Adequate Protection Against Lookalikes in Consumer Electronics

Adequate protection against lookalikes in consumer electronics

Analysis of a case study at Philips

Master thesis, Law and Technology Tilburg University, December 2012 J.M.H. van der Linden

Supervisors Tilburg University: M.H.M. Schellekens / S.L. Gellaerts Philips IP&S: Andrew P.G. Hall

Foreword This thesis is the capstone of my master Law and Technology at Tilburg University. It is based on the internship I have done within Philips Intellectual Property and Standards (IP&S) between September 2011 and May 2012. I am very thankful to Philips IP&S for giving me the opportunity to work within their organization for that period of time. It was a meaningful and interesting period and it gave me a unique chance to see an IP department of a multinational company from the inside. All IP&S colleagues were very cooperative and willing to share their valuable knowledge and views on the subject matter in general and the actual cases of lookalikes Philips is confronted with, in particular. I would especially like to express my appreciation to Sandra Vrolijk for having thought of the possibility to write my thesis based upon a practical research at Philips IP&S, and to Ronald van Tuijl and Andrew Hall of Philips IP&S for taking the time to guide me within Philips, and generally for coping with me and my endless questions and doubts during that period. Furthermore appreciation is owed to all the other trademark and IP counsels within Philips, as well as the various business contacts within Philips’ commercial divisions, for their willingness to participate in my interviews. Finally I‘d like to thank Maurice Schellekens and Sander Gellaerts of Tilburg University for being my thesis supervisor and second reader respectively, and the guidance they gave me during the process of writing this.

Quitting one’s job to enroll in law school while in one’s late thirties is not the most common move. This would not have been possible without the support of my family, first of all Suzanne who had to put up with a student for a husband for the last few years, and my mother, her support made the whole idea possible. Sadly she passed away last Christmas. It is with much gratitude that I dedicate this thesis to her in loving memory.

Tilburg, December 19th 2012

Table of Contents

Foreword ...... 3 Table of Contents ...... 4 1. Introduction...... 5 1.1 If it looks like … ...... 5 1.2 Research question ...... 6 1.3 Methodology ...... 6 1.4 Outline ...... 7 2. Legal protection against lookalike products...... 8 2.1 Introduction ...... 8 2.2 Trademarks ...... 8 2.3 Designs ...... 11 2.4 Copyright law ...... 13 2.5 Unfair competition ...... 15 2.6 Conclusion ...... 16 3. Case study at Philips ...... 18 3.1 Introduction ...... 18 3.2 Research methods and selection of respondents ...... 18 3.3 Are Philips’ products copied by with lookalikes? ...... 19 3.4 How big a problem does Philips think it has with lookalikes? ...... 19 3.5 How does Philips know about the lookalikes ...... 20 3.6 Where do lookalikes turn up? ...... 23 3.7 What is Philips doing about it? ...... 25 3.8 Is the available legal protection seen as adequate ...... 28 3.9 Wrapping up the case study ...... 31 4. Case study analysis, putting it in legal context ...... 32 4.1 Introduction ...... 32 4.2 Practical issues in Philips’ dealing with lookalikes ...... 32 4.3 What does this mean for IP legislation & policy ...... 35 4.4 “Let’s make things better”?!? ...... 38 4.5 Conclusion ...... 40 5. Executive summary ...... 41 References...... 43 Literature ...... 43 Case law ...... 44 Online publications & resources ...... 44 Annex 1: Questionnaire ...... 45 Annex 2: Qualitative research logbook ...... 48

1. Introduction

1.1 If it looks like … Products and services coming from a certain company are generally identified by their “brand”, the name they are sold under. A popular definition of the meaning of the term brand is: "Any name, term, design, symbol, or other feature that identifies one seller's good or service as distinct from those of others1”. People sometimes refer to a product or service by the brand only; they talk about a SAAB or an Apple for instance, and it is immediately clear they refer to their car or computer, just by mentioning the brand. The brand becomes associated with the origin of the product and the level of quality the buyers have come to expect from the products of a certain company. So it can be said that brands represent value. A-brand companies invest a lot in creating and maintaining the value of their brand, so that it is recognized and immediately communicates the right sentiments about the product to the prospective buyers.

This thesis is about lookalikes. Lookalikes are a very common phenomenon; we see them on a daily basis on the market. Some competitors try to make their products look like the well known company’s products. They “imitate the name, logo, and/or package design of a leading brand to take advantage of the latter’s positive associations and marketing efforts.”2 For instance products sold under so called “shop brand” in supermarkets look quite similar to the well known brand on the shelf next to it. Reports from among others the AIM3 (Association des Industries de Marque) and the British Brand Group4 show that this practice is still increasing. Besides that, recent consumer behavior research shows that subtle imitations are likely to benefit more than blatant imitations5.

Protection against lookalikes is offered by national, Benelux, European and international laws. Our Legal system has chosen to limit competition and protect brand holders through the system of intellectual property rights. However this protection is bound to limitations, in time and subject matter.

An example of a recent case in this field in the Netherlands is the case between Albert-Heijn and Unilever6. In this case Unilever, holder of many A-brands for their products, started a law suit against Dutch market- leading supermarket chain Albert-Heijn with a claim of Albert-Heijn 20 shop brand products copying Unilevers products. This case is interesting because Albert-Heijn and Unilever have a continuing business relationship that has lasted well over 80 years; they are each others’ largest customer respectively second largest supplier. So the parasitic copying is also taking place by parties in the sales channel of the branded goods.

However much has been said about this phenomenon in the agro-food industry, no research has been done to the phenomenon of lookalikes in consumer electronics, and if the legal ways of protection against this are perceived as adequate by the brand holders in this segment. Philips is an innovation driven consumer electronics manufacturer that has a very recognizable and worldwide reputed brand. Its products are at risk of being copied by lookalikes all over the world. I was offered the opportunity to work as an intern within Philips’ central intellectual property department, Philips Intellectual Property and Standardization (IP&S), to do research into the phenomenon of lookalikes, how they affect this company’s products and how the company uses the system of intellectual property protection to respond to this.

1 AMA Dictionary 2 Van Horen & Pieters 2011 3 AIM, Position paper 2010 4 British Brands Group, study 2009 5 F. van Horen, 2010 6 District court Arnhem 28 April 2005, BIE 2005, 64; IER 2005/49 (Albert-Heijn / Unilever)

1.2 Research question Following from the above the central research question of this thesis is:

“Is legal protection against lookalikes adequate for A-brand holders in consumer electronics?”

To answer this research question there are two sub questions to be answered: firstly “How are brand holders currently legally protected against lookalikes?” And “secondly “Does consumer electronics brand holder Philips consider protection against lookalikes effective in practice?”

For answering a research question like this it is necessary to determine what will be considered “adequate” in the case study. Adequately protected means in this research that a majority of the professionals interviewed within Philips think the legal protection against lookalikes is sufficient.

In order to have a working definition of the phenomenon lookalike, I have taken one used by the AIM brand organization in various publications: A lookalike is: a product that resembles the overall appearance of a branded product by combining certain visual features of the original brand so as to convey a similar composite appearance7. The phenomenon of lookalikes is also referred to as “copycats” or “parasitic copying”; these are for the purpose of this thesis synonyms and can be used alongside each other. The definition of lookalikes does not include the so called counterfeits, i.e. fake products being passed off as branded goods. There is a simple way to tell a counterfeit and a lookalike apart: with a counterfeit it is hard if not impossible to determine the real origin of the product, as it is a fake of a branded product, meant to deceive the buyer into believing he is buying a real branded product. This is not the case with the lookalike. The latter does not conceal its origin, it sells under its own name; it just mimics the well known brand’s appearance to a certain degree. Finally, in some publications like the EC Commissioned Hogan Lovells report8, a tighter definition of parasitic copies is used, focusing on cases of unfair competition, and leaving trademark-, design- and copyright law more or less out of the picture. I choose to include these in my definition, as it makes sense for a case study in a real business environment, to define the problem as it is faced by the business in practice.

The outcome of a research like this is somewhat limited in terms of validity, because it was done within one single company. However it is an interesting company to look at for this case study, because it has a strong, recognizable and globally known brand, and it is an innovative and market driven company. Therefore it is an interesting brand for many less known brands and/or shop brands to free ride upon. On top of that Philips has a global presence, but its global IP department is located in Eindhoven. This gave me an opportunity to get a view on how this phenomenon is dealt with in practice in different countries.

1.3 Methodology To answer this research question I have studied the laws and the literature in this field, both national and international, as well as reports and publications from various organizations of brand holders. To determine if legislation against lookalikes is perceived as effective to protect brand holders in this segment, I have done a qualitative research within Philips, in the form of a case study. For this case study I conducted a series of interviews with Philips employees in sales, purchasing and design as well as the involved intellectual property specialists within IP&S in order to find out how adequately in their experience the legal system works in practice. The professionals to be interviewed were selected based upon their availability and willingness to cooperate, combined with their experience and knowledge of lookalikes and other forms of imitation in their line of business. Besides that I have taken a closer look at

7 AIM guide “Lookalikes are not Funny” (2000) and AIM guide “Dealing with unfair lookalikes” (2004) 8 EC MARKT/2010/20/D Study on Trade Secrets and Parasitic Copying 2012, nr 6

IP&S’ database, in which all intellectual property infringements are recorded, and from these records I have determined how the amounts of reported lookalikes of Philips’ products have developed in the last 10 years. This made it possible to get an impression of how much the phenomenon affects Philips in the markets it is active in.

1.4 Outline This thesis is presented as follows: in chapter 2, to get an answer to the first sub question I will look into the ratio and material law of the four IPR regimes that serve to protect brand holders against lookalikes on national, European and international level. After that in chapter 3, in order to answer the second sub question, the results from the case study at Philips will be presented. Finally in chapter 4, the results of the sub questions from the previous chapters will be closer analyzed and brought into connection with each other. In order to do that I will take the results from the case study as a starting point and will try to answer the question how adequately the system of legal protection works for the cases of lookalikes as described in the case study.

2. Legal protection against lookalike products

2.1 Introduction In order to get an answer to the first sub question, “how brand-holders are currently legally protected against lookalikes”, I will describe the relevant parts of the legal system of protection of brand holders, taking a closer look at the regulation, case law and literature in this field. In this chapter I will describe the intellectual property rights regimes that protect consumer electronics against lookalikes on a national level (i.e. Dutch or Benelux) and, where relevant, European law and international treaties will be described.

Lookalikes try to look like the other brand; they try to achieve that by creating some sort of association, a resemblance that calls the A-brand into the consumers mind. In order to do that they copy distinguishing features of the chosen product or A-brand. This can be done for instance by choosing a similar name, shape, label, color, box, product claim, catchphrase, or any other feature that the brand they’re targeting is commonly recognized by. Thus the A-brand owners wanting legal protection from this practice should invoke legal protection regimes that are able to protect exactly these features.

Protection against lookalikes can be found in four legal IP-regimes, namely trademark law, law of designs, copyright law and finally the laws of unfair competition. Patent law, which admittedly is also an important IPR regime for electronic consumer goods, protects inventions9, and therefore is of no relevance in the particular context of this thesis, so this field will not be dealt with. Also the field of trade names10 is left out of this research, because it bears no direct relevance to this thesis’ subject.

In every regime I will look at the ratio, subject matter and the scope of protection. The ratio will show us what the legislator wants to protect, the subject matter defines what is protected, and the scope tells us how broad this protection is, in other words what the limits of the offered protection are. I will describe per regime how each characteristic of the regime relates to lookalikes, but for practical sake I will limit myself to the current Dutch (or Benelux where appropriate) law. I will also limit myself to the material law, and will leave the aspects of procedural law out of my review.

2.2 Trademarks 2.2.1 Introduction When in everyday speech the word “brand” is used, it is in a legal sense mostly referring to trademarks. “A trademark is any sign that individualizes the good of a given enterprise and distinguishes them from the goods of its competitors”11. A company’s trade name may be the same as its trademark, but that is not necessarily the case. Aside from trademarks for tangible goods, there are also signs used to distinguish intangible proceeds of a company’s efforts. For instance KLM, Hertz and T-mobile, these companies don’t actually produce and sell goods as their main activity, but they do offer their services under their respective well known “brand”, these are called service marks12. It is possible to further separate between individual and collective trademarks, the former used by an individual company, the latter by a group of companies, to distinguish their products with a common characteristic from the rest13. For example VVV, Kema, BOVAG are well known collective trademarks in the Netherlands. Signs can be words, letters, numbers, shapes and all other signs capable of being represented graphically. Consumers need a way of

9 WIPO 2008, p. 7. 10 WIPO 2008, p. 219. 11 WIPO 2008, p. 184 12 T. Cohen Jeroham a.o. 2010, p. 6. 13 T. Cohen Jeroham a.o. 2010, p. 6.

