Commercial Law International

By: Ainsley Brown

So what is brand management law?

The best definition that I can give is the law or legal practice that facilitates a company or companies managing their band or brands. Yes, I know, I know the definition is a bit circular but hey what do you expect, I am a lawyer after all.

Then what is brand management?

Brand management according to BusinessDictionary.com is: the process of maintaining, improving, and upholding a brand so that the name is associated with positive results…Brand management is built on a marketing foundation, but focuses directly on the brand and how that brand can remain favorable to customers.

Brand management law (BML) is thus defined as the legal facilitation of the above process. It is a multi-disciplinary practice area and brings together many differing areas of law (Intellectual property (IP), litigation, contracts, tax, etc) but more importantly by its very nature also encompasses the non-legal (marketing, public relations, consumer care, business sensibility/sensitivity, etc).

BML is not just a simple matter of commercial awareness or knowing your clients business – both of which are important very important aspects of this area of law, however BML goes beyond either of them. That is to say it is not just a matter of discerning what the client’s interests are, then moving to put in place the requisite legal instruments that establish some right “to” or “in” and then defending said right or rights. Take for example a client that has expended millions on research and development, this client clearly has an interest in seeing a return on this expenditure, a lawyer would move to protect the client’s work product by intellectual propertizing it as much as possible (e.g. registering patents and trademarks), the lawyer would then act as a kind of sentinel, safeguarding the client’s IP through the threat (real or potential) of legal action.

BML is this but much more. Its is practice area that requires a lawyer to be able to keep the legal and non-legal in sync – always remembering that it is the brand that matters.

This practice area requires from a lawyer certain degree of intellectual flexibility. From the nature of our profession lawyers are problem solvers – some might beg to differ – to be more specific we are legal problem solvers. To put it succinctly we will find the legal solution to your business problem. And here lays the problem for many a lawyer when it comes to BML.

Lawyers are good at finding legal solutions to business problems; well that’s what we were trained to do after all. However, BML requires a lawyer to go beyond this and to realize that some times what is in fact needed is a business solution to a legal problem.

What is the difference between these two approaches, isn’t it just matter of semantics? Well, you will just have to stay tuned.

By: Ainsley Brown

This forms part of the Middle Passage Law Series on Law Is Cool.

American International Group, better know by its acronym AIG, it seems these days can rarely catch a break. It just seems negative news follows negative news for this company. This time the negative news for this too big to fail company – deeply wounded by the global credit crunch and later recession – has two of its units being accused of racial discrimination in their lending practices.

It is important to note that AIG has not been found guilty of anything; in fact it wasn’t even accused of any wrong doing.

WHAT?

I know, I know, it seem like I am saying that AIG is involved yet not involved in this case. And yes that is exactly what I am saying.

All of this may seem totally contradictory but let me assure you it is not. What we have here is a classic illustration of legal reality vs. public perception of a company’s brand. In order to be successful companies have to be mindful of the differences between these two concepts and effectively manage their interrelation.

The Department of Justice (DOJ) allegations were never directed at AIG, the parent company, but were instead directed at two of its subsidiaries –AIG Federal Savings Bank (FSB) and Willmington Finance Incorporated (WFI). Both banks were accused of not sufficiently monitoring the activities of mortgage brokers who sold mortgages that they funded. The brokers were, according to the DOJ, offered African-American borrowers less favorably borrowing terms than similarly financially situated whites. The two have agreed to settle the case with the DOJ and have agreed to pay at least $US6.1 million without admitting liability as part of the terms of settlement.

The case broke no new ground as far as banks in the US being accused of racial against minorities, namely African-American and Latino-Americans, in fact similar settlements or even full blown litigation involving other US banks will surely be making the headlines in the near future. The case however did break new legal ground in that for the first time US authorities held a lender directly responsible for the racial discriminatory acts of brokers. As a consequence, from now on banks will have a positive duty to monitor the activities/policies of brokers that they fund, to the best of their ability, in order to ensure that they are not using race to determine borrowing terms. This duty also of course carries with the co-duty to take positive action whenever a bank believes that a broker is using race.

