Commercial Law International

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.

By: Ainsley Brown

“Old pirates, yes they rob I.”

The opening words to Redemption Song are as hard hitting now as they were when first bellowed by the iconic musical legend – Bob Marley - years ago. These words however may be taking on a new meaning in this era digitization and globalization where information is king. This era is all about IP – Intellectual Property – and the right to access, control and exploit for ones own benefit the concepts encapsulated within creativity.

As a matter of course the Brand – how you package and sell your IP, in fact branding itself becomes a form of IP – in this era becomes of great import. In fact one could argue that brand is not the everything but is the only thing. Consumers no longer simply buy a product or service – no, no – rather they are buying a brand.

Now this brings me to the House of Marley. The heirs of Bob Marley – the holders of the exclusive rights to the reggae superstar’s image – are drawing clear battle lines in the IP war on whom can access, control and exploit Marley’s iconic status. They have enlisted the aid of Canadian private equity firm Hilco Consumer Capital to package, manage, market, sell, monitor and protect the IP that is Bob Marley through the products sold under the new House of Marley brand.

Rather than attack the hawkers of existing wears, which would result in a multiplicity of protracted legal battles spread-out across the globe, Hilco and the House of Marley have instead embarked on a branding campaign. It is quite simple, the House of Marley will be authentic and all other comers will only be imitators – a potentially very lucrative strategy, if it can be pulled off.

According to reports, the Marley brand – name, sound and image – are estimated to generate $USD 600 million in a year and this is on the bootleg side alone. On the legal side, the brand generates a profitable but substantially smaller $USD 4 million a year.

With numbers like those no wonder the Marley heirs sought out and gained a partner like Hilco with a proven reputation in IP generally and branding specifically?

While I applauded this new venture, I can’t help but how long will it be before we see a court case or two? Maybe a few Anton Piller orders – best described but somewhat inaccurately as a civil search warrant, that feature so prominently in IP cases – or maybe the odd Mareva injunction – a court order freezing assets -?

The reason why I am thinking this is that it is impossible to escape the fact that branding – intellectual propertization – eventually means not only the allocation of exclusive rights but also the enforcement of those rights.

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

This is a follow up to: L´Oreal Takes eBay To Court.

L´Oreal and eBay should just make up

The pending court case launched in France by L´Oreal against eBay is now in. And it is not good news for L´Oreal.  A French court ruled that eBay has sufficient anti-counterfeit measures in place to prevent fake L´Oreal and other branded products from being sold on the site.

This is a real blow to L´Oreal and its strategy of aggressively protecting its brands against counterfeits. EBay had become one of its favorite targets, with in addition to this case there are out comes pending in Britain, Germany and possibly Spain. The French court went beyond just ruling that eBay´s anti-counterfeit measures were sufficient. No or should I say Non. The court ruled that eBay´s measures were sufficient ¨to fulfill its obligations in good faith (The italics are mine).¨

The good faith obligation is of much interest. It means that eBay is not under an absolute obligation to prevent all fake L´Oreal products from being sold on its site, the court made that clear. However, it is under a positive obligation to take all reasonable steps or at a minimum to make its best efforts to prevent counterfeits being sold on its site.

This latest ruling might give L´Oreal cause to pause and rethink how it pursues its legitimate interests – its bands and branding are after all what it is in the business of selling.

The decision is the first victory for the internet auction site in the French courts after losing similar cases brought by LVMH and Hermes. And is a very important one at that, as it could provide guidance to the other courts in Europe or for that matter the rest of the world.  While it is true that the French court´s decision does not bind the other in Europe it could be very influential as the French courts are well known for being the most brand protectionist in Europe.

The judge in the case went on to say that the only to stamp out counterfeits was for the band and the e-commerce industry to collaborate in such efforts. And I full agree – both have a vested interest in stopping fakes.

By: Ainsley Brown

I have been wanting to do an Australian themed story for a long time, not least because of the global mandate of the site but also I am just a big fan of the land of Auz – I guess it´s just the rugby player in me but truth be told I am a bigger fan of New Zealand. However, I digress.

This story at its simplest can be boiled done to the difference between a Vo-Vo and just plain old Vo? What indeed?

A Vo-Vo, what on earth is a Vo-Vo or a Vo for that matter? Well for my non-Australian readers, the Australian ones I am sure know what I am talking about – that is if I have any Australian readers left after my rugby confession – a Vo-Vo is a popular Australian cookie. The strips of pink icing and jam sprinkled coconut of the Vo-Vo is much beloved by Australians, you could even go as far as saying it has cultural significance as evidenced  by it  garnering a mention in the victory speech of Prime Minister Kevin Rudd.

Now given the iconic status of the Vo-Vo, to say nothing of the commercial value of the brand to the Sydney based Arnott´s Biscuit´s it would come has little surprise that they would fiercely defend their intellectual property. Arnott´s after all has put a lot of time, human capital and money in the branding and marketing of the Vo-Vo, as demonstrated by its success. The Vo-Vo has been with Arnott´s very long time, it has held the registered trademarks to the Vo-Vo, Iced Vo-Vo and Iced Vo Vo names since 1906.

