Published in MIP – Brand Management, April 2007
"It would be difficult to over state the importance of a brand"
- The Centre of Strategy and Communication, London.
As everyone would be aware, brands are an intrinsic part of a Company's equity. But not many would be aware that the global concept of modern brand management that revolutionised operational marketing germinated and grew from a 3-page internal Memo written by a Junior Marketing Manager of a Company.
Brand Management led to a development of the concept that brands were a means of communication between the manufacturers and the consumers and across Europe and USA, marketing teams of various organisations competed with each other in a race to launch the most number of brands and followed it up with vociferous marketing. Truck loads of brands were launched, obstreperously marketed and registered as trademarks. Companies spent huge amounts of money to maintain their portfolio of brands and each wished to outnumber others in the industry by the sheer size of their brands and product mix.
But over the years, this traditional view of brand (protective) management transformed into a more aggressive brand (profit) management, from merely a prerogative of the marketing department to a shared responsibility of the entire organisation. The marketing function synergised with the financial, technical and legal functions, with all of them sharing the responsibility of maintaining a successful brand.
What this meant was that Brands now fell within the ambit of general management and therefore they were no longer alienated from the baptism of audit. Brands now became the subject matter of financial scrutiny to gauge the efficacy and profitability of maintaining a bulging brand/trademark portfolio. Resultantly, an over whelming majority of managers were now looking to streamline their brand/trademark portfolios in order to reduce the cost of maintain and promoting them; and to maximise the return on investing in such brands by eliminating cost and administrative inefficiencies. Companies which hitherto were on a trademark registration rampage were now more willingly to take small and unknown brands off the shelf. For example, European FMCG giant Nestle in the year 1991 launched 101 products but only launched 5 new Brands. Thus, 96 of Nestle's products that year were launched under the banner of existing brands.
The task on the hands of brand managers thus became to keep a particular Brand's Propensity to Earn, at the maximum possible level. That is to say that the rate of increase in sales generated by a particular trademark/brand should at all times remain greater than the rate of increase in the cost of maintaining that brand. Therefore we now only see the best known brands surviving and endorsing more and more products. We now also see derivative branding gaining popularity, where new brands are created by deriving from an existing well known brand. For instance Nesquick was derived from Nescafe and now there are a series of brands/trademarks owned by Nestle, with a common 'Nes-' prefix associated with its full range of hot and cold beverage products.
As a Case Study we can take the example of Danone. The French FMCG Company covers more than a 100 product lines. But over the years, the management realised the need to create intermediate product line brands in order to structure Danone's overall product range. Soon they launched umbrella brands such as Taillefine for waist-conscious consumers; Charles Gervais for gourmet adults; Bio for the health conscious; etc. The unique feature of such Brand Management is that each product line brand has its own target market and its own positioning, and is meant to encompass several sub brands itself. Therefore, at Danone, product brands have now become a thing of the past.
Other companies like Pepsi-Cola, Coca-Cola and Cadbury Schweppes, driven by falling sales in 2006, have expressed the desire to re-brand few of their flagship brands to counter this drop in popularity and sales.
In India, with a change in topmost management in mid-2000, at Hindustan Lever Limited (HLL), India's biggest FMCG Company, the Company decided to tackle its problem of brand overcapacity by focusing its resources only towards 30 of its 'power brands'. This strategy not only resulted in better Economies of Scale for HLL, but also gave a level playing field to the smaller companies in this FMCG sector and provided them an opportunity to move into the big league.
II. BRAND MANAGEMENT AND TRADEMARKS
The more we talk about brand management, the more we realise that it is a concept that cannot be divorced from Intellectual Property (IP). Many, rightly, consider a Brand to be nothing more than a 'valuable' Trademark. Therefore protection of this trademark is as vital as any other function which makes the brand 'valuable' in the first place. For example, the periodical Business Week ranks Coca-Cola as the most valuable brand in the world, with its notional value exceeding US$ 65,000 million. It is plain to see a sizable chunk of this value is due to the fact that there is exclusivity attached to the brand Coca-Cola. Thus is someone is allowed to use the mark "Enjoy Cocaine" written in fonts, similar to the ones used by the Cola Giant for their Ad campaign "Enjoy Coca-Cola", then rest assured, the mark will soon find itself giving company to the lesser mortals around.
