing and Branding Strategies: The Role of Collective Marks, Certification Marks and Geographical Indications for Business Success Lien Verbauwhede Koglin Consultant, SMEs Division World Intellectual Property Organization (WIPO)

1. Introduction

The Challenge of Marketing for SMEs Some products have to face competition of other products on the market that are often similar or almost identical Need to find mechanism that creates and maintains loyal clientele - what are the most important products from Cambodia - choose mass products: what are the problems SMEs encounter to market their products

Choosing a textile product Materials and texture: quality silk, pure wool vegetable colors Quality: colorfastness easy to clean density of the knots Design: traditional designs fashion trends unique Manufacturing technique: weaving/knitting technique hand woven woven by women Reputation

Marketing a textile product Materials and texture Quality Manufacturing technique Design Give information Send a message Create image that differentiates you To maintain credibility, confidence and loyalty Reputation

Role of IP in Marketing Consumers are unable to assess the quality of products on the market Trademarks, collective marks, certifications and geographical indications (GIs) refer to the reputation and to certain qualities of the products Trust in the mark/GI is the reason why consumers may be willing to pay more

IP and Marketing Joint marketing Trademarks Collective marks Certification marks GIs Individual marketing Joint marketing

Acting individually, it is often difficult to gain recognition for your products in the marketplace Some knowledge and production techniques belong to entire communities and can therefore hardly be attributed to a particular individual “If you can’t beat them, join them” SMEs have grouped in associations ( organized geographically or per industrial sector) Working collectively, SMEs can benefit from the advantages of a joint undertaking.

2. Certification Marks My: “certification trade marks” - Section 56 TMA

What is a certification mark? Sign indicating that the goods/services have been certified by an independent body in relation to one or more characteristics Origin, material, mode of manufacture, quality, accuracy, etc. Owner is usually an independent enterprise, institution, governmental entity, etc. that is competent to certify the products concerned (My: ‘person’) Registered in trademarks register

How does certification mark work? Rules of use Cases in which the owner is to certify the goods/services quality, composition, other characteristics Cases in which the owner is to authorize the use Other provisions required by Registrar e.g. control measures, sanctions My: Mark must be to the public advantage Authorization to use anyone who meets with the prescribed standards not confined to membership generally: licence agreement (fee) owner not allowed to use Control

For Consumers: For SMEs: Benefits Guarantee for consumers of certain quality For SMEs: Benefit from the confidence that consumers place in users of certification mark Strengthen reputation

 No children were employed in the production process For example, certify that:  Product is handmade  Certain ecological requirements have been respected in the production procedure  No children were employed in the production process  Products have been produced in specific geographical region  Products are made 100% of recyclable materials  Products are made by indigenous group

Case Study: “RUGMARK” Global non-profit organization working to end child labor and offer educational opportunities for children in India, Nepal and Pakistan RUGMARK label is assurance that no illegal child labor was employed in the manufacture of a carpet or rug

Case Study: “RUGMARK” To be certified by RUGMARK, carpet-manufacturers sign legally binding contract to: Produce carpets without illegal child labor Register all looms with the RUGMARK Foundation Allow access to looms for unannounced inspections Carpet looms are monitored regularly by RUGMARK Each labeled carpet is individually numbered  enables origin to be traced back to the loom on which is was produced  also protects against counterfeit labels

Case Study: “WOOLMARK” Registered by Woolmark Company Quality assurance symbol denoting that the products on which it is applied are made from 100% wool and comply with strict performance specification set down by the Woolmark Company Registered in over 140 countries

“Through ownership and licensing of the Woolmark, we provide unique worldwide quality endorsement. Our brands and symbols are protected by rigorous and extensive control checks and recognized globally as unrivalled signs of quality and performance. If a wool product carries our brands, it carries our guarantee of product quality.”

Case Study: “TOI IHO” Exciting initiative for Maori artisans, artists and businesses Denotes that products are authentic quality indigenous Maori arts and crafts The creation of the mark was facilitated by Te Waka Toi, the Maori arts board of Creative New Zealand, in consultation with Maori artists.