8 telling apart the goods or services of different enterprises, so that they are able to distinguish the available alternatives, to base their choice between the competing manufacturers upon14. “Consequently, the goods must be named. The medium for naming goods on the market is precisely the trademark15.”

2.2.2 Ratio & functions of trademarks Trademark law aims to protect a sign that serves to distinguish or individualize goods or services in economic trade. The ratio of protecting trademarks should be sought in the need of an undistorted functioning of the market16, or as the ECJ words it: “Trademark rights are an essential element in the system of undistorted competition. An undertaking must be able to keep its customers by virtue of the quality of its products and services, something which is possible only if there are distinctive marks which enable customers to identify those products and services. For the trademark to be able to fulfill this role, it must offer a guarantee that all goods bearing it have been produced under the control of a single undertaking which is accountable for their quality”17. By way of trademarks products are identified, and parties on the market communicate through trademarks. Therefore trademarks need to be protected in these functions18. ECJ’s case law consistently refers to functions (plural) suggesting that ECJ implies that a trademark fulfills several functions19. Aside from the essential designation of origin function the trademark has other functions that have become more important over the last years, mainly as a result of ECJ case law. In this respect the words from the ECJ in l’Oréal/Bellure sums up the other functions: “It is for the referring court to determine whether, in a situation such as that which arises in the main proceedings, the use which is made of the marks belonging to l’Oréal and others is liable to affect one of the functions of those marks, such as, in particular, their functions of communication, investment or advertising.”20 The quality function serves to instill confidence in the consumer and to project an image of quality. The advertising or communication function implies that along with the trademark certain values are communicated. In practice the advertising function is viewed as an important function as it projects the image and the reputation that has been built up by the trademark. This allows for the trademark holder to accumulate value, or goodwill, with the brand, which is the investment function of the trademark. Lookalikes aim to free ride on that goodwill, for instance by choosing a trademark that makes the consumer associate their offering with the A-brand’s reputation. The function of trademark law, amongst other things, is to protect right holders against this free riding.

2.2.3 Material trademark law, acquisition of the right On Benelux level, which in case of the Benelux countries takes the place of the national level of regulation, trademark law can be found in the Benelux Treaty of Intellectual Property, hereinafter BTIP, which is in function since 2006. The trademark right comes into existence if all conditions mentioned in article 2.1 to 2.4 BTIP are met and proper registration took place, according to article 2.19 BTIP. The trademark right has a validity of 10 years from the filing date, but can be renewed for ten years at the end of each period, without any restriction, provided this request takes place within 6 months after the expiration of the formal validity.21 The BTIP does not have any requirements as to who can register and hold a trademark, natural as well as legal persons, residing or established in- or outside the Benelux area can obtain a Benelux trademark. Trademark law does not have the requirement of novelty as is known in patent law

14 WIPO 2008, p. 183. 15 WIPO 2008, p. 184. 16 Gielen 2007, p. 201. 17 ECJ October 17, 1990 C-10/98 (HAG II). 18 Gielen 2007, p. 201. 19 T. Cohen Jeroham a.o. 2010, p. 9. 20 ECJ, June 18 2009 C-487-07 (l’Oréal/Bellure) 21 Both an international and EC registration of a trademark have a validity of 10 years.

9 and design law. This means that the mark, sign, shape or form of the trademark to be registered, does not have to be new in order to get protection under trademark law, it does have to be distinctive though, according to article 2.11 (1)(b) BTIP. In order to serve as protection against lookalikes the trademark has to exist, i.e. be registered and renewed in time.

2.2.4 EU and international system of trademark rights Besides the Benelux regime there is the European system of trademarks, founded by the Council Regulation (EC) No 40/94 on the Community trade mark, which calls into existence a complete system of harmonized trademarks rights and a Community trademark office, the Office for the Harmonization in the Internal Market, OHIM, which is located in Alicante. The Community and Benelux trademark system co exist, a prospective user in the Benelux or any other member state can choose to register nationally or Community wide. On the international scale of trademark rights international treaties comes into play, the Paris treaty concerning protection of industrial rights, that contains some trademark related regulations, and most importantly the “Madrid agreement concerning the International Registration of Marks”, that provides for an international registration of Trademarks22. Under the WIPO-administered Madrid system, a trademark owner may protect a mark in 88 countries plus the European Union by filing one application. Applicants wishing to use the Madrid system must apply for trademark protection in a relevant national or regional trademark office before seeking international protection. An international registration under the Madrid system produces the same effects as an application for registration of the mark in each of the contracting parties appointed by the applicant.

2.2.5 Scope of protection The essence of a trademark is protection it offers for the user of the trademark, and the goods or services it is used for, through ensuring that this relationship is exclusive. The holder of the trademark has the right to use it, as well as the right to exclude others from using the same (or strongly resembling) trademark for goods not originating from the trademark holder.23 The protection of the BTIP has 4 criteria of infringement, which are lain down in article 2.20 (1) (a), (b), (c) and (d). The first category under article 2.20 (1)(a) sees upon the infringement that would be constituted by using the same sign on the same class of goods not coming from the trademark owner. The second act described in article 2.20 (1)(b) extends the protection to confusing use of identical or similar sign for the same sort of products. The third form of infringement in article 2.20 (1) (c) sees upon the use of an identical or similar sign for different goods or services. Finally the protection under article 2.20 (1)(d) extends to use of the identical or similar sign for other purposes than goods or services. This gives the trademark holder the right to oppose to every use that indirectly affects the trademark’s distinctive power, attractiveness and reputation24. This last category is unique to the Benelux trademark regime.

2.2.6 Using the trademark right in case of lookalikes As seen in paragraph 2.2.5 legal protection against trademark infringements can be found in article 2.20 BTIP. Sub (1)(a) gives the holder of the registered trademark the right to oppose to use of an identical sign for identical classes of goods, but this fits the description of counterfeiting, which is not the subject of this thesis. Trademark holders that are confronted with a product offering in the same or similar class of goods, using any signs which are identical or similar to their trademark, can oppose this on the basis of article 220 (1)(b) BTIP, when the use of the resembling sign invokes a risk of confusion in the mind of the public, which includes the risk of association between the sign and the trademark. The protection offered

22 Holzhauer 2005, p.297. 23 T. Cohen Jeroham a.o. 2010, p. 241. 24 Holzhauer & Gellaerts 2011, p. 132.

10 in article 220 (1) (c) BTIP goes further, it gives the holder of the well reputed trademark the right to oppose the use of an identical or similar sign on goods or services of any sort, if this use is taking unfair advantage of or is detrimental to the distinctive character or reputation of the trademark25. Lawsuits invoking the above mentioned article are dealt with via civil law based on a wrongful act26. These legal actions are only available to the holder of the registered trademark, so not to any other party (e.g. a licensee). It goes without saying that no protections can be found in trademark law when no trademark has been registered. The former part only relates to the use of an identical or similar sign as the registered trademark, deemed infringing by the trademark holder, but not to a situation when a trademark is being registered that itself is misleading27. The latter issue is regulated by article 2.28 BTIP in conjunction with article 2.4 (b), which sees upon the annihilation of a trademark if the mark itself is misleading to the general public as to the type, character or origin of the product or service . A-brand manufacturers whose products are being imitated by lookalikes, using other features than their registered trademarks, will not find protection in trademark law.

2.3 Designs 2.3.1 Introduction Besides by way of the trademark, the design of a product also contributes strongly to its distinctiveness. As defined by the various treaties and directives, a design is the outward appearance of a product or part of it, resulting from the lines, contours, colors, shape, texture, materials and/or its ornamentation28. It is good to bear in mind that the term design refers to aspects of - or features applied to - an article or product, not the article or products itself29. The outward appearance, as per the definition above, is what the general public sees and that which allows it to distinguish from another product, often even before the trademark is noticed. According to WIPO “Industrial design refers to the creative activity of achieving a formal or ornamental appearance for mass-produced items that satisfies the need for the item to appeal visually to potential consumers, and the need for the item to perform efficiently its intended function”30.

2.3.2 Ratio and functions of design protection In a legal sense, “industrial design refers to the right granted in many countries, pursuant to a registration system, to protect the original ornamental and non-functional features of an industrial article or product that result from design activity”. The legal protection of industrial design serves the important function of protecting one of the distinctive elements by which manufactures achieve market success. By rewarding the creator for the effort which has produced the industrial design, legal protection serves as an incentive to the investment of resources in fostering the design elements of production31. Contrary to a trademark, a design has to fulfill requirements of novelty and individual character in order to be subject to protection32. However a design does not need to have an aesthetic quality in order to be protected33. Design law protects “the appearance of the whole or a part of a product” as long as it is novel, which means that no identical design has been made available to the public; and it has individual character34, meaning that the overall impression which the design produces on the informed user should differ from

25 T. Cohen Jeroham a.o. 2010, p. 296. 26 T. Cohen Jeroham a.o. 2010, p. 391 27 Gielen & Verkade, Tekst & Commentaar 2009 28 Art 3.1 BTIP 29 Bainbridge 2010, p.546 30 WIPO 2008, p. 221. 31 WIPO 2008, p. 221 32 Gielen 2007, p.147 33 Vanhees 2006, p.9 34 Art 3.1 (1) and 3.3 (2) BTIP

11 that which any design which has been disclosed to the public prior to the filing35. Protecting designs by law has a twofold ratio, on the one hand the innovation ratio, the designer should feel stimulated to create visually appealing new designs, and on the other the communication ratio, which serves the purpose of the design to distinguish the products from one manufacturer from the other36. Lookalikes in this sense means products that use the design of a product, producing the same outer appearance as the registered design, making no different overall impression on an informed user. This conflicts with both ratios mentioned before, as the incentive for a designer to create appealing new designs would be lost if his designs would be copied effortlessly by others, as well as the distinguishing power would be lost.

2.3.3 Material design law, acquisition of a design right Until the mid 1970’s no specific legislation on the protection of designs existed in the Netherlands. However the Netherlands had acceded to the “The Hague Agreement Concerning the International Deposit of Industrial Designs” of November 6, 1925, it had not executed the obligations from that treaty to create a legislative body of protection for designs. Until the first uniform Benelux act of Drawings and Designs of 1975, the maker of a design had to rely on copyright law or civil (tort) law when his or her design would be unrightfully copied by others. However the Dutch Supreme Court filled this void by explicitly including design under the “slavish imitation” doctrine, in the Hyster Karry Krane37 case of 1953. The slavish imitation doctrine has since fulfilled the role of design protection legislation until 1975. The uniform Benelux act of Drawings and Designs of 1975, has in its turn been replaced by the Benelux Treaty on Intellectual Property (BTIP) in 2006 that takes the place of national legislation. To obtain a design right on national level (i.e. Benelux), it suffices to file a depot at the Benelux Office for Intellectual Property, BOIP, which will result in a design registration if all conditions mentioned in the articles 3.1 to 3.4 BTIP are met. The actual creation date of the right is the date of the registration in the Benelux Design Register. Besides the Benelux registration there is the Community Design, which is registered at OHIM in Alicante. For both the aforementioned design registrations the duration is 5 years, but a design registration can be renewed for 4 times, so in total 25 years of protection is offered38. Finally, by way of one international request, residents of countries which have signed to the Union treaty of Paris can deposit an international design registration at WIPO in Geneva.

2.3.4 EU and international system of design rights With the EC directive 98/71/EC a big step was made making a European design law, and this resulted in a limited harmonization of member states’ national design laws in Europe39. However with the council regulation (EC) no 6/2002 of December 12 2001 on Community Designs (CDR or Community Design Regulation) the Community design was introduced, which became a new form of design right with unitary character, equally effective throughout the community40. These international systems offer essentially the same protection.