From a strict legal perspective AIG, the parent, hands remain totally clean is this matter. It is important to reiterate that AIG was never accused of anything; the allegations were solely directed at the two subsidiaries. And no this is not a simple matter of splitting hairs, while related all three companies are separate. The legal concept of the corporate veil - the independent legal identity of companies, even if related – is a fundamental one in corporate law. The corporate veil is best understood as a shield that is used to protect all the right that come with incorporation. This is not to say that it can never be lifted/pierced, for it can, but this is only done in rear and specific instances where for example fraud is alleged or where for some reason the directing/controlling mind of a corporation needs to be identified.

However, these allegations go beyond strictures of the corporate veil and this is where public perception of the brand and effective management of that brand become important.  AIG and its army of brand management specialists both know that the general public are often not so discerning as to make the distinction between parent and subsidiary; as far as the public is concerned AIG is AIG.  This is the reason I believe that there was such a quick settlement – the last thing AIG, the parent, needs is a protracted legal battle involving accusations of racial discrimination, albeit involving subsidiaries. This would be a public relations nightmare.

By: Ainsley Brown

When it comes to the hype around a new product no body does it better than Apple. In fact you could even say that Apple has made the hype surrounding a new product a large part of its advertising and marketing campaign.

However, the key to such marketing is maintaining such levels of secrecy that would make the CIA proud. This same approach was taken with all its “i” products – the iPod, the iPhone and now the iPad. With the importance of secrecy such high levels of secrecy it’s only a matter of time before the lawyers get involved.

And yes, they did get involved.

In the lead up the release of the iPad this week, Apple’s lawyers Orrick, Herrington & Sutcliffe LLP sent out a stern warning letter to a website that offered a cash bounty to any one that could produce pictures of the then unnamed iPad. The Silicon Valley gossip website, Valleywag received the warning after it offered $10,000 for a photo, $20,000 for a video and $50,000 for a video with Apple co-founder/CEO Steve Jobs holding the iPad.

Now if this was simply a joke by Valleywag, and I don’t know if it was or wasn’t, Apple and their lawyers certainly weren’t laughing. In the letter to Valleywag, Orrick, Herrington & Sutcliffe warned: “While Apple values and appreciate vibrant public commentary about its products, we believe you and your company crossed the line by offering a bounty for the theft of Apple’s trade secrets. Such an offer is illegal and Apple insists that you immediately discontinue the Scavenger Hunt.”

There is no word of if Valleywag was moved by the warning but it is important to note that the iPad was released without incident to the joy of Apple.

Remember The Greater Commercial Interest...Don't Get Crushed By Your Own Litigation

First posted on Law is Cool on Jan 9, 2010.

This is a blog post by current University of Western Ontario third year law student and Law is Cool blogger, John Magyar that I just had to share. It is a perfect illustraion of why here at Commercial Law International we say that: Commercial Awareness Is Global.

The story featured in the post is not gobal in the geographic sence but rather in the sense of being all encompassing. It illustrates very nicely why persuing a cliam or legal right while making perfect legal sense may not make much business sense. It gives a stark warning to current and future lawyers and their cleints for that matter to have  a Global-Big Picture outlook by examining how the best interests of the client are served; especially when considering persuing litigation. 

Enjoy:

According to an article by Canadian Press, Loblaws has seen the light and will no longer sue the man ‘deemed to be at fault’ for a collision involving a Loblaws truck that caused the death of the man’s wife and 6 teenage boys.  The legal action had been a lingering PR disaster that motivated outraged communities to push for a boycott.

Having spent all of 4 minutes considering the matter, I am struck by the lack of circumspect. This accident was a highly publicized tragedy that made front-page national news. Prime Minister Harper sent a letter of condolence to the school that the teenagers attended, according to CBC news, and no where in the coverage was the driver blamed.

This man was a basketball coach.  He was driving a van that carried the basketball team plus his wife and daughter.  It was winter and the road conditions were not good when the van fish-tailed on a highway and unspeakable tragedy ensued. This man might have been driving too fast, and his negligence might have caused damage to a Loblaws truck, however, from where I sit, public backlash seems a likely outcome of litigation. He made a horrible mistake and paid very dearly for it:  He lost his wife, he could have lost his daughter.  Many families in the community lost a son. Meanwhile, amidst all of this loss of life, Loblaws wants to recover for a damaged truck and lost inventory.  This looks cold-hearted to say the least.