Case Study: “CRAFTMARK” Registered by the All India Artisans and Craftworkers Welfare Association (AIACA) Logo symbolizes ‘threads’ from craft product. Also metaphor for the hands of the craft worker. Certifies that product is genuine Indian handicraft or handloom

Minimum standards + norms for labeling Fee based on turnover of the applicant Increases consumer awareness of distinct handicraft traditions AIACA is working towards building the Craftmark into a strong brand national advertising campaign in-store displays and posters direct mailing to consumers tying up with international craft support organizations to publicize the Craftmark in other countries Website: www.craftmark.org

Case Study: “SIRIMLINK” SIRIMLINK provides access to technical information, stored in SIRIM Malaysian Standards Malaysian Patents Technical Abstracts from journals Malaysian Experts in Science and Technology, etc Owner = Sirim Berhad (government owned company) Logo can be used by? Rules of Use? Certifies what?

“VETERINARY HEALTH MARK” Case Study: “VETERINARY HEALTH MARK” Awarded under the Veterinary Inspection and Accreditation Program of the Department of Veterinary Services (DVS), Ministry of Agriculture, Malaysia Given to plants processing livestock products

Accredited plants allowed to imprint the logo on the label of approved products / packaging material Benefits: Consumer confidence on food safety marketing tool easier acceptance in applications for access to foreign markets

3. Collective Marks My: not available

What is a collective mark? Sign capable of distinguishing the origin or any other common characteristics of different enterprises which use the sign under the control of the registered owner Typically, the owner of collective mark is an association of which the producers are members Registered as such in trademarks registry

How does collective mark work? Rules of use persons authorized to use criteria for membership conditions of use e.g. particular features/qualities of the products sanctions against misuse Authorization to use membership application or automatic comply with the rules Control

Thus, function of collective mark is to INFORM the customers : About the origin of the products e.g. ceramic artisan, member of a specific association in Thailand About a level of quality or accuracy, geographical origin, or other features set by the association

Benefits for SMEs 1. Economies of scale (registration cost, advertising campaign, enforcement, etc.) 2. Reputation acquired on the basis of common origin or other characteristics of the products made by different producers/traders 3. May facilitate cooperation amongst local producers/traders

 collective marks can become powerful tool for local development 4. Creation of collective mark hand in hand with development of certain standards and criteria (rules) and common strategy  collective marks can become powerful tool for local development  harmonization of products/services, enhancement of quality  no licenses

Example: “Interflora” To buy, order and send flowers at almost anywhere in the world > 70.000 florists in 150 countries emblem : Mercurio with flowers in hand Slogan: “Say it with flowers" Guarantees freshness, flower quality and value of every Interflora relay order Mercurio, dios del comercio de los antiguos romanos y antiguo Heraldo de los dioses griegos Garantia de calidad de servicio + flores. Yo utilizo (internet) Permite de livrar en todo el mundo

CASE STUDY: “La Chamba”

Project “La Chamba, Tolima” The project 3 municipalities: El Guamo, Flandes, El Espinal Population: 12.100 inhabitants 1.300 ceramic artisans (10%) 284 workshops 70% women 12% without formal eduction 21% without public services Mapa del Tolima

Project “La Chamba, Tolima” The product Added value: traditional know-how transferred from generation to generation 89%: handwork or with simple tools

Project “La Chamba, Tolima” Organization Problems: little enterprise management capacity paternalism individual leaders lack of organizational structure Solution: cooperation development of enterprise management capacity common strategy

Project “La Chamba, Tolima” Marketing Problem: Added value (handmade, tradition, quality) of the product not advertised Need to find new clients, enter new markets Solution: Certification “Hecho a Mano” (handmade) Creation of culture of CONSISTENT QUALITY Collective Mark (joint project WIPO)

Project “La Chamba, Tolima” COLLECTIVE MARK Association: Members allowed to use the collective mark Exchange of experiences Joint advertising and promotion Regulation of use: Production process (mine extraction, preparation of clay, moulding, heating, glazing) Quality control and inspection  homogeneous products Objectives: Strenghten image of Chamba ceramics Reputation of consistent quality and tradition Differentiate on the market Chamba ceramics from other ceramics Preserve cultural heritage Foster commercialization

Collective Mark Certification Only members that comply Control by association Simple authorization Free use Owner allowed to use Cooperation Certification Anyone who complies Control by independent entity: stronger Authorization through license agreement Fee Owner not allowed to use