Here enters the American doughnut shop icon, Krispy Kreme, with their Vo. Yes a Vo. The Krispy Kreme Vo, instead of being a cookie is a doughnut that is, and get this, filled with raspberry jam and topped with pink icing and coconut.  As far as Krispy Kreme is concerned the public can easily tell the difference between a cookie and a doughnut and is not violating any laws.

Given the similarity, despite Krispy Kreme´s claim´s to the contrary, Arnott´s has told the American based company to stop violating its intellectual property rights or else it will be forced to take legal action to protect those rights. And I say rightfully so. Krispy Kreme can fool itself all it wants, the truth is that is was trying to cash in on the iconic status of the Vo-Vo without asking or having to pay the rightful owners for such a right. I if were representing Krispy Kreme I would take the out offer by Arnott´s and simply just stop making the Vo rather than risk going to court.

Krispy Kreme now finds itself in a lose, lose, lose situation. Before I go any further let me confess that I am not versed in Australian law nor am I well versed in common law based intellectual property law but I do know a little and I also know a little about the commercial consequences of legal action. As the site´s tag line exclaims Commercial Awareness Is Global.

Why a lose, lose, lose situation? Well, if it ends up in court Arnott´s stands a very good chance of proving its case, the Krispy Kreme Vo is, despite it being a doughnut, is far too close in name and substance to the Vo-Vo and violates Arnott´s rights. In this situation not only would Krispy Kreme have to pay over damages to Arnott´s it would also have to endure the spectacle of a public trail with its ensuing damage to its commercial reputation. Now even if it wins, you just never know which is why litigation is such a risky proposition at times, it still loses. It may not be liable for damages but it still would have suffered damage to its commercial reputation. It has take on an Australian icon, now even if Australians don’t readily associate Vo-Vo, Vo, Iced Vo or whatever else you want to call it, with Arnott´s, the do proclaim the name to be theirs .Now through the use of legal tricks an outsider – an American company – has come to our country and stolen our name – a part of Australia. Am I over playing it a bit, maybe, but it seems to me that the Australia people are a very proud people and guard what they deem to be their heritage very jealously.

Lastly, and incidentally the best situation for Krispy Kreme – though it still represents a loss – is to take up Arnott´s offer and just stop making the Vo.  This could quickly, as outlined above, turn into Australia vs. Krispy Kreme rather than an Arnott´s vs. Krispy Kreme.

Krispy Kreme should just admit that it got caught with its hand in the cookie jar and move on. It would be far better for it.

By: Ainsley Brown

ITC Ruling Not So Sweet

Tate & Lyle, the makers of Splenda, lost its appeal last week in the US International Trade Commission (ITC) in its bid to keep out an imported Chinese substitute to Splenda.

The company initiated legal action in April of 2007 against a group of Chinese companies and six importers, after non-Splenda sucralose began appearing in the US market. Tate & Lyle alleged that the Chinese sucralose was manufactured using its trade secrets. However, the ITC found in its initial ruling, set down in September of last year, that this was not the case. The Chinese sucralose was in fact produced using its own process independent of any patents held Tate & Lyle. As to be expected Tate & Lyle did not like the ruling and appealed. It again lost on appeal.

This was a big blow to the UK based company, not just because of the high legal costs, an estimated £10 million, according to the Times. No. Much more important is that it now faces the strong potential of cheaper Chinese imports flooding its most lucrative market – the US. This new reality, and this may help to explain why it spent so much trying to defend its brand, will have to be accounted and adjustments made to the company’s strategic plans.

This adjustment will be no mean feat for the managers of the company. This is because it had counted on Splenda being a major profit driver in the future, namely amongst is soft drink clients – read Coca- Cola and Pepsi Co. The ITC ruling therefore has major consequences for the company’s re-branding drive as a food and ingredients company rather than a sugar-commodity driven company.

By: Ainsley Brown

The Jamaican Coffee Industry Board (CIB) launched its new website last week. The site, according to The Gleaner, promises to be the main source of comprehensive information on Jamaican coffee for buyers and stakeholders.

The CIB, a quasi-independent statutory body, is charged with the responsibility of having oversight over the various players in the Jamaican coffee industry. In other words it monitors and ensures Jamaican coffee is only of the highest quality; manages the branding of coffee – the main brand being Jamaican Blue Mountain, a tasty coffee by the way – and; market’s the Jamaican branded coffee locally and internationally.

Coffee for Jamaica represents a significant foreign exchange earner to the tune of approximately US $30 million in 2008. The CIB hopes that the site will help to significantly improve on this mark.

The site, which received funding from the Canadian Development Agency (CIDA), will provide detailed information about the latest developments in the Jamaican coffee industry; quality control; new branding and marketing initiatives; and licensing certification. The second phase of the site, set to launch in a few months, will allow buyers (internationally and locally) to track online the progress of their coffee shipments. Access to such information should prove to be of tremendous vale to coffee buyers making it easier for them to manage their supply lines. This second phase of the site could also prove to be the most valuable component of the site for the CIB.

I say well done to the CIB and best of luck. However, will offer one piece of advice, please, please, I implore you; please ensure that the site is well managed – the only thing worse than not having a website is have a poorly managed one. This should include accessibility; easy of use; frequent updates; and accuracy – in a word, the site has to have Trustworthy-Authority.