WATCHES & JEWELLERY FINANCIAL TIMES SPECIAL REPORT | Saturday September 8 2012 www.ft.com/reports/watches-jewellery-sept2012 | twitter.com/ftreports Inside this issue Brands Richemont Sky is still took the Russian patent office to court on its home turf and won the limit Page 2 Second lines The sibling marque is not to be sniffed at, especially if it is Rolex’s for those Page 4 Bloggers Disdain is fading as the industry recognises its place in the digital world Page 5 at the top Planetary life Audemars’ Hard luxury ranges are accessories, notably Chanel, Versace has part and, most recently, Louis Vuitton, are funded an seen by customers as the rebalancing traditional portfolios by observatory most portable, transferable entering the sector. in a form of wealth in times of Branded sales make up 19 per cent celebration of the global fine jewellery market, of the link economic uncertainty, against 50 per cent and 38 per cent in the leather goods and eyewear sectors between writes Elizabeth Paton respectively. So, many see untapped star gazing and horology market potential, particularly given Page 6 ince the collapse of Lehman the appetite for “status symbol” Brothers in 2008 and the ensu- spending by consumers in emerging High frequency Why spend ing global financial crisis, one markets. so much money on expensive of the few resilient sectors has The characteristics of the sector engineering? Page 7 Sbeen the luxury goods industry. have also made it easier to insulate Consumer demand for prestige prod- against the impact of market volatil- ucts has appeared insatiable – notably ity. When 2009 saw a decline in Swiss Paris Biennale The antiques from the Bric economies – and was watch exports of 30 per cent, compa- fair has become an extremely reflected in the strong performances nies responded by expanding global important event for jewellery of market leaders such as PPR, Rich- retail networks and streamlining Page 10 emont and LVMH. wholesale operations. Yet results announced over the past The past three years have seen con- Creative directors As few months reveal something of a sistent organic growth of more than businesses have passed into slowdown, catalysed by sluggish 20 per cent. “The elite hard luxury growth in China and the continuing brands have recorded consistent the ownership of big groups, eurozone debacle. growth for two main reasons,” says they need to keep their In particular, sales in soft luxury Thomas Mesmin, a luxury analyst at personality Page 13 such as ready-to-wear lines and Cheuvreux. leather accessories have slipped, “Their watch and jewellery ranges Lab-made diamonds Fakes while management teams across the rarely offer discounted prices or more are gaining acceptance, even sector have aired a cautious long-term affordable lines, unlike clothes and among the wealthy view on the sustainability of stellar accessories collections. But, more Page 14 growth. importantly, they are still seen by For high-end hard luxury brands, customers as the most portable, trans- however, the sky continues to be the ferable form of wealth in times of eco- Family story limit. While some larger companies nomic uncertainty – significantly Weathering the storm: they are made. For generations, pres- they are looking to retain value, then What such as Tiffany have suffered slightly more reliable than stocks and shares.” prestige jewellery and tige jewellery has been a safe haven these things make a big difference. happened in recent months, haute luxe watch Stanislas de Quercize, chief execu- watches have been a for value.” Given we are a brand that only offers when Olivier and jewellery businesses seem to tive of Van Cleef & Arpel agrees. safe haven for value Getty He says clients are more demanding the very best, we can only see this as Reza took have weathered the downturn rela- “Hard luxe holds more long-term than they were before 2008. “They a reassuring sign for our business.” over Page 16 tively unscathed. Some brands, tradi- value than soft luxe creations, by want reassurance of the ultimate An important trend has been the tionally known for their clothes and virtue of the commodities from which quality, provenance and expertise. If Continued on Page 2 2 ★ FINANCIAL TIMES SATURDAY SEPTEMBER 8 2012 Watches & Jewellery Richemont’s Russian victory is legal landmark Brands James Shotter reports on a big stride in protection of intellectual property arlier this year Patrizio Bertelli, the head of Prada, stirred up a storm in the world of fashion by declaring: E“We don’t want to be a brand that nobody wants to copy.” Most of Prada’s peers are rather less relaxed about having their intellec- tual property infringed. This year has been a bumper one for the IP lawyers, with high-profile suits ranging from Gucci and Guess’s wrangle over shoe trademarks, to Burberry’s successful pursuit of