4. Geographical Indications My: Geographical Indications Act 2000

What is a GI? 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 Not created. Can only be recognized - 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

In some countries : can also be figurative sign Most commonly, consists of the name of the place of origin of the goods Country, region, city E.g. Champagne (France), Havana (Cuba) In some countries : can also be figurative sign E.g. Eiffel tower, Egyptian pyramid E.g. birds, animals associated with a place 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? Authorization to use Collective right of use Each enterprise located in the area has right to use For products originating from that area  LINK Possibly subject to certain quality requirements 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 may not use GIs if such use is likely to mislead the public as to the true origin of the product for not originating from geographical place for not complying with prescribed quality standards Stronger protection for wines & spirits Sanctions: Court injunctions preventing unauthorized use Payment of damages Fines Imprisonment

GI – Who does what? Government: – supplies the legal framework – approves GIs, verifies compliance – “external” (independent) control system + enforcement Producers groupings: – talk to government – help define the mandatory specifications (book of requirements) to be met – ‘’internal”control

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

Coffee and Green tea from Paksong Silk from Pak Eum Examples in Asia: Laos: Coffee and Green tea from Paksong Silk from Pak Eum Algea from Luang Prabang Benzoin from Laos Indonesia: Tobacco from Deli (Sumatra) Cocoa from Bone Bone Coffee from Kintanami (Bali) or Toraja Clove from Ternate Benzoin raisins clove

Examples in Asia: Vietnam: Pepper from Phu Quoc Pomelo from Nam Roi Tan Lam Coffee Cambodia: Khampot Pepper Prahoc Durian Philippines: Dried mangos from Cebu Pomelo Nam Roi durian Cebu mango

Case Study: “Sarawak pepper” Exported throughout the world over the last 100 years Gained international recognition by chefs and gourmets Distinctive flavour and taste through years of agro-research Sarawak’s tropical climate and fertile hill slopes are ideal for pepper cultivation

Goods: In respect of the following goods Geographical Indications No: GI03-00001 Class: 3 Name of Registered Proprietor: Pepper Marketing Board Registered From: 4th day of November 2003 Expiry Date: 3rd day of November 2013 Goods: In respect of the following goods SARAWAK PEPPER IN ANY FORMS (WHOLE, GROUND, PICKLED, ETC). ALL GRADED PEPPER, VALUE ADDED PEPPER PRODUCTS AND PEPPER-BASED PRODUCTS FROM MALAYSIA

Quality, Reputation or Other Characteristic Sarawak, the largest state in Malaysia is an establish producer of “King Of Spice”-Pepper, where about 98% of pepper production in Malaysia comes from Sarawak. Pepper cultivation in Sarawak was commercialized by the White Rajah Charles Brooke with the introduction of ‘Gambier and Pepper Proclamation’* in the 1870’s. Ironically, Sarawak a latecomer, went on to become a significant producer in world pepper industry. Starting with a modest output of 4 tonnes* in 1870s, pepper production now averages 30,000 tonnes a year (over 90% is for export) and in 2002, Malaysia was the fourth biggest pepper exporter in the world. Currently, there are about 70,000 pepper farmers throughout Sarawak and their cultivation covered about 14,000 hectares. Sarawak Pepper is synonymous with quality in the spice trade and it has been recognized in the international market as one of the high quality pepper. Nowadays, Sarawak Pepper Sarawak value-added pepper such as Creamy White Pepper (CWP), Mikrokleen (MK) and Naturally Clean Pepper (NCP) are well accepted, particularly by clients who would not compromise on quality. (Refer to the brochures on CWP, MK and NCP and Grade Specification of Sarawak Pepper attached). In this respect, Pepper Marketing Board (PMB) as one of the main government agencies entrusted with the development of the pepper industry in Malaysia has to ensure that only quality Sarawak Pepper will be exported to overseas. In order to enhance buyers confidence towards Sarawak Pepper, the Board has embarked on efforts to improve the quality of Sarawak Pepper right from the farm level up to the export level. In 2002, the board was awarded with SAM ISO 17025 accreditation and ISO 9001:2000 for Testing Laboratory and Statutory Grading respectively. This recognition has to put PMB on the fast track of pepper industry by having a testing laboratory and grading unit with worldwide recognition.