2.3.5 Scope of protection According to the BTIP the holder of a registered design has an exclusive right to use his drawing or design. He can, according to article 3.16 (1), challenge use, where use can mean a number of things, some of them are specified (but not exhaustive) in article 3.16 (2) BTIP, and may include the manufacturing, selling, importing and exhibiting of a product in which the registered design is incorporated or that the design has

35 Art 3.3 (2) BTIP 36 Holzhauer 2005, p.367 37 HR Hyster / Karry Crane 38 Gellaerts 2008, p 32 39 Bainbridge 2010, p.561 40 Bainbridge 2010, p.562

12 been applied to, producing the same outer appearance as the registered design, or not making a different overall impression on an informed user. There are limitations to this protection, laid down in article 3.19 BTIP. Amongst other things reproduction of a registered design privately and for non-commercial purposes41, i.e. with regards to hobby, study, education or science, do not constitute an infringement according to article 3.16 BTIP. In cases of lookalikes, where the registered design of one’s product is being imitated, the producer of the original product can seek legal protection by means of the design protection in article 3.16 BTIP, provided the model was duly registered.

2.4 Copyright law 2.4.1 Ratio The field of copyright deals with the legal protection of the rights of creators and their creations. The ratio for protecting the rights of creators lies in “the need to stimulate and foster the individual creativity of men and women and the need to make the results of that creativity available by disseminating it on the widest possible scale.”42 At the basis of copyright lies the notion that it is contemptible to profit from the works of others without doing an effort43, i.e. a creative mind should be encouraged to create and be protected from other people, eager to reap the benefits of the creator’s work without doing any effort themselves, by copying his work and passing it off as their own44. Copyright protection also has a prominent place in the universal declaration of human rights, the EC treaty and the ECOSOC treaty.

2.4.2 Subject matter, acquisition of the right Article 1 of the Dutch copyright act of 1912 (DCA) states that “Copyright is the exclusive right of the creator of any work of literature, science or art to publish or multiply his work”, where work has to be interpreted in a non-material sense, as the creation of the mind, which manifests itself in a tangible form45. The “Work” is the central element of copyright46. Copyright protects works, such as a picture, a painting, a drawing, a work of sculpture, a novel etc. The term “work” was more closely defined by the ECJ in the Infopaq case: In order to qualify as a work, there has to be “an intellectual creation of the author able to give expression to his creative spirit47”. A single word can never be a work, but eleven words collected and arranged in a specific order can be, as long as there is a creative activity of a mind involved. These works are the result of a creative process that materializes in tangible objects; however the tangible appearance (the expression) of the work is not the object of copyright protection, the intangible creation of the mind is48. There are no formal requirements for copyright to come into existence, no registration is necessary, copyright exists with the creation (the first expression) of a work49. Copyright is temporary and expires after a certain time. Articles 37 to 42 DCA regulate the duration; the protection period is 70 years after the death of the author, when the holder of the copyright is a legal person this period is 70 years after the work has been made , according to article 38 (2) DCA. Article 8 DCA regulates how a copyright works if a legal person is entitled to the copyright to a work. A legal person employing a natural person may own the copyrights, when the natural person creates a work as part of his duties within the employment situation50, and the legal person publishes the work as his own, without mentioning of the natural person(s) who actually created it. The fact that a legal person can be copyright holder and the

41 Bainbridge 2010, p.571 42 WIPO 2008, p.151. 43 Bainbridge 2010, p.33. 44 Bainbridge 2010, p.39. 45 Gielen 2007, p. 411. 46 Gellaerts 2008, p.39 47 ECJ 16 July 2009 C-5/08 (Infopaq International A/S. v. Danske Dagblades Forening) 48 Spoor, Verkade, Visser 2005, p.60 49 Gielen 2007, p.413. 50 Gielen 2007, p.433.

13 broad definition of the term “work” in the context of copyright makes it possible for a producer of goods to invoke copyright when dealing with lookalikes.

2.4.3 Scope of protection There are more than one rights comprised in general copyright, such as reproduction, performing rights, broadcasting rights, but the one relevant for this thesis’ subject is the reproduction right, the right of the owner of a copyright to exclude others from making copies of his protected work. “The owner of the copyright in a protected work may use the work as he wishes – but not without regard to the legally recognized rights and interests of others – and may exclude others from using it without his authorization.”51 Limitations made by law to the copyright protection are defined in the articles 15 to 25a DCA, based on the freedom of information and the protection of personal privacy. In the context of this thesis, I will not further elaborate on these.

2.4.4 EU and international system of copyright The Copyright Directive (Directive 2001/29/EC on the harmonization of certain aspects of copyright and related rights in the information society) also known as the Information Society (InfoSoc) Directive gives some general rules on copyright law, which have been implemented in the DCA52. On supranational level the Berne convention (BC) and the Universal copyright Convention (UCC) can be mentioned. Both of these have no direct meaning in the context of this research, so will not be dealt with further.

2.4.5 What this regime means for Lookalikes After reading the above paragraphs copyright may not come to mind first when thinking of legal protection in a lookalike case, as trademark and design right seem to be the regime of choice for conflicts between producers of consumer goods. However copyright does play a role in cases of lookalikes. When an identical or similar sign is used by a lookalike, but trademark law does not apply, for instance if no trademark was registered, a copyright claim might still stand a chance. The same holds true in case of a design. A lookalike product can produce the same outer appearance, but the producer of the original has not registered a design, or the product allegedly being imitated predates the introduction of design registration regulation. In both of the above examples, if the product can be regarded as a work in the sense of copyright, the lookalike can be regarded as an unauthorized reproduction, and can possibly be tried upon copyright infringement. In order to invoke copyright law to protect against lookalikes it is first of all important to establish that the product allegedly being copied can be regarded as a work in the sense of copyright, for which it needs to be established that the work is original and has a distinctive character53, and is the result of a creative effort. This is sometimes referred to as the “work test”54. Subsequently in order to establish if a newer work forms a copyright infringement it is necessary to compare the overall impression55 of the both of them, to see if the later work is derived56 from the older. The products do not need to be identical in order to constitute a copyright infringement, as article 13 DCC includes imitation in altered form in the definition of the act of reproduction. In Dutch law legal protection of a copyright dealt with via civil law based on a wrongful act57.

51 WIPO 2008, p. 155. 52 Holzhauer & Gellaerts 2011, p. 31. 53 Gellaerts 2008, p.44 54 Spoor, Verkade, Visser 2005, p.65 55 HR Deceaux/Mediamax 56 HR Heertje/Hollebrand 57 Gielen 2007, p. 495

2.5 Unfair competition 2.5.1 Introduction It may come as no surprise that the free play of market forces is not always the best way to achieve fairness in competition. Just as likely as a sports gathering with a competitive aspect, played without any rules and a neutral referee enforcing these, will get out of hand. Especially when there are substantial benefits to be gained, some will resort to unfair play to have better chances. Likewise a market with no enforcement mechanism for competition is unlikely to remain a fair playing field. When gains are made with unfair dealing, all other market parties, competitors, consumers, will suffer a loss. A certain degree of regulation and enforcement thereof is likely to be necessary. In the trade markets the mechanisms of antitrust law as well as unfair competition law both are aimed at guarding the efficient operation a of market economy.58 By the efficient operation of a market, the market functions better.

2.5.2 Object, ratio and functions of unfair competition regulation Competition is good, and competition on the market will result in better products for better prices. The ratio of unfair trade regulation is to create an optimal functioning of the market, where all parties benefit because competition is fair. Protection against unfair competition has been recognized as forming part of industrial property protection for well over a century59, as was formalized already in 1900 with the addition of article 10bis in the Paris Convention for the Protection of Industrial Property. This article obliges its member states to assure effective protection against unfair competition, where any act of competition contrary to honest practices in industrial or commercial matters constitutes such an act. Countries have transformed provisions from this and other competition regulations into their various national laws. Unlike the proactive system of industrial property right, like trademarks and design rights, where an exclusive right is granted to a party, unfair competition law is reactive, offering a remedy against unfair dealing by competitors. The remedy for rights holders against acts of unfair competition is generally provided via an unlawful act in civil law. There is a possibility for national competition authorities to enforce against acts of unfair competition via administrative fines, but that is outside the scope of this thesis as it is not initiated by the party whose product is copied by a lookalike, but a public authority.

2.5.3 Subject Matter, the “slavish imitation doctrine” in the Netherlands In the Netherlands the civil code article 6:162 DCC, the general unlawful act provision, is used to counter act of unfair competition. As mentioned in this chapter, before the national design regulations came into existence, the slavish imitation doctrine had developed in the Dutch Supreme Court’s case law60 as a specific variant of the unlawful act, usable to counter unfair competition by way of copying the specific design of a successful competitor’s product. The mentioned Hyster case was followed by a series of cases with similar reasoning by the court, consistent in the court’s view that the regime of unfair competition via slavish imitation does not call into life a monopoly on a specific design, like is the case with a registered design, but it targets the unnecessarily confusing behavior of the alleged infringer61. This case law implies that slavishly imitating is in itself not unlawful, because it does not constitute a breach of the duty of care, unless there is an unnecessarily confusing behavior that can be attributed to the infringer. This requirement of attributability is then further specified into a series of factual criteria, which have been developed in the Dutch Supreme Court’s case law, and form the elements necessary to underpin a

58 WIPO 2008, p.246. 59 WIPO 2008, p. 243. 60 Hoge Raad, June 26, 1953, NJ 1954, 90 with annotation HOUWING – (Hyster Karry Crane). 61 Holzhauer 2005, p.393.

15 breach of a duty of care, as is required for a Dutch civil tort claim, according to 6:162 DCC62. It carries too far however to go into detail on this.

2.5.4 Scope of protection The standard reasoning of the Dutch Supreme Court seems to be that it is in principle allowed to reap the benefit from the effort and the costs that a competitor has made in order to build up a reputation for his product or undertaking, with the exception of the specific cases regulated in IP law and competition law, and taking into account the specific limitations of protection that are defined in each regime respectively, including registration requirements, and duration of the protection of the acquired right. However there are still many acts of competition that are deemed unwanted other than the direct infringements of an intellectual property right.

2.5.5 What this regime means for Lookalikes The slavish imitation doctrine was already mentioned in the above paragraphs covering the design law regime; it is actually sometimes referred to as the unwritten predecessor of design law that just was not obsolete after it being replaced by design law63. In fact, together with copyright the unfair competition / slavish imitation applies to many cases of lookalikes. What is important however that the different procedural approach and heavier burden of proof needed for setting up an unfair competition / slavish imitation claim, forms the limitation to the scope of protection in this legal regime.

2.5.6 “Crossing the beams" As becomes clear from the above paragraphs the legal regimes have overlapping scopes of protection to a certain extent. There can be cases in which two or more tools fit. Cases in which both a copyright and a trademark right or design respectively can be used to counter the lookalike, as well as cases in which both design right and unfair competition through “slavish imitation” are possible and actually do occur. In practice for a company like Philips, what eventually matters is that it can take action against a lookalike of one of its products, based on whatever IP regime that fits the case.

2.6 Conclusion In this chapter the different IPR regimes that serve to protect the brand holder against lookalikes have been reviewed.

Firstly the law of trademarks, that protects signs that serve to distinguish or individualize goods, and enables manufacturers to accumulate goodwill, has been dealt with. The ratio of trademark protection is found in the need for an undistorted functioning of the market. This ratio has in the global, European and Benelux levels of trademark protection law been effectuated by precisely defining how a trademark can be registered, what can be registered as a trademark, and by limiting the scope of protection and the criteria of infringement. The duration of the protection however, if renewed on time, is unlimited. By creating a system that regulates the ways of acquiring a registered trademark, it is prevented that trademarks are claimed randomly and the protection from it is abused just to hamper fair competition on one hand, and to protect trademark holders from others abusing (the goodwill accumulated in) their trademark on the other.