Chinese counterfeiters. The IP case with the most far-reach- ing implications for luxury goods makers, however, had nothing to do with copying. It played out in the Russian Federal Supreme Court in Moscow, and pitted Richemont, the Swiss luxury giant, against a Russian company called Ritter Gentleman. Ritter had registered the trade- marks Jaeger-LeCoultre and Vacheron Constantin – two of Richemont’s most famous Swiss watch brands – in its name in Russia. Ritter was not, however, using them to sell watches in the local market: instead it was using them to sell clothes. This co-opting of brands to sell unrelated goods is not unique to the world of luxury. In 2009, for example, Nasdaq had to ward off an attempt from an Italian company called Antarctica to register the exchange operator’s name as a trademark for various types of sport- ing goods. But as Marcus Höpperger, director of the law and legislative advice division of the World Intellectual Property Organisation, says: “there is an added temptation with luxury com- What’s in a name? Richemont, duped. A court agreed and Richemont The most immediate consequences “This is really an extraordinary step. panies because of the prestige associ- which owns Vacheron appealed. By April the case had of the ruling will be for companies Hopefully we will see courts moving ated with their brands”. Constantin (above) and worked its way to the Federal operating in the Russian luxury goods in the same direction in other jurisdic- Richemont duly applied to have Rit- Jaeger-LeCoultre, won a Supreme Court, which found in the market. tions,” she says. “I could imagine that ter’s trademarks cancelled on the trademark appeal in Moscow What has really got Swiss company’s favour. Given Russia’s ample supply of CIS [Commonwealth of Independent basis that customers were being lawyers and fashionistas That decision, lawyers said at the super-rich, that is no mere bagatelle: States] countries, which tend to look misled over the origin of the goods time, was a legal landmark. Histori- McKinsey, the consultancy, reckons it to Russian law, might take note of they were buying. excited is the prospect the cally trademarks were tied to specific was worth $5.3bn in 2011. this decision.” The Russian patent office refused, ruling could influence legal jurisdictions. However, as commerce What has really got the lawyers and Others in the world of intellectual arguing that watches and clothing became more global, they have fashionistas excited, though, is the property think that the case’s prece- were different products, and so there decisions in other nations increasingly become enforceable prospect that the ruling could also dent value could travel further still. was no chance of consumers being across borders. influence legal decisions in other Even as international law begins to The Russian court’s ruling recog- countries – and in particular in catch up with one type of infringe- nised that trademarks can be pro- emerging markets, an increasingly ment of intellectual property, how- tected across seemingly unrelated important source of revenue for lux- ever, the march of technology is open- classes of goods as well. ury companies. but where intellectual ing up other fields in which luxury That, says Janet Hoffman, a partner property protection is in practice goods makers must defend their at the law firm Fross Zelnick Lehr- often something of an optional extra. brands. man & Zissu, is the way things should At the international level, says Since the beginning of this year, be. WIPO’s Mr Höpperger, protection ICANN, the body that regulates the “The law should not permit third against trademark infringement in naming system for websites, has been parties to register or use, for example, the case of unrelated classes of goods accepting applications for new generic ‘Kodak’ for bicycles,” she says. dates back to the World Trade Organi- top-level domain names that will be “Because of the effort and invest- sation’s agreement on Trade-Related used alongside the established ones ment that goes into developing the Aspects of Intellectual Property such as .com or .org or .uk. Anyone reputation of a globally well-known Rights, which was adopted in 1994. with $185,000 to spare can apply for a brand, the owner should have the It takes time, however, for the prin- name. exclusive right to benefit from that ciples enshrined in international trea- Fresh from its Russian victory, reputation, even in respect of goods ties to work their way into jurispru- Richemont has been an enthusiastic and services beyond those for which dence of different nations. Richem- filer. So far it has applied to secure the mark might have initially been ont’s Russian victory, Ms Hoffman the right to domains named after no known or registered.” reckons, could accelerate that process. fewer than 10 of its brands.