Under the philosophy of brand (profit) management, brand owners, and managers alike, are concerned not just with the visibility of their brands but are also getting increasingly aggressive when it comes to creating and protecting exclusivity around such brands. This exclusivity is kept sacrosanct by way of trademark registrations, domain names registrations, stopping people from diluting a trademark, protecting well-known trademarks across different goods and services, etc.
Parliamentarians have provided the dynamic mechanism of commerce, economics and trade with Legislative tools to protect legitimate rights and one such tool is in the form of the protection of Trademarks and other Intellectual Property (IP). The IP legislation is flexible and applies to cases based purely on the facts and circumstances of each case. Therefore it is imperative from a brand manager perspective that brands are marketed in such a way that they warrant the widest protection possible. General Management of commercial establishments now seek legal redress at every pretext and against every such party that seeks to encroach upon the exclusivity built around a trademark. Apart from this external initiative, companies are also on the path on an internal reorganisation of brands/trademarks. Therefore the gospel of brand management has amalgamated with IP to bring forth the novel theory of Trademark Management.
Following suit, in January 2006, Indian telecom giant, Bharti, consolidated its Brands by bringing its cellular (AirTel) and fixed line and broadband services (TouchTel) under a single banner, AirTel. This consolidation was a smart move by the company, founded upon the sheer number of their subscriber base, to increase the worth of the trademark AirTel by improving its visibility across the nation. Whilst commenting upon the brand merger Mr. Sunil Bharti Mittal, Chairman and Group Managing Director, Bharti Enterprises, said "Over the years, we have nurtured and grown the AirTel brand. The use of word AirTel in the name of the Company will reflect the brand as well as the activity of the company. Having brought all our service offerings under the AirTel brand umbrella, his change will be another step towards making AirTel the most admired brand in the country".
Thus, across economies, one can witness an overt move towards creating and protecting brands that are and will remain profitable; and towards a corporate regime wherein brands shall be evaluated according to the same yardsticks of efficiency and profitability, as are applicable on products and even employees.
III. TRADEMARK MANAGEMENT AND INDIAN COURTS
A competitive economy can remain competitive only till the time that the efforts fetch adequate returns and to ensure the adequacy of such returns, the rights have to be protected at all times. Courts thus play a vital role in shaping the economy and therefore a successful economy would be one, which would be able to ensure that legitimate rights are not restricted by a judiciary that is reluctant to enforce IP rights.
Courts in India have demonstrated that they are, indeed, willing to enforce India's international obligations. There have been a growing number of decisions wherein Courts have shown themselves as extremely pro-IP and have exhibited significant courage whilst passing orders that evidence the sentiment that Courts too are eager to play a proactive role in the development of IP protection in India.
The following two recent judgements, demonstrate this favourable trend:
The Trade Marks Registry at Ahmedabad in July 2006 gave an order in favour of the proprietor of the well known YAHOO trademark, by citing the decision of the Delhi High Court between the same parties.
The Applicant had filed around 90 trademark applications, all for the mark YAHOO and derivative marks. The Opponents contested the matter by first filing a civil suit at the High Court in Delhi and obtained in its favour an order [2006 (32) PTC 263 (Delhi)] injuncting the Applicant from using the mark. The Applicant had not contested the matter at the High Court and was also reluctant to contest the matter at the Trade Mark Registry as well. The Learned Registrar, for the first time at the Trade Marks Registry, clubbed the various YAHOO matters together and collectively passed an order, by endorsing the decision of the Delhi High Court, in favour of the Opponents stating that the YAHOO mark was indeed a famous mark and instructed the Applicant to refrain from filing any more applications for the YAHOO mark.