Secondly, the law of designs was reviewed, which deals with the ways to protect the outward appearance of a product. The outward appearance is what the public sees and what distinguishes one product from

62 Holzhauer & Gellaerts 2006, p.159. 63 Visser 2004, p.31

16 another at first glance, which is the communication ratio of protection. Besides that there is the innovation ratio of protecting designs, which is to encourage designers to create and deposit new designs This has led the legislators to create design protection law that regulates how a design should be deposited, what can be registered as a design, it requires the design to be novel and have individual character, and that limits the duration of a design to a maximum of 25 years. By limiting the time a design can be protected the legislator prevents that a design remains exclusive endlessly. By requiring novelty he prevents that parties can obstruct competition by registering a design similar to an earlier design. By way of the design protection regime the holder of a design has the exclusive right to use it. He can prevent or oppose infringing use. However there are limits to the acts that form an infringement. Use for study, hobby, education or science are not deemed infringements.

After that the legal protection of copyright was reviewed, of which the ratio is to protect the creativity of individual spirits, and enables the works resulting from this creative effort to be disseminated in a regulated way. This ratio has led legislators to create a system of copyright in which no formalities exist to obtain a copyright, other than creating the work, and that limits the duration of the copyright to 70 years after the creator’s death. The copyright materializes in a series of rights to the holder, amongst others to exclude others from perform, broadcast or reproduce the work. By giving these rights to the rights holder, this individual can control the way his work is disseminated and enjoy (parts) of the proceeds that dissemination of his work might yield. By limiting the duration of the right to 70 years after his death, the work can be preserved for society and preformed by others.

Finally the laws of unfair competition were dealt with, in which field of law for the subject of this thesis brand holders can seek protection from unfair competition amongst others from slavish imitation, by way of general tort law. The ratio for this category of regulation is that all market parties benefit from free competition, but that competition should be kept fair, so no party can obtain an unjust advantage. This ratio has developed, in the Netherlands mainly through case law of the Supreme Court, into a regime of protection in which a brand holder can counter unfair acts of competition that would stay outside the scope of the other mentioned regimes. Contrary to the other regimes there is no exclusive right obtained, but a way is offered to counter unfair practices from competitors through civil tort law. Protection from this regime requires a greater effort of the plaintiff, because a claim based on slavish imitation requires a different approach to establish a ground for an unlawful act, but that goes beyond this thesis’ purpose.

On national level, European level and the level of international law (treaties) legislators have created ways of legal protection for brand holders, via trademarks, designs and copyright. These different intellectual property regimes together with an unfair competition regime have been reviewed in this chapter. All of these regimes have a different ratio, which results in different schemes to obtain protection against different forms of lookalikes. This can result in a situation where certain types of products are in some cases legally protected from lookalikes, and some cases are not. How this plays out for a company like Philips is the subject of the case study which is presented in the next chapter.

3. Case study at Philips

3.1 Introduction In this chapter I will present the results of the case study research I have done while working at Philips IP&S, in order to answer the second sub research question: “Does consumer electronics brand holder Philips consider the legal protection against lookalikes effective in practice?” It consists of a small quantitative analysis64, in order to find out how the amount of reported lookalikes of Philips products is developing, followed by a broader qualitative research65, with the purpose to explore and describe how the phenomenon is experienced within Philips66. The latter part is done by way of interviews with selected Philips employees directly involved in these issues. A copy of the complete questionnaire is added in annex I. As required by the methodological handbooks for qualitative research67, this chapter contains just a representation of the results from the research, analysis interpretations and conclusions are drawn in chapter 4.

3.2 Research methods and selection of respondents The type of research I have used for this chapter is an exploratory case study68, which has quantitative and qualitative elements. For the quantitative part I have made a download of all records of reported lookalikes in Philips IP&S’s database over the period 2001-2011. The total of the reported cases of lookalikes have with the use of pivot tables in Excel been divided into a yearly total, resulting in a bar graph representing the total of the reported cases of lookalikes over the last decade in the IP records of Philips IP&S per year.

For the qualitative research I have used interviewing as data collection method, as interviews are a good way to gather insights and understanding from the people involved. These interviews gave me an impression of what the respondents consider relevant and important. As I had to visit the respondents in their offices, it also provided an extra opportunity to see examples of lookalikes that were gathered, and get further information on the legal actions that were initiated against them. In the course of the research I have conducted 17 interviews with Philips employees dealing directly with lookalikes in the market. 7 of the respondents were IP counsels working at Philips IP&S, the remainder were “business contacts”, Philips employees active in sales, marketing management, purchasing and design of various Philips products. 15 of these interviews I have conducted face to face, one via videoconferencing and in one case the questionnaire was sent by email and returned to me completed. I have used the form of a semi structured expert interview69 for which the interviewed candidates were recommended to me on basis of their knowledge of the phenomenon. This complies with the selection method known as purposive sampling70. The IP counsels that were interviewed are responsible for trademarks and designs and handle all sorts of infringement cases as their daily work. They have a global responsibility, but the focus in my research was on the EU (Examples of cases outside the EU serve as illustrative). Besides that they handle all of Philips product ranges, so a fairly complete picture of the phenomenon as it affects Philips was given.

By these interviews I have tried to get an answer to the second sub question of the thesis. This is itself divided into a set of topics in the interviews, in order to paint a complete picture, which was also the

64 Baarda 2009, p.38 65 Baarda 2009, p.29 66 Ritchie & Lewis 2003, p.28 67 Baarda 2009, p.147 68 Baarda, de Goede, Theunissen 2005, p. 112 69 Baarda, de Goede, van der Meer-Middelburg (2007), p. 19 70 Lawless, Robbennolt, Ulen 2009, p.149

18 request of Philips. The sub topics are 1) does the phenomenon affects this company’s products and to what extent; 2) how the alleged lookalikes are discovered & reported to the company; 3) in which markets and channels it exists; 4) in what way Philips responds to reported cases; 5) if the action taken is considered successful; and finally 6) if the forms of legal protection offered are deemed adequate for Philips, in the respondents’ perception. In each topic I have placed a copy of the interview questions; where questions had pre determined answers they are shown in a table with the number of times the answer is chosen tallied in the column beside, and when applicable a summary of the comments made by the respondents is added below. As recommended in the methodological handbooks71 for qualitative research I have kept a logbook of every step in the case study, which is added as annex 2.

3.3 Are Philips’ products copied by with lookalikes? First the question needs to be answered if Philips products are subject to copying by lookalikes. In order to answer this I used data from the internal database of Philips IP&S. This database contains all Philips’ intellectual property assets. It has records of all of Philips’ trademarks and registered designs and every reported infringement, as well as all actions taken against it, are added to the database. A download was made from this database of the reported infringements in the period 2003-2011, from which the cases that constitute a lookalike were filtered, and the output is represented in a graph representing the total of reported cases per year. (There is no data before 2003, as this is the first period these infringements were recorded in a way that makes them identifiable as such). This gives the following picture:

Total of reported lookalikes per year 35

0 2003 2004 2005 2006 2007 2008 2009 2010 2011

In the last two years a total of 52 (22 in 2010 and 30 in 2011) reported lookalikes of a Philips product have been reported to Philips IP&S. The figures suggest that Philips’s products are indeed being copied by lookalikes, and that the amount of lookalikes of Philips’s products has risen significantly in recent years.

3.4 How big a problem does Philips think it has with lookalikes? To substantiate these figures with the views and experiences of the involved people within Philips, the first topic of the questionnaire is dedicated to establish the awareness of the problem with the respondents.

71 Baarda, de Goede, Theunissen, p. 304

Questionnaire part I

Topic: Awareness of the problem / extent of the problem

1. Would you describe parasitic copies of your business group’s products in the market as: a) Insignificant b) A nuisance, but not hurting business to a serious level c) A possible threat, best dealt with at some priority d) A serious issue, that needs attention within short notice e) An immediate threat that could hurt Philips total turnover if not dealt with immediately (explain) 2. Would you say that the existence of parasitic copies in your business segment has grown steadily / considerably / explosively in the last 10 years? (expand) 3. How much, in your estimation, would you say the activities of lookalikes cost your business in the last year

The first question is if the existence of lookalikes is noticed by Philips, and if so if it is seen as a threat to its products.

1: Would you describe parasitic copies of your business group’s products in the market as: IPC Business Insignificant - - A nuisance, but not hurting business to a serious level 5 1 A possible threat, best dealt with at some priority 3 5 A serious issue, that needs attention within short notice 2 7 An immediate threat that could hurt Philips total turnover if not dealt with immediately - - Note: For this question more than one answer could be chosen, so the added up total of the tallied answers exceeds amount of respondents. Some IP counsels that have different business groups entered 2 options, each for another part of their portfolio, and elaborated on the answer they chose.

Most respondents elaborated on their answers to this question. From these remarks the prevailing sentiment is that the phenomenon exists, and Philips is well aware of it, but it is not seen as a real threat to the business. In comparison with counterfeiting and patent cases the phenomenon of lookalikes has a much lower impact and therefore gets lower priority within IP&S. However respondents from the business seem to take lookalikes more seriously than IP&S respondents.

Next question aims to find out of there is a growth in the reported case over the last few years, as would be suggested by the graph above:

2: Would you say that the existence of parasitic copies in your business segment has grown IPC Business Steadily 5 3 Considerably 1 3 Explosively 1 1

Both the IP&S and the Business contact that answered “explosively” were referring to a specific product, namely the Philips “Living Colors” LED lights range, which is shown beside one of its lookalikes on the cover page. In this example Philips was the first to market with a totally new product. It took competition a little while to react, but now they have caught up. The amount of lookalikes like “The Moving Colours” offered in the various channels is said to exceed the amount of Philips Living Colors lamps sold, by now. Besides that extreme example a moderate growth is reported by most involved.

On the third interview question, “How much, in your estimation, would you say the activities of lookalikes cost your business in the last year” none of the respondents could or were at liberty to answer, so it is discarded.

3.5 How does Philips know about the lookalikes This topic in the interviews was intended to determine how Philips becomes aware of the existence of parasitic copies, how they are reported to Philips, and by whom, and how do these products end up in

Philips’ hands from all over the world, furthermore if the Philips professionals think they have a good view of the existing copies, or only a tip of the iceberg is seen, and if they feel the search should be intensified or not.

Questionaire part II

Topic: Monitoring and detection

4. In order to fight lookalikes, the lookalikes must have been detected in the marketplace, and the alleged alikeness reported to Philips IP&S. Which of the following statements most applies to the way parasitic copies come to your attention (if none applies, please give the correct answer beneath, more than one answer may apply) o Lookalikes of our product are reported to us by distributors, retailers or end users on their own initiative o Lookalikes of our product are reported to us by distributors or retailers, because we encourage (and reward) them to do so o Our employees are asked to keep an open eye, and we encourage them to do so o We systematically search for copies of our products ourselves, in all relevant markets o We hire a professional party to monitor all new competing products entering in the market, and evaluate every entrant 5. Do you think the above selected detection method, catches most of the parasitic copies in the market? 6. Are you planning to increase your level of monitoring and reacting to lookalikes in the next year, become more aggressive in responding to them? If yes, why? If not, why not?

First question of this topic is intended to find out how the existence of a lookalike is brought to the attention of Philips IP&S.

4: Which of the following statements most applies to the way parasitic copies come to your attention Lookalikes of our product are reported to us by distributors, retailers or end users on their own initiative 14 Lookalikes of our product are reported to us by distributors or retailers, because we encourage (and reward) them to do so - Our employees are asked to keep an open eye, and we encourage them to do so 11 We systematically search for copies of our products ourselves, in all relevant markets 2 We hire a professional party to monitor all new competing products entering in the market, and evaluate every entrant - Other, namely… 1* * many possible infringements are signaled by customs upon entry in the Union. Though customs do not make the differentiation between counterfeit and lookalikes, they are alert on any form of resemblance and simply notify Philips upon every suspicion.

In the comments by the respondents it is mentioned that distributors and retailers spontaneously report cases of lookalikes, as it seems they are quite eager to do so, either because the existence of lookalikes is costing them turnover, or as argument in price negotiations with Philips. Besides that it was mentioned that Philips employees who travel for their work often notice lookalikes on their trips, and report them. This is also encouraged by the so called “infringement detection award” program, offering an incentive for Philips employees reporting IP infringements, that are successfully countered. A link to this incentive is featured on the intranet portal page that every Philips employee sees upon logging onto internet from an office computer (see picture p.22). However a quick look at the awarded prizes shows that reported cases concern almost only technical IP infringements, granted patents or patents in application, and trademark or design cases have hardly been reported via this way.