There is lesson to be learned here.  As we graduate from law school and become involved in that financial bloodsport called litigation, we should remember that law suits do not occur in a vacuum.  Even though the law says you can, and even if you’re impervious to emotional reactions to sympathetic defendants, you should consider the potential for public outcry.  The client likely values his or her public profile more than money, and this applies whether the matter is civil, family or criminal.

From where I sit this seems so obvious …  but maybe things look different after swimming in shark-infested water for a few years.  Perhaps the real lesson is to remember what things look like from the outside when your on the inside.

By: Ainsley Brown

EBay was fined yesterday €1.7 million by the Paris Commercial for violating an injunction prohibiting the sale of LVMH products on the online auction site.

The injunction was imposed on eBay last year after it was taking to court by LVMH for allowing the sale of its products on its site. LVMH, the world’s largest luxury good group, with such brands as Louis Vuitton, Christian Dior, Moet Hennessy, and Givenchy, to name a few, had  exclusive sales and marketing contacts with specialist retailers.  In an effort to protect its brands, including of course its exclusive sales arrangements LVMH – and other luxury band companies such as L’Oreal – has taken aggressive steps against eBay and others.

These legal battles are not just simply about LVMH or L’Oreal wanting to prevent counterfeits of their brand entering the market, though this is part of the story. No! It is also, if not more about brand management – who has the right to develop, market, sell and ultimately who right to profit from such efforts.  All of this, it must not be forgotten, is being done in the context of the era of globalization and the internet.

By: Ainsley Brown

Anheuser-Busch, along with Labatt Brewing Co – both companies are owned by Anheuser-Busch Inbev NV – have filed suit against Brick Brewing Co claiming that Brick is violating its intellectual property.

The dispute centers on the use of the colour green and limes on the labels of Brick’s Red Baron Lime Beer.  Anheuser, the maker of Budweiser, is alleging the Waterloo, Ontario, Brick has violated the intellectual property on its own lime beer – Bud Light Lime. The suit will be essentially an exercise in  compare and contrast; like one of those games where you are given two similar images and you have to find and circle the differences.

The primary question that that has to be answered during this is whether or not any similarities between the two beer is likely to lead to confusion in the eyes of the public? Put another way is there enough of a difference between the two beers so that the consumer may make a conscious decision to chose one brand over the other?

So, how similar/different are they?

Both are sold in clear glass bottles; both labels have green and silver colours; both depict a slice of lime; Bud Light lime has BL written on it; and Red Baron Lime has its name spelt in different font than that of BL. I invite one and all go out to your nearest Beer Store or LCBO and you be the judge, alternatively you can do the same by visiting both websites.

Is this really the crux of the dispute or is there something else afoot?

I believe there is. I think the real issue here is the 25% cost differential in Ontario between the two beers. Does Anheuser – seeking to prevent Brick from using limes and beautiful scantily clad people in its advertising; unspecified monetary damages; along with $500, 000 in punitive damages – have a valid claim? I don’t know but what do know is that Red Baron Lime being 25% cheaper than Bud Light Lime in these tough economic times will be sufficient inducement to many a beer drinker to at least give it a try. That being the case Red Baron Lime could represent a substantial threat to Bud Light Lime, well at least in Ontario.

On a side note, this is not the first time that these two have tangled. In June of this year the two settled an intellectual property dispute after Labatt claimed that Brick’s Red Baron packaging was too similar to Labatt’s Brava beer. The dispute was settled after Brick agreed to change its label.

However, this time there does not seem to be any room  for such a settlement, the vitriol coming from Brick is to be believed.

By: Ainsley Brown

This is part of the Middle Passage Law Series and is cross posted on Law Is Cool.

Now I know I have not posted a piece in this series in quite some time and for that I apologize – I have no excuse.

It may seem that I am either picking on L´Oreal, as I have tracked their recent legal battles with eBay on Commercial Law International, either that or I have an obsession with makeup. Let me assure you that neither in the case. With that over, let´s go to the story.

The La Cour de Cassation, the highest court in France, upheld the ruling by the Paris Court of Appeal, finding L´Oreal guilty of racial discrimination. The court also found Adecco, a temp-employment agency, involved through its Districom division, guilty and fined both it and L´Oreal €30,000. The court however, sent back to the Court of Appeal for its reconsideration the €30,000 each in damages payable to SOS Racisme, an anti-racism public interest group that brought the case.