How is a GI protected? National Regional International

Protection on national level Specific title of protection Registration with IP office (Russia) Decree (France) Special laws for the protection of GIs (India, Malaysia) Act of public law Defines area of production and production standards Enforcement through public law bodies (fair trading bodies, consumer protection bodies etc) Unregistered: through Passing-off, Unfair Competition, Consumer Protection laws if reputation + misleading Pass off: e.g. Scotch whisky – Peter Scot in India Cons prot: e.g. ‘made in Japan’; Egyptian cotton Only successful if you can prove damages (if goodwill) Protection only effective between parties of the proceedings. Entitlement to protection of given GI must be demonstrated every time enforcement is sought. Passing off = legal remedy for cases in which the goods/services of one person are presented as being those of somebody else. 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. Unfair competition = act of competition contrary to honest practices in commercial or industrial matters At international level: Paris Convention: basic international rule concerning protection against unfair competition. National level: remedy against unlawful and dishonest practices of competitors. Commercial practices which are misleading the public with respect to the geographical origin of products offered by an enterprise = act of unfair competition

Protection on national level Certification marks or collective marks May certify or indicate origin of products Cert: e.g. in the U.S.A.: Darjeeling, Swiss, Stilton Coll: e.g. Japan; agricultural label in France Passing off = legal remedy for cases in which the goods/services of one person are presented as being those of somebody else. 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. Unfair competition = act of competition contrary to honest practices in commercial or industrial matters At international level: Paris Convention: basic international rule concerning protection against unfair competition. National level: remedy against unlawful and dishonest practices of competitors. Commercial practices which are misleading the public with respect to the geographical origin of products offered by an enterprise = act of unfair competition

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

International treaties TRIPS: 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 in country of origin TRIPS - does not prevent GIs from becoming generic - does not prevent abuse of GI name by trademark holder

Benefits for SMEs GIs shift focus of production to quality  increased production  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

Disadvantages Inconsistent protection Absence of GI system in many countries Civil law Registration Only similar goods Common law Repution enough (e.g. Champagne in India) Also dissimilar products Additional protection for wines and spirits GIs may become generic terms (e.g. Chablis in America, China for porcelain) Common law: USA protects GIs that are not registered. E.g., Cognac is protected as a common law (unregistered) certification mark in the USA. Purchasers primarily understand Cognac to refer to a brandy originating in the Cognac region of France, and not to a brandy produced elsewhere. Generic: TRIPS does not require that a WTO member extend protection to a GI if that GI is the generic name for the goods of the member. E.g., in the USA Chablis is often used to refer to any sort of white wine: a generic term in the USA. Therefore, the USA can continue to permit the use of Chablis as a synonym for white wine. E.g. Champagne in the USA is generic term for light-colored wine with bubbles E.g. Parmigiano cheese in Italy is generically known as parmesan cheese in Australia and the USA. Other exception in TRIPS: situations where a trademark already exists.

GI Protects indication that links product’s origin and quality/reputation based on that origin Most often: public right; owner= State Anyone can use Proscribed list of unauthorized actions Action: private + public Certification Protects certification of product’s particular characteristics (not necessarily origin) Most often: private right; owner = trade association or producer group License needed Protection against those who don’t have license Action: owner of certification

4. Conclusions

Trademark is powerful instrument to differentiate your individual products from those of your competitors However, in order to be effective (strong reputation), the enterprise in question must have a high level of organization and production Collective marks, certification marks and GIs may be useful (additional) tools to help enterprises overcome the disadvantages associated with their small size and isolation in the marketplace  Coll marks, cert marks and GIs are important for the same reasons as TMs: source indicators + indicators of quality

Economic benefits of collective marks, certification marks and GIs Capable to acquire a high reputation Protection can be maintained indefinitely No monopoly, but simply limit group of people who can use a specific symbol Protect goodwill and reputation acquired by a group of producers over centuries

Individual reputation IP and Marketing Trademarks Collective marks Certification marks GIs Individual marketing Joint marketing Origin: enterprise Individual reputation Origin: geographical Common reputation, characteristics, qualities

thank you Lien Verbauwhede Koglin WIPO, SMEs Division: www.wipo.int/sme/