Furthermore it was mentioned that Philips has a subscription to a so called “watch notice”, a commercial service, where a subscriber can enter a number of criteria (such as classes of goods, his own registered trademarks) and then receive an automatic alert if someone applies for registration of a resembling trademark at the Benelux or Community trademark registers. Finally for one specific product group that is particularly plagued by lookalikes (electric shavers) there is a full time employee dedicated to searching and investigating all kinds of counterfeits and lookalikes, however his actions concentrate on the Chinese market, where imitations of Philips electric shavers are sold in large numbers. Summarizing: almost all respondents see the sales channel, distributors and retailers, as well as Philips’ own staff members as the most important sources of information about lookalikes in the market. A structured mechanism in order to search and detect lookalikes for Philips’ entire range of products and brands seems not to be in place.

Next question is intended to measure the effectiveness of the used detection methods:

5: Do you think the above selected detection method, catches most of the parasitic copies in the IPC Business market? Yes 4 1 No 3 9

On this question the comments from the respondents vary from “we have no clue what is really happening” to claims that for a company of this size and with this geographic coverage, Philips has a reasonable overview of the playing field. People from IP&S, who have a global view, are more confident than the business contacts, covering a single product range or geographic market, that Philips has a good sense of what is going on with lookalikes of their product.

Next question is to find if in the mind of the involved Philips Intellectual Property counsels, the alertness, search intensity and responsiveness to lookalikes in the market ought to be increased, or not:

6: Are you planning to increase your level of monitoring and reacting to lookalikes in the next year, become more IPC aggressive in responding to them? Yes 3 No 4 * Question was only asked to IPC’s

Here the opinion varies from IPC to IPC, also depending on their product portfolio or geographic responsibility. Most would like to increase the level of vigilance, or change to a more structured approach, but all are aware of the fact that this depends on limitations in resources and capacity, and other IP issues, like counterfeiting and patent infringements have more impact and therefore a higher priority at corporate level.

3.6 Where do lookalikes turn up? In order for Philips to be able to successfully react to lookalikes it is useful to know if the lookalikes turn up in the mix with Philips product at the same points of sales, or in separate sales channels. It could mean a big difference in the chances and consequences of a legal action, if the retailer offering lookalikes is also a Philips reseller or if it is in a totally separate channel, like for instance a web shop.

Questionnaire part III

Topic: Channel

7. To your knowledge, where do these parasitic copies pop up? o In distribution- or retail channels that also carry Philips branded products o In other, parallel channels, where Philips’ product is not offered? (If this is the answer, skip next question) o Both of the above 8. When lookalikes arise in our own channel, do you think these are manufactured by, or on initiative of, Philips’ own retailers or distributors in that channel? 9. Is it a repetitive phenomenon, in other words, are always the same parties in the channel responsible for lookalikes (the “usual suspects”)

The question is if lookalikes are found in the same points of sale as Philips products or in separate channels:

7: To your knowledge, where do these parasitic copies pop up? IPC Business Mixed with Philips 2 4 In separate channels 2 1 Both 3 4

From answers and the comments it seems that most lookalikes emerge in the mix with Philips products, so in the same sales channels (combined on answers 1 and 3). The only exceptions (answer 2) come from respondents from specific business groups, “Oral care” and “Mother and child care”, in which cases the explanation was added that lookalikes were only ever found in online sales channels (web shops), where Philips itself is not present.

In the Oral Care category the known cases are replacement parts, the so called brush-heads of electric toothbrushes, parts that wear, and are meant to be replaced periodically. These exceptions set aside lookalikes of Philips’ products are found in the same sales channel as Philips’ own branded products, which seems consistent with the common practices of lookalikes in the Fast Moving Consumer Goods sector. The leading brand has to be called to mind in order for the lookalikes to be able to benefit from its reputation.

Subsequent to the previous question it is interesting to know where Philips thinks the initiative to market a lookalike product lies. Is it the points of sale, the distributors or (chains of) retailers, that take the initiative to offer a lookalike of the branded product and put it in their shelve, or are the manufacturers developing the lookalikes, and push these to the market?

8: When lookalikes surface in our own channel, do you think these are manufactured by, or on initiative of, IPC Business Philips’ own retailers or distributors in that channel? Yes 3 7 No 4 2

The answers vary per product category and per regional market. In the category of consumer luminaries in the northern European market, the respondents are of the opinion that the local retailers, lighting shops but especially the home improvement chains, are the main players in this field. They simply take an original Philips branded lighting product that sells well, send a sample over to their supplier in China, and ask them to make a similar product, specifying the design of the product as well as the layout of the packaging. The same picture arises from the category of consumer lifestyle: the strong multinational hypermarket chains that operate a discount / price fighter business model, like Aldi and Carrefour release an action flyer with a product looking much like Philips’. These are big companies, have an international presence with purchasing departments locally in China. They sell large enough quantities to invest in a custom product for their shop brand.

The last question of this topic in the questionnaire was intended to get some sort of idea what companies are typically involved in this way of doing business.

9: Is it a repetitive phenomenon, in other words, are always the same parties in the channel responsible for IPC Business lookalikes (the “usual suspects”) Yes 4 8 No - - Not clear / no comment 3 1

It falls beyond the purpose of this thesis to name the companies involved, however the general picture becomes clear. Typically the companies involved in lookalikes are larger chains of retailers that operate at the lower end of their specific sectors. For the lighting category this are mainly the chains of DIY / home improvement stores, for the consumer lifestyle products the hypermarkets and discount stores. For Oral care and Mother and child care the lookalikes are mainly found in the online sales channels. As a general line the sort of retail channels that are most involved in copying are at the lower end of the scale, were pricing is more important, but still the reputation of the A-brand has an added value that rubs off on the lookalike.

3.7 What is Philips doing about it? When a lookalike product has been reported to IP&S from and it is considered infringing, there are several possible courses of action directed at more than one possible parties. A reaction may target the point of sales offering the lookalike, the distributor or manufacturer of it. There are many options, but some of them may have sensitivities. It is possible that the retailer offering the product is also a customer of Philips, and to immediately drag a business relation to court for an infringement, with possible publicity, is perhaps not desirable. The following topic from the questionnaire serves to get an impression on how Philips has responded to alleged parasitic copies, and if the reaction was considered to have been successful or not. For this part of the research, only the IPC’s responses are taken into account, as the decision to respond is at their discretion.

Questionnaire part IV

Topic: Actions taken

10. Did your business group initiate / take action regarding these parasitic copies o Yes, every time when a copy was detected o Most of the times o Sometimes o Never 11. Were actions taken targeting the manufacturer of these lookalikes? 12. What character did the actions taken against the manufacturer by your BG have?? o Warning letter o Cease and desist order o Infringement procedure o Court actions 13. Did the action targeting the manufacturer yield the desired result, i.e. direct removal of the lookalikes? o Yes in all cases o In some but not all cases o No, really not 14. Were actions taken targeting the points of sale of these goods? 15. What character did the actions taken against the points of sale by your BG have?? o Warning letter o Cease and desist order o Infringement procedure o Court actions 16. Did the action targeting the retailer yield the desired result, i.e. direct removal of the lookalikes? o Yes in all cases o In some but not all cases o No, really not 17. Was any financial compensation won, either civil damages, or penalty 18. If no action has been taken, what is the reason for that? o low estimated chance of success o no faith in legal system (if this answer is chosen, please specify the country involved) o not wanting to jeopardize relationship with retailer/infringer o Other, namely:

In order to find out if Philips usually takes action in response to reported lookalikes, the following question was asked

10: Did your business group initiate / take action regarding these lookalikes IPC Yes, every time when a copy was detected 4 Most of the times 1 Sometimes 2 Never - No comment -

IPC’s commented that at least every time a lookalike is reported, it is documented and recorded in the internal database, after which it is decided at IP&S whether Philips should respond or not. The first condition is if there is an intellectual property right, to base action upon. If yes, the decision to respond largely depends on the business unit. Besides anticipating the legal feasibility, a cost/benefit consideration is always made, for instance if a low margin, low volume or otherwise lower priority product is imitated, it might not be worth going to great lengths fighting over a lookalike.

In order to know if the producer of the lookalike is targeted in response, the following question was asked:

11: Were actions taken targeting the manufacturer of these lookalikes? Yes 3 No (or not primarily) 4

From the comments it becomes clear that in cases of lookalikes (as opposed to counterfeits) the focus lies on the point of sales, the manufacturer is not the primary target. The manufacturer can only be addressed if they’re identified, but especially when lookalikes turn up in the form of shop brands, by definition of the term “shop brands”, the initiative lies with the retail chains themselves. However if the manufacturer is identified and still making the alleged lookalike at the time actions are planned, it is probable that also the source is targeted in order to end production and prevent more lookalike product from reaching the market.

Next questions identify the legal actions taken against manufacturers, and their perceived effectiveness.

12: What character did the actions taken against the manufacturer by your BG have?? Warning letter - Cease and desist order 1 Infringement procedure - Court actions - All above 4 Manufacturer not targeted 1

13: Did the action targeting the manufacturer yield the desired result? Yes in all cases 2 In some but not all cases 4 No, really not -

In comments all IP&S respondents emphasized that Philips will only start legal proceedings against producers if there’s a realistic chance of winning. Hence success ratios of started legal actions are quite good, however it can still be doubtful, depending on what country/jurisdiction the legal action was started in.

The next series of questions is in order to establish if the points of sales where the lookalikes surface are targeted with legal reactions:

14: Were actions taken targeting the points of sale of these lookalikes? Yes 4 No (or not primarily) 2

From comments it is noted that primarily large chains of shops are addressed with legal actions, rather than stores. Examples were shown to me including the obvious lookalike cases like the “moving colours” and “wake-up light” lookalikes marketed by Dutch discounter chain Blokker. Also the many web shops offering lookalike replacement heads are targeted for infringing use the Trademarks Sonicare or Philips.

Next questions identify the legal actions taken against points of sale, and their perceived effectiveness.

15: What character did the actions taken against the points of sale by your BG have?? Warning letter 1 Cease and desist order 2 Infringement procedure - Court actions 3 All above 1 Not applicable -

16: Did the action targeting the retailer yield the desired result, i.e. direct removal of the lookalikes? Yes in all cases 5 In some but not all cases 2 No, really not -

Here it is noted from comments that when taking action against points of sales which are also Philips’ client careful consideration has to be made as to what legal means to employ. In order not to disturb a profitable business relation with a retailer, sometimes only a warning letter is sent, after which parties sit down come to an amicable settlement. Using heavier legal means with the risk of losing a business relationship is avoided.

Finally, the question was if a legal action by Philips, besides removal of the alleged lookalike, has ever resulted in financial compensation:

17: Was any financial compensation won, either civil damages, or penalty Yes 3 No 4

Respondents commented that in cases when lookalikes resulted in a court case, sometimes a compensation was claimed and awarded, limited to the legal costs of the proceedings, but not likely damages or otherwise significant amounts. They added that it is never really the goal of Philips when going to court over a lookalike, to get financial compensation, but just to stop the lookalike. All agree that Philips’ focus should be on innovation, not on fighting over lookalikes in court.

18: If no action has been taken, what is the reason for that? low estimated chance of success 2 no faith in legal system (if this answer is chosen, please specify the country involved) 1 not wanting to jeopardize relationship with retailer/infringer 2 Other, namely: 4

Option 2 (no faith in legal system) was chosen once, and the country involved was Italy. Under the 4th option (Other) it was added by one IPC that sometimes the commercial departments of Philips seem uninterested to go after lookalikes, as they see counterfeits as the bigger problem. Furthermore it was mentioned that in many cases the quality of the lookalike was so much inferior it could not be regarded as a serious threat, or that the Philips product being imitated was already at the end of its lifecycle, and was to be phased out soon. Most considerations not to act upon a reported lookalikes lie in cost benefit balancing, and finally sometimes the party through which channel the lookalikes is offered is such a big client that Philips chooses not to seek a confrontation in order not to jeopardize an otherwise mutually beneficial partnership with this company.

3.8 Is the available legal protection seen as adequate

Questionnaire part V

Topic: Opinion on legal protection

19. Do you believe that the (lack of) harmonization of national laws in this area presents a problem? 20. Do you feel the complete system of protection offered by national and harmonized community law is (in)adequate to protect brand owners from parasitic copying?