The ruling ends three years of legal wrangling and is no doubt a huge blemish for L´Oreal.

The main issue of fact in the case was BBR. Yes, BBR. What in the world is BBR, you ask?

BBR or blue, blanc, rouge – the colors of the French flag. Now if you were to ask me I would have simply thought that this was a general patriotic gesture, however, it hides a much more sinister meaning. It, as the Times reports is an expression ¨widely recognized in the French recruitment world as code for white French people born to white French parents.¨ This would of course exclude not only the 4 million ethnic minorities current living in France but also any whites not born of pure French stock, including presumably none other than the French President himself Nicolas Sarkozy whose father is Hungarian.

It would seem that word got out that L´Oreal did not want any black, Asian or Arab sales staff to promote Fructis Style, a hair care product made by its Garnier division. Only BBR would do, I guess – because they are worth it – to play on L´Oreal´s because you are worth it ads. But, why?

And this for me is the most troubling aspect of this case. The BBR move by L´Oreal hints at a much larger and disquieting issue in French society. Yes, racism, this is very obvious but much more than that it is brand of racism that operates not just on the fringes of society but at its heart – in the labour and retail markets – while at the same time managing to remain in the shadows .

How is it that this BBR policy that so pervades the French employment and retail markets is only now seeing the light of day?

Like I said, very troubling indeed.

However, a silver lining to all of this is that BBR has now been fully exposed in a court of law. From now on the racial prejudice that operates in the French labour and retail markets can no longer be subject to denials of anecdote or conjecture. The court record stands as an official record by the state that BBR does exist and is a proven fact.

As for L´Oreal, this cannot be good for its brand management. For a company that so fiercely defends its brands, just take a look at its battles with eBay, this was not only a poorly conceived recruitment drive but also incorrectly defended case – this is not to be read as a dig at L´Oreal´s lawyers, not at all, I am sure they represented their client the best way they could, however, I am unreservedly criticizing L´Oreal.

L´Oreal forgot that it´s all about the brand. What they sell is much more than simply a product, it is a lifestyle, it is instant gratification, it is control and it is improved self-confidence through a line of beauty products designed for one thing – to improve the true beauty that is you. Nothing can be allowed tarnish the brand less they lose sales and market share.

If this is the basic market reality of the L´Oreal brand, and for that matter any brand, why would you maintain the spectacle of a public trial for three years with a case that even if it comes out in your favor could still blemish the brand?

There is no doubt that L´Oreal´s PR team is hard at work trying to figure out how to either make this go away or finding an angle on how to spin this. A word to the wise, L´Oreal, you have already been found guilty, it would be an exercise in futility to deny any part of this. In fact such a denial, in whole or in part, direct or indirect, could result in a backlash against the brand. It would be better to fully accept culpability, say sorry and take positive and no doubt public steps in order to combat BBR or other forms of discrimination. That my friend is your angle.

By: Ainsley Brown

The world´s largest purchaser of hazelnuts and the maker of a very tasty treat, Ferrero Rocher, has been cleared in the English courts of a £20 million fraud.

The suit was brought against the Italian chocolate company by the Bank of Tokyo Mitsubishi and others alleging that deceit, negligent misrepresentation and conspiracy for a deal involving the purchase of hazelnuts. The allegations were that Ferrero Rocher participated in a fraud carried out by a Turkish company, Baskan Gida, between 2001-2002. Baskan Gida borrowed money from the banks´ London branch in order to purchase hazelnuts which it would in turn re-sell to Ferrero Rocher. However, it convinced the bank, using forged documents that Ferrero Rocher would repay it directly.

Well as you can guess no such payment was forthcoming. And the bank brought suit convinced that it was defrauded in a plot by both Ferrero Rocher and Baskan Gida. No such conspiracy existed.

The cost of defending this action was not cheap. As the Times reports ¨millions of pound were spent by each side.¨ Was this money well spent?

While there could be a very persuasive argument brought that this suit should have never been brought against Ferrero Rocher in the first place but since it was brought it had to fiercely defend against it. Fraud after all is an allegation against reputation – for a company commercial reputation is every thing.