This decision is a landmark judgment for two reasons. Firstly, in an unprecedented move, the Registrar had clubbed several oppositions between the same parties and had passed an order on them and, secondly, the Registrar's order not only commented upon the legitimacy of the present applications but also barred the same applicant from filing further applications for the same or similar mark. Such relief was hitherto not forthcoming from the registry and it was only the Courts that granted such relief.
Zee Telefilms Case
In this case [Zee Telefilms Ltd UOI & Ors;(CM 1703/2007 in CM (M) No. 183/2007)], as recent as in 2007, a Kolhapur-based local Pan Masala manufacturer had sought registration of the mark ZEE for pan masala and related products. In this case also, the Applicant had filed in excess of a 100 trademark applications and ordinarily, each application would have to be met with a separate opposition proceeding. Zee TV or Zee Telefilms is an Indian bases satellite television channel which reaches audiences not only South Asia but also across Europe, Middle East, Africa, East Asia, Australasia and North America.
In a Writ Petition filed at the Delhi High Court, the Delhi passed an order whereby the Registrar of Trademarks was instructed to refrain from prosecuting pending applications for the mark ZEE, filed by the Applicant. The court went further ahead and restrained the Registrar from even advertising any further application in Trade Marks journal, which may be filed pertaining to the registration of trademark "Zee".
This decision is also a significant one, as it now provides a "short circuit" approach to interdicting pirates rather than going through the cumbersome process and expense of attacking multiple applications by filing Oppositions in each and every case.
Apart from the above mentioned cases, even the Government has taken a proactive stance and has, from time to time, urged that the Trade Marks Registry should become increasingly stringent in protecting well know international brands by outrightly refusing subsequent applications for marks in conflict with those already existing on the Register. This stance will go a long way in not only improving the quality of trademarks that finally make it to the Register but also in providing better protection to legitimate rights holders.
Brand management is responsible not just for a paradigm-shift within companies and their managements but has engendered a whole new concept of 'creating' brands rather than the earlier concept of 'adopting' brands.
During the years before 1991, before the Indian economy opened its doors to foreign competition, trademarks in India carried an extremely vernacular DNA within them. Most of the marks were simple marks picked up either from ordinary parlance or based on deities. For instance, marks like Hamdard, Maruti Suzuki, Bajaj, etc. had little or no innovative or attractive element primarily aimed at brand recollection more than anything else.
But as the economy liberalised, companies that came to India brought with them not just innovative products and services but also a novel concept of brands and brand equity which made Indian companies realise the importance of generating sales by having brands that capture the imagination of the consumers and draws him closer to them rather than merely remaining in the 'back of their minds'. Today Indian companies are getting more and more experimental and courageous when it comes to coining trademarks for their businesses. Brand like Provogue, Titan, AirTel, Sify, Infosys, etc. are redolent of a change in the intrinsic culture of branding.
This culture change has proved to be so effective in terms of generating business that even foreign companies, that had initially set the ball rolling, are now playing catch. For instance, De Beers has launched a range of products under the mark 'Sangini' and Insurance services providers are naming their schemes based on Indian sentiments so that foreign companies are not alienated or sidelined.
The Harvard Graduate mentioned above was Neil H. McElroy, Junior Marketing Manager at Procter & Gamble. He wrote the famous Memo when he realised that while devising advertisement strategies for the soap brand Camay, he was not only competing against Palmolive and Lever brands but also against brands within P&G. He wrote the Memo out of sheer frustration and without realising that from the same Memo a whole new corporate ideology would be born, an ideology that shall ultimately catalyse world economics and stimulate commercial growth.
BIOGRAPHY OF CONTRIBUTING AUTHOR
Ankit Prakash is an Associate in the Trademark department of Anand & Anand and specializes in Trademark Prosecutions, Oppositions, Assignments, Licenses and Agreements.
Ankit has a Bachelors' Degree in commerce from Shri Ram College of Commerce and an LL.B Degree from Faculty of Law, University of Delhi. He also has an LL.M Degree in Intellectual Property from Queen Mary, University of London and is a part-qualified Trademark Attorney from the Institute of Trademark Attorneys (UK).
Ankit has been a Member of the Bar Council of Delhi since the year 2005.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.