The final interview topic aims to find out if Philips, or at least the Intellectual Properly counsels involved in this field, considers the system of legal protection adequate for protecting Philips’s products against lookalikes.

In order to know if according to Philips there lays a problem in adequate protection against lookalikes in the EU countries, due to different national legal systems, I asked the following question:

19: Do you believe that the (lack of) harmonization of national laws in this area presents a problem? Yes 1 No 6 This being the most important question of the interviews, directly relating to the second sub question of the thesis, I have verbatim-quoted the comments from IP counsels 1 to 7.

IPC1 is responsible for high-end medical systems, which have until now hardly been affected by lookalikes. In the past this counsel has had cases with other product groups, but in other regions (Middle East/Africa), where legal protection is limited and, if at all, only effective in counterfeit cases.

IPC2 is mainly responsible for consumer and automotive lighting products. He has dealt with many lookalike cases, and is of the opinion that “the European Legal systems provide a good basis for Philips to effectively counter lookalikes. A player like Philips can afford to hire the right law firms that can make a lookalike case stick in court. Differing a bit between countries, the European legal systems (the Northen European more than the southern) have a sufficient level of protection for the brand holder.”

IPC3, responsible for domestic appliances, and sees many IP infringements, including lookalikes, especially in the well known Senseo (coffee machines) range. She states that: “It would definitely help if the rules are applied in the same way all over the EU. This would save a lot of time in forum shopping, i.e. thinking about in which country to start proceedings, based on the expected chance of success. At least the definition of what is and what is not a lookalike should be the same across Europe, allowing Philips to better weigh their chances when starting legal actions. […] Especially the difference between for instance the UK and Germany is very large, but that is inherent to legal culture, where the UK is very much anti- monopolistic and free competition oriented, and Germany is very strict on protecting IP and unfair competition.”

IPC4, whose product group is Oral care (electric toothbrushes), says that: “European trademark and design law are in principle harmonized, and interpreted conformably. There is no problem in that. When the enforcement directive is implemented, there should be enough legal protection. Trademark and design regulations and the unfair trade practices directive along with general tort law 6:194 DCC, should be enough. However the business should enforce far more aggressively, and make better use of the legal ways”

IPC5 does however see a problem with harmonization, in his case experience he finds that: “Especially in Italy we have been confronted with this. We have seen cases in which we have actually won the infringement law suit against the manufacturer in China, after which sales of the product involved has been forbidden there, only to see the same goods turning up in Italy, where a local judge ignores all previous proceedings, and allows it to be sold.“

IPC6 who is a senior IPC and has had much experience with litigation in lookalike cases, also with his previous employer, finds that “Harmonization of the system of legal protection across Europe is good, and does not pose a problem, but from Philips point of view, as a company that is active in all countries of the supposedly harmonized common market, it is surprising to see that the same case can have an opposite outcome between European countries. It is supposed to be a level playing field, especially in designs, but it is not. The same design infringement is interpreted differently by every judge, and a case can have the opposite outcome in another European country. Although design and Trademark law are European harmonized law, the way the actual lookalikes are judged differs very much per country, therefore the effectiveness of legal protection is different, and that is not how a harmonized system should work. Especially for players that operate cross border that is a challenge. So the system of IP protection itself may be fine, but the problem lays in the fact that courts rule differently per country.”

IPC7 has until recently been working in China. He has not yet had a chance to get a full picture of the current legal field, and did not comment on this question.

20: The complete system of protection offered by national and harmonized community law is inadequate? Yes 1 No 6

IPC1: “No, to my experience the European and member states’ legal systems are well developed, especially compared to other regions, and procedural law quite well, it works in advantage of a party like Philips, that manages its IP proactively”

IPC2: “Harmonization by for instance the unfair competition directive is effective, however it can be difficult to effectively use it due to the way a directive is implemented in national law.”

IPC3: “No, not really. The system is quite adequate, on the condition that the company seeking protection did their homework. If they registered their IP well and timely, and manage their IP portfolio well, the current system of legal protection is most adequate, and works in favor of A-brands, at least for companies like Philips. It however requires the A-brands to pro actively manage their “IP Position” well, i.e. their entire strategic portfolio of trademarks, designs and patents, to take full advantage of this legal system. However if a case gets to a level where litigation is sought, there is a large effort involved in these proceedings, and the business already looses patience, wants to move on, they do not care that much about the lawsuits.”

IPC4: “No, European trademark and design law are sufficient. However the business often doesn’t show the guts to use it. Our legal system is a dream come true, compared to the far-east, where on IP field the world is basically a jungle.”

IPC5: “The system itself is fine, the OHIM design and brand registration in principle work well, so now we should take advantage of this by effectively using it, both preemptively, so by registering designs and trademarks well and in time, as reactively, taking action on basis of the protection offered.

IPC6: “The system as it is offers adequate protection. However the case by case approach by the judge is the weakness of the system. See the AH / Unilever case. For unfair competition the following does not apply, but the trademark and design laws require in case of a lookalikes type of infringement cases, that every count of an alleged lookalike must be judged on its own merits. So if you take the AH/Unilever case where there is an entire range of A-brands’ product copied by the shop brand, the court must judge every jar of peanut butter or bottle of ice tea separately, to see if there’s a likeliness of confusion, and it cannot take into account that the same retailer is doing the same trick with dozens of A-brand products. In many other fields of law there is a system where cases accumulate, like in criminal law with “three strikes – out”, or the points deduction on a driver’s license, which will discourage a repeated offender. This might be a bridge to far for IP law, but if you ask me what the weakness of the system is in this respect, this will be it. A company might be systematically parasitic copying A brands products, but every single case is judged separately and the activity is never judged as a whole.

So how is it possible that a retailer blatantly copying 20+ products of an A brand, gets off the hook in 17 of the 20, and not a word is said about the entire range of parasitic copies, so the whole case. This is how trademark and design law works, and it’s ineffective for parasitic copying72.

A good judge might take a somewhat holistic approach, and after seeing 10 counts of parasitic infringement understand that it is a systematic approach, but the system is not devised this way, and he must separately regard and motivate if there is an infringement for every original/copy combination.

This plays in the hand of the copycats, they will subtly take several key features, enough to just subtly create an association with the A-brand, but not enough to be successfully challenged with a design/trademark/copyright infringement. And when the affected brand holder reacts, they know the case will not be regarded as a whole, so the copycats stand a good chance of getting off the hook with most of the products, even when it is obvious the whole range of product from the shop brand is a shameless copy of brand A’s range. If the cases would in some way be allowed to add up, regard them as a class as it were or at least with each other, some of the individual alleged parasitic copies, that now only but reach the threshold, would be judged otherwise.

So for an isolated case of a lookalike, the legal protection is not inadequate, but the cases where a copycat systematically copies tiny parts of one A-brand’s trade dress, the copycat is actually helped by the system as it is set up today.”

IPC7: “From a distance these harmonized laws might work as one system of protection, but the way they cases are interpreted by the local judges can be completely opposite. In fact the system is adequate but the enforcement possibilities are inadequate, or at least too differently interpreted country by country to be able to anticipate your chances of success.”

72 Note: The concerned IP counsel was previously employed at Unilever, and was personally involved in the mentioned Albert-Heijn/Unilever case. His remarks on the item by item approach in trademark infringement cases was made based upon his experiences in this case at his previous employer. Though making a very interesting point on the adequateness of the legal system in lookalike case, it is not a problem that Philips was ever confronted with, and therefore bears no relevance for this research.

3.9 Wrapping up the case study In this chapter the findings from the exploratory research into the phenomenon of lookalikes of the products of Philips have been presented. From interviews with the involved professionals both from the business groups and the Intellectual Property counsels I have learned to what extent Philips’ products are affected by lookalikes, how they are reported to Philips IP&S, in which channels they surface, how Philips responds to cases of lookalikes, or on what basis it is decided to respond or not to respond, and finally if the involved Philips professionals see the system of legal protection as adequate to protect their brand from lookalikes.

On an evaluating note, it needs to be said that after having prepared and done the interviews, the setup of this thesis has changed quite a bit, resulting in a different research question than the one I had started with. With the benefit of hindsight I would have taken a different approach to the interviews, resulting in a different questionnaire that would have allowed for a better legal analysis. Still these interviews had a very valuable outcome for me. They gave me a broad insight in the phenomenon of lookalikes in general, and in the way a company like Philips deals with this in particular.

The second sub question of this thesis can thus be answered, from the results of the case study research: According to the majority (6 out of 7) of Philips Intellectual property counsels the system of legal protection as it is offers adequate protection against lookalikes, however some shortcomings are noticed in practice. In the next chapter I will summarize and further analyze this outcome, and put it in context with the legal backgrounds of chapter two.

4. Case study analysis, putting it in legal context

4.1 Introduction In this chapter I will evaluate and analyze the results from the case study I have done into the phenomenon of lookalikes and how it is dealt with within Philips, and put these results into their legal context. In chapter 2 the framework of legal protection that serves to protect brand holders against lookalikes has been drawn, in order to answer the first sub question: “How are brand holders currently legally protected against lookalikes?” After this in chapter 3 the case study about lookalikes at Philips was presented in order to answer the second sub question: “Does consumer electronics brand holder Philips consider protection against lookalikes effective in practice?”

In chapter 4 these two elements will come together in order to answer the central research question, “Is legal protection against lookalikes adequate for A-brands holders in consumer electronics?” In order to do that I will evaluate in paragraph 4.2 how Philips deals with detection of, and enforcement against lookalikes in practice, and if in Philips’s experience the regimes of legal protection against lookalikes function adequately. This paragraph has the purpose to make clear what problems Philips faces in protecting its brand against lookalikes. In paragraph 4.3 I will look into the question which legal elements play a role in this, if they serve their purpose well in the eyes of Philips, and discuss what solutions could be suggested which would improve legal protection against lookalikes for a company like Philips. Finally in paragraph 4.4 I will take a closer look at the suggested improvements, and see if they are desirable or not and why. In paragraph 4.5 I will come to a conclusion.

4.2 Practical issues in Philips’ dealing with lookalikes Topics 1 through 3 of the survey deal mostly with the practical issues, like the awareness of the phenomenon of lookalikes within Philips, the ways of detecting the lookalikes in the market, the internal reporting to IP&S, leading eventually to IP&S’ decision to come into action or not, and the choices how and where to initiate a legal response. After that in topic 4 the IP counsels within Philips were asked if they see the complete system as adequate for protecting against lookalikes. From the responses to this topic I concluded that almost all (6 out of 7) of the questioned IP professionals find that in principle there’s adequate protection against lookalikes from the legal regimes of intellectual property and unfair competition, however some remarks were made on the way legal protection works in practice for Philips. Below the responses from the survey are evaluated per topic.

Topic 1: “Do we have a problem with lookalikes?”

From the survey it becomes clear that, though the number of reported lookalikes of Philips products has increased significantly over the last years, lookalikes are not perceived as the biggest of problem in the field of intellectual property by Philips, at least not by its IP professionals. The business contacts see more of a threat in them, which can be explained to some degree by the fact that business contacts do not know the exact difference between counterfeit and lookalikes and tend to see everything that resembles a Philips product as a knock-off of some sort. Besides a better understanding of the legal differences, the IP counsels have a worldwide responsibility for their product groups, and therefore have a better overview than a business contact, which is responsible for a specific product group or single geographical area. Still it is commonly believed within the company that counterfeits and patent infringements are a much greater threat to Philips’ business, and therefore IP&S’ attention and resources are allocated accordingly. Nonetheless Philips’ IP professionals are unanimously of the opinion that lookalikes will develop into a more serious problem, if not kept under control. Keeping it under control involves pro

32 actively managing the protection of the assets that are eligible for this under the intellectual property regimes, on which I will expand in the next paragraph.

Topic 2: “How do we detect the lookalikes?”

The detection and monitoring of lookalikes largely depends on the benevolence of business partners like distributors and retailers, as well as Philips staff, who are each with their own reasons motivated to report cases of lookalikes found on their way. There is no structured detection mechanism for lookalikes in place, other than the “infringement detection award”, an incentive for Philips staff to spontaneously report found IP infringements on the intranet. This is rather different from the enforcement against counterfeits, where dedicated staff, or contracted detective agencies, together with customs authorities are involved, doing raids on facilities seizing and destroying counterfeit products and production matrices. Of course this is a different playing field, ruled by anti-piracy treaties and legislation, based upon criminal law and procedure, where much more pervasive detection methods are available, as opposed to lookalike cases that are mostly based on civil procedure. Nonetheless, thanks to the geographical spread of Philips’s offices and proactive attitude of its staff and business partners, the IP professionals are mostly confident that they have a good overview of lookalike products in the market, be it remarked that all would like to have a more structured way of reporting and further reaching investigative powers to accompany them. This topic describes the internal procedures, or lack thereof, within Philips to detect lookalikes. It’s relevance to law and policy making will be expanded upon in the corresponding part of the following paragraph.

Topic 3: “Where does the problem occur?”

Lookalikes are more likely to be found in the same sales channel as Philips’ original products, which makes sense because the original brand’s reputation must be known to consumers in order to “rub off” on the lookalike. It is noted from the survey that the origin of a lookalike product is often thought to be in the sales channel rather than at the manufacturers’ side. In practice, the retail channel sees a high demand for certain Philips product, and decides to offer a cheaper brand beside it, or introduces a shop-brand product, often resembling to a degree the look and feel of the A-brand product it is competing against. According to the respondents there are some “usual suspects”, like well known discount chains or hypermarkets (for domestic appliances) or DIY/Home improvement shops (in case of lighting products) that take the lookalike approach with their shop brand or one time action items. The other way around also happens, another brand manufacturer closely follows the product design of the dominant product in a certain segment, as is seen with Philips classic dry iron, that is copied by other A-brands. Finally, lookalikes are starting to emerge as a form of “counterfeiting light”, meaning that former producers of counterfeit (like the fake Philips electric shavers from China), having been confronted with the much heavier enforcement and sanctions on counterfeiting activities, evolve their product into lookalikes. “Where” can also be interpreted in a geographical sense, meaning in what country the lookalikes are caught. The legal implications of this topic are expanded upon in the next paragraph.

Topic 4 “What is Philips doing about it?”

Upon reporting of a lookalike IP&S always records the case in its IP database, regardless if any action is taken. Together with the sales management of the concerned business group it is decided to take action or not, taking into account the commercial sensitivities, like the relationship with the involved distributor or retailer, if it is also a Philips reseller. The business has the lead in deciding what form of action is taken. Possible actions are a warning letter, a “cease and desist” order, starting a civil procedure, and invoking a court ordered interlocutory injunction (in Dutch law referred to as “ex-parte”).

A warning letter is sent by Philips IP&S, stating that a lookalike was noticed, that Philips has exclusive rights to the imitated trademarks or design, and will enforce them upon ongoing infringement. It has minimal cost as no law firm is involved. Taking it a small step further Philips can resort to cease and desist order, which is issued on behalf of Philips by a law firm in the country of the concerned party, ordering the recipient to stop (cease) and keep from (desist) infringing on Philips intellectual property, giving a term within which to comply, or face legal actions. It has a higher implied threat, but also a fairly low cost. Thirdly Philips can start a civil law suit claiming an unlawful act based on a trademark-, design- or copyright infringement, or an unfair competition claim. In practice this will be a short proceeding (kort geding) in order to have a preliminary ruling on short notice, followed by a full suit (bodemprocedure) afterwards. The advantage of this remedy is that it will result in a binding court ruling on the alleged infringements, with which, if ruled favorably, further sales of the infringing lookalike can be effectively halted, and compensation of legal costs and damages can be awarded. However starting such proceedings is costly and usually time consuming, and while the case is pending the sales of the alleged lookalike still continues. Finally with the IP enforcement directive73 from 2004, the interlocutory injunction has been added to the arsenal of enforcement for intellectual property cases. This so called ex-parte order has been implemented in Dutch civil procedure since 2007 with article 1019e DCP. It gives the court a possibility to forbid any imminent infringement of an intellectual property right, without hearing the alleged infringer. With this ex-parte order a brand holder can stop a lookalike, before it reaches the shop’s shelves, and in some cases have the alleged infringing goods seized. This order can be invoked as long as it is a clear infringement of an intellectual property right, and irreparable damage is imminent to the rights holder. However the slavish imitation74 is not considered an intellectual property right in the Dutch implementation of this remedy from the directive, so it is applicable only to cases where trademark-, design- or copyright infringement is clear and irreparable damage is imminent.

Respondents were also asked if any substantial financial compensation has ever been claimed and awarded in a lookalikes case. It becomes clear from the responses that Philips does not often claim damages from lookalikes, other than the legal costs. The focus is on stopping lookalikes and persuading the manufacturers to stop their free riding upon Philips’ brand. The final question of this topic was intended to find out of Philips ever decided not to take legal action on a lookalike, and if so on what basis. Respondents indicated that first a consideration is made if the case is strong enough, i.e. if there’s a valid right to base a legal action upon. Sometimes the specific item of Philips’ trade-dress or design imitated by the lookalike is not protected in the country involved, and a claim will likely not hold in court. Also sometimes a lookalike is considered harmless or at least not causing enough harm to justify legal costs. Finally the relationship with the retailer is sometimes considered more important than the possible turnover lost to the lookalike.

Topic 5: “Is the legal protection adequate”

It is generally agreed upon by Philips’ IP counsels that the system of legal protection as it is in the Netherlands and surrounding (EU) countries offers adequate protection against lookalikes. It is noted from the survey that the system of intellectual property protection works particularly well for a company like Philips. Being an internationally established company and having a central Intellectual Property department, Philips is able to register and manage its designs and trademarks structurally. Besides that, the fact that Philips is represented in many countries makes it likely for a lookalike of a Philips product to be noticed, either by its own employees or by its business partners. On top of that, a company of this size has, or can afford to engage competent lawyers to deal with infringements of its Intellectual Property

73 EC Enforcement Directive, article 9 (1) and (4) 74 See paragraph 2.5

34 rights. However most respondents note that in practice, when it comes to law suits, enforcement against lookalikes based upon infringements of trademark law or designs is complicated, even within the EU countries. The EU system of trademark law and designs may be harmonized, but infringement procedures take place in national, not necessarily specialized, courts and local judges tend to view the similarities on which a claim is based differently in different countries (even so between different courts within a country). In the following paragraph I will elaborate on the challenges that brand holders run into when dealing with lookalikes.

4.3 What does this mean for IP legislation & policy In this paragraph I will analyze the topics from the survey as summarized in the previous paragraph, look for the legal component in each of them, in order to determine how the legal protection against lookalikes works, if it could be made to work better, taking the issues Philips experiences when dealing with lookalikes in practice as a starting point, and finally in the next paragraph I will see if these proposed improvements are realistic and desirable.

Topic 1: “Do we have a problem with lookalikes?”

Keeping the phenomenon of lookalikes under control starts with pro actively managing protection of the assets that are eligible for this under the intellectual property regimes. In this sense Philips is using the system of intellectual property rights as it is intended to be used, proactively filing trademarks and design registrations for new products, product lines, packaging layouts, payoff lines (e.g. “sense and simplicity”) that it wants to have protected. Philips IP&S B.V. is a separate legal entity within the Philips corporate structure, “owning” all of Philips intellectual property and managing all IP related affairs. It has a dedicated administrative department, occupied with the task of submitting and renewing the trademarks and design registrations with the relevant offices worldwide. On top of that there are 8 Intellectual Property counsels (lawyers) employed at the trademarks and designs department that handle all disputes. It can be concluded that Philips is well aware of its intellectual property rights, and the ways to protect and enforce them. In this sense the legal system of intellectual property protection functions adequately for Philips, offering Philips sufficient means of registering and protecting its intellectual property.

Topic 2: “How do we detect the lookalikes?”

Monitoring of the markets and detection of infringements is the second step towards enforcement of one’s intellectual property. In the cases of counterfeits and piracy there are much heavier investigative powers involved, especially since the ACTA and IP Enforcement Directive. Like ACTA75, the enforcement directive is the product of a legal effort to award heavier means to enforcement of IP rights. Philips’s IP counsels handle both counterfeit and lookalike cases, and their experience that their hands are tied in dealing with lookalikes. Unlike counterfeit cases there is no possibility to have lookalike goods held at the border by customs, and to demand information about the source from the party offering the goods in the market. The brand holders have to rely on spontaneous reporting of lookalike products seen on shelves, as described in the survey, by colleagues or partner companies, or go searching for lookalikes on websites or in shops themselves. From the EC commissioned Hogan Lovells report a wish can be heard to have more clear and precise aims and objectives of regulation against lookalikes and have relevant provisions in the enforcement directive extended to lookalike cases76, referring to the provisions on providing information and preserving evidence as put down in articles 6, 7 and 8 of the IP enforcement directive.

75 The Anti-Counterfeiting Trade Agreement (ACTA), a multinational treaty aimed at establishing international standards for enforcement against counterfeit. 76 EC MARKT/2010/20/D Study on Trade Secrets and Parasitic Copying (Look-alikes), p.21

Topic 3: “Where does the problem occur?

Where, meaning in which channel, the problem occurs can have some relevance for the ways Philips deals with the lookalikes. If the lookalikes occur in Philips own sales channel, i.e. distributors and retailers that Philips has also a direct business relationship with, Philips could use the conditions of the business relationship to somehow bind these parties to keep from imitating Philips product with shop-brand lookalikes (not conflicting with unfair competition regulation). The question where in geographical sense the lookalikes arise, has legal relevance, because if Philips chooses to go for legal actions against a lookalike, they will have to decide where to do this. This can either be in the country in which the infringing product is being manufactured, or the country (or countries) where it is sold. The differences between different legal systems will determine the chances of success of such a legal action, and if more than one country qualifies, it is possible for Philips to go “forum shopping”, i.e. choose to start legal action in a jurisdiction that offers favorable protection for the type of infringement at hand. Disregarding the fact that a multinational company can use forum shopping to their advantage, the fact that different countries have different rules for intellectual property protection, hence the same case of a lookalike have an opposite outcome when taken to court in different countries, is in itself a shortcoming of the legal system from the brand holder’s viewpoint, because it creates legal uncertainty for brand holders that operate across borders, possibly amounting to a barrier to trade within the internal market77. Both in the Hogan Lovells report78 as in my survey it becomes clear that besides internationally a more uniform and powerful detection and/or enforcement possibilities, more clarity on the material rules on what is and what is not considered a look-alike would be a much wanted improvement in the protection against lookalikes.

Topic 4 “What is Philips doing about it?”

From the responses described in the paragraph above, the warning letter and ‘cease and desist’ order are mostly used by Philips as a first resort in case of a lookalike. Although it might seem the legal regimes of intellectual property protection do not come into action, they are the ground on which an exclusive right for Philips exists. In this sense the law functions adequately, as with several cases of Philips lookalike products the maker agrees to change the disputed design, packaging or text, and no further action has to be taken. The term cease and desist order is commonly used within Philips being an international company, but it is not a known legal figure in the Netherlands and surrounding countries. The term is borrowed from Anglo-American legal jargon; although similar formulas exist in most European legal systems, “sommatiebrief” would be the form in Dutch law. Both of the above ways of addressing an alleged infringer give a useful and quick way to end infringements of one’s intellectual property rights, but they also may lead to abuse by the rights holder. It should be noted that there are limits to which a rights holder can use the above methods, as in most legal systems there is case law declaring ungrounded threats of IP infringement by a supposed rights-holder as a form of unfair competition79. It could be suggested that the cease and desist order be given an internationally formalized legal status for cases of lookalikes, for instance by incorporating it into a refreshed enforcement directive or other intellectual property treaty, which would, implemented in the local legal systems, give an IP rights holder a uniform way of addressing an infringer demanding him to stop its lookalike activities, before or without having to take it to court. If this were to be formalized in any way, also the conditions under which abuse of this option could be formalized.

77 EC MARKT/2010/20/D Study on Trade Secrets and Parasitic Copying (Look-alikes), p.20 78 EC MARKT/2010/20/D Study on Trade Secrets and Parasitic Copying (Look-alikes), p.21 79 Parker 2006

In the Dutch as well as the continental European legal systems, a lookalike case is mostly handled through the general unlawful act (NL article 6:162 DCC), underpinning the claim with a breach of a right (in trademark, design and copyright infringement cases) or a duty of care (in case of a slavish imitation claim). The civil suit is not often used by Philips in cases of lookalikes, according to the respondents in the survey. Reasons that are given include that the lookalikes are often not that easy to catch under IP regimes. Their tactic of staying away just far enough from the branded product’s trade dress to not commit a clear trademark or design infringement works in favor of the maker of the lookalike. The unfair competition is the remaining option to base a civil suit upon. The definition of what is and what is not a slavish imitation is quite vague, compared to trademark and design law, and requires a different approach. In general a civil law suit is based on equality of arms, so the defendant can reply with his arguments, but also resort to delaying trial tactics in order to slow down proceedings. From a brands-holders’ point of view the adequacy of legal protection offered in these for enforcement against lookalikes, both in material and in procedural sense, leaves room for improvement.

Philips has successfully used the ex-parte option in some cases, a recent example involved a complete range of Philips domestic appliance products that had been copied by a range of lookalike shop brand products from supermarket chain Lidl. In cases such as this, where the product is offered only for a short period, this ex parte is the only way to act against the lookalike. However in the Dutch implementation of the IP enforcement directive, the “slavish imitation” claim is not considered an intellectual property right, and therefore this remedy is of limited use for cases of lookalikes, since design-, trademark- or copyright infringement claims do not always hold on a lookalike. Besides that the brand holder must be very perceptive to catch this lookalike, as with an action as in the example from Lidl, it is announced in a weekly flyer, and the item is on sale for a very limited period of time, and unless action is taken immediately it’s of no use. By the time the brand holder has a short proceedings action started, the item has been sold out. However when initiated in time, and awarded the ex-parte has proven to be a very efficient weapon.

With the implementation of article 14 of the IP enforcement directive into Dutch civil procedure (article 1019h DCP) the successful party can claim compensation of legal costs, which is welcomed by Philips. In the words reasonable and proportionate it can be read that not always full legal costs are awarded. The Dutch implementation of the IP enforcement directive leaves it to the judges to determine the amount, taking into account the gravity and degree of deliberateness of the infringement. From the brand holder’s point of view, this is not ideal. Rightful enforcement of his IP right will still cost him money, even when the claim gets awarded.

Topic 5: “Is the legal system adequate”

As mentioned in the corresponding topic in the previous paragraph, Philips is of the opinion that the system of legal protection offers adequate protection against lookalikes for a company like Philips, be it remarked that Philips considers itself in a privileged position when it comes to countering lookalikes. Thanks to its organizational level, having set up Philips IP&S as a seperate company within the corporate structure, dedicated to handling all IP, it’s geographically spread organization, making it possible to have lookalikes reported by its own partners and staff, at home and abroad, and finally its backbone of skilled legal staff, enabling it to start litigation against an alleged infringer virtually anywhere. For many smaller scale companies the above does not apply, and the fact that there are hardly structured detention methods like provided in counterfeit/piracy treaties, makes it for a smaller scale operation virtually impossible to monitor the global market for lookalikes of its branded product, let alone seek enforcement. Taking the above paragraph in conclusion it can be said that the system of legal protection against

37 lookalikes, though it may offer adequate protection in the eyes of Philips, leaves room for improvement. In the next paragraph I will expand on possible improvements that came forward in the survey, as well as in the recent AIM and Hogan Lovells reports.

4.4 “Let’s make things better”?!? As seen in the previous paragraph, there are some obstacles facing Philips in protecting its branded product from lookalikes or parasitic copying. Some suggestions on how eliminate these obstacles from the brand holders point of view can be distilled from the survey’s responses, but improvements from rights holders point of view do not always have to be improvements for the market as a whole. Intellectual property has its counterweight in free competition, with which it should maintain a balance.

In this paragraph I will expand on the obstacles as perceived from the side of the brand holders, the suggestions that were made to eliminate these, and finally see how this balances out against the idea of free competition. I will use the main themes as they came forward in the survey: prevention, detection and enforcement.

Focusing on prevention it became clear from the preceding paragraph that Philips uses the system of intellectual property rights well, registering its intellectual assets and managing its registrations actively. However registering intellectual property does not prevent others from infringing on them. A system that would absolutely prevent lookalikes from copying aspects of the brands is not really imaginable in terms of a real market economy. As far as prevention is concerned, the AIM report80 suggests that besides awareness rising (“educating consumers that lookalikes are the same as brands and copying in this way is not acceptable or beneficial”), a code of conduct could be enacted between brand holders and the retail channel, facilitated by the Commission, in order to deter parasitic copying in the future. I see little use in this suggestion and I don’t expect much of it, as it depends on the willingness of distributors and retailers, who are often at least benefiting from (if not involved in the making of) the lookalikes. It is part of the game of competition to seek and push the limits of what is and what is not allowed, and for a market party to willingly limit itself on it possibilities to make money, just does not seem to be a logical step.

Focusing on detection and enforcement it can be concluded that the limited possibilities of detection make it hard to get a grip on lookalikes being offered in the market. This difficulty would be overcome to some extent if the relevant articles from the enforcement directive were to be extended to cases of lookalikes, as was also suggested by the Hogan Lovells report81. This in particular involves the right of demanding information and seizing evidence as described in articles 7 and 8 of the IP enforcement directive. This would give the enforcement against lookalikes much more the character of anti piracy regulation as is proposed by ACTA. However more enforcement for the A-brands in reaction to lookalikes cannot exist of just handing stronger enforcement powers to the rights holders, without requiring the rights holders to make an extra effort, for instance by improving their internal reporting system. If anything this research shows that Philips as the rights holder relies on an comparatively unstructured reporting system for cases of lookalikes. Why hand out more enforcement powers if the rights holder is not obliged to deliver anything in return? In the system of IP rights, all rights have limitations in terms of their validity and reach.

Already at its introduction the enforcement directive received some criticism on this part, from the side of intellectual property academics. The criticism concerns the proportionality of the enforcement. Among others Hugenholz argues that it from the recent international initiatives to enforce intellectual property

80 AIM, Position paper 2010, p. 15 81 EC MARKT/2010/20/D Study on Trade Secrets and Parasitic Copying (Look-alikes), p.21

38 rights (the above mentioned IP enforcement directive and ACTA) there is a trend visible to value intellectual property rights higher than other rights, justifying further reaching enforcement. The principle of proportionality entails that enforcement and sanctions upon infringement of a right should be in balance with the purpose of the right82, and that there is no justification to treat a victim of intellectual property infringement differently than a victim of other unlawful acts.

Focusing on enforcement, the appointment of specialist national courts dealing with intellectual property cases, in order to concentrate specialist judicial experience, would be a significant step forward. This would mean that lookalike claims can be heard efficiently together with all other intellectual property cases, which would benefit brand holders. Finally this could include a central court of appeal administered by WIPO in charge of reviewing national rulings on these cases, in order to ensure equal level of legal protection across the globe.

Generally, thinking of other ways to improve the current system of enforcement of brand holders against lookalikes, another thing that comes to mind is that, though the total system offers adequate legal protection against lookalikes, it is in fact a patchwork blanket of three IPR regimes and unfair competition law. The regimes of trademark law, design regulation, copyright law and unfair competition law each have specific subjects of protection, different conditions and different limitations in their protection scope, and in order to build a case on either one of them, the rights holder has to rely on different sets of material and procedural rules. That on top of the fact that all of these are national laws, though to some extent harmonized by implementation of EU law or international treaties, and have to be enforced via national courts, whereas companies holding A-brands operate more and more on a global level. Many consumer goods are sold and marketed the world over, and brands like Philips are globally known, and thus unfortunately face infringing activities all over the world, though legal protection always has to be sought on a national level. One could argue that it would be useful to have a specific set of rules against parasitic copying, an anti lookalike treaty (Anti Parasitic Copying Act, or “ACPA”), be it on EU or global level, as an addendum to the international intellectual property protection treaties, administered by WIPO, to be implemented in national laws. Any such specific anti lookalike law should specify exactly what its subject, ratio and scope of protection should be, starting with defining what is a proprietary “trade dress”, consisting of elements of trademark, visual aspects and texts on the packaging, design elements, also applied to packaging and the product itself, eligible for protection, as well as specifying what is allowed in copying or imitating aspects of this under the flag of fair competition, and what level of copying constitutes an infringement? All that however would require a new system of material rules, protecting items that are already protected in the existing intellectual property regimes. Such a separate system for lookalikes, would not replace the regimes of trademark-, design- and copyright protection, since these existing regimes have a broader protection than that what is needed to be covered to counter lookalikes. Therefore creating a separate system of protection against lookalikes would create overlap with the previously mentioned regimes, which would possibly complicate matters even more.

82 P.B. Hugenholz, 2004

4.5 Conclusion In answer to the research question of this thesis, my conclusion is that the legal system of intellectual property protection offers adequate protection for A-brand holders in the consumer electronics industry against lookalikes, however that there is room for improvement.

Recommendations for further research would be to investigate if it were desirable to create one international system of brand protection superseding the regimes of trademark-, design- and unfair competition law, in a separate treaty or in an addendum to the international intellectual property treaty WIPO, combining material rules on what is and what is not unlawfully copying another brands’ trade dress, and harmonizing enforcement to a degree where companies can at least have the same minimum level of protection of their branded goods across the globe.

5. Executive summary This is a thesis is about the phenomenon of parasitic copying of branded goods in general, and in particular about the legal means of protection against this for brand holders in consumer electronics industry. It is based on a case study done as part of an internship within Philips Intellectual Properly and Standards, the department that handles all intellectual property and standardization issues for Philips.

Products and services from a company are generally identified by their “brand”. The term brand is defined as "Any name, term, design, symbol, or other feature that identifies one seller's good or service as distinct from those of others”. Some competitors try to make their products look like the well known company’s product. They imitate the name, the logo, the product’s design and/or packaging layout of a leading brand in order to create some sort of association in the mind of the buyer, by which they free ride on the well known brand’s reputation. Protection against this activity of lookalikes is offered by laws of intellectual property and unfair competition. In this way our Legal system has chosen to limit competition to a degree, in order to protect the brand holder. However this protection is bound to limitations.

The thesis deals with the following research question: “Is legal protection against lookalikes adequate for A-brand holders in consumer electronics?” To answer this research question there are two sub questions to be answered: firstly “How are brand holders currently legally protected against lookalikes?” And “secondly “Does consumer electronics brand holder Philips consider protection against lookalikes effective in practice?”

In order to answer the fist sub question I have given an overview is given of the four legal regimes that serve to offer protection against lookalikes. The rules of trademark law, design law, copyright law and unfair competition law are described in chapter 2, explaining the ratio and the scope of protection given by each regime. Most countries have national registration systems for trademarks and designs, as well as copyright protection and some form of unfair competition regulation. For trademark and designs there is also an EU registration system. Besides that international protection exists based on international treaties regulating intellectual property. Enforcement against infringement of these rights is generally to be found at national courts.

In order to answer the second sub question I have done a survey at Philips by way of interviewing 7 IP counsels (trademark and design attorneys) of Philips IP&S, and 10 selected contacts from various Philips business groups, working in the fields of marketing & sales, product development, design and purchasing.

From the survey it was learned that Philips is using the registration system of intellectual property rights as it was intended to be used, filing trademark and design registrations for assets that it wants to protect. In this sense the legal system functions adequately for Philips. Monitoring of the markets for detection of infringements is the next step towards enforcement of one’s intellectual property. For detecting lookalikes Philips IP&S relies on spontaneous reporting of lookalike products by colleagues or partner companies, or goes searching for lookalikes in shops or on websites. There is no systematic approach to this, but also there no such thing as an official organ for detecting lookalikes, contrary to enforcement against piracy and counterfeit. In this context government agencies and border authorities actively search for infringing goods, aided by rules of criminal investigation and treaties like ACTA and the EC’s enforcement directive, which give further reaching enforcement powers against these IP infringements. Brand holders have no investigative powers against lookalikes; they must rely on their own observance. In this context the legal protection against lookalikes leaves room for improvement from the point of view of brand holders. Both from the survey’s respondents as from the EC commissioned Hogan Lovells report on lookalikes an argument can be heard for extending some provisions of the enforcement directive to

41 include cases of lookalikes. The lookalikes are mainly found in the same sales channel as Philips branded products. This makes sense because the A brand product must be known in order for its reputation to rub off on the lookalike product.

The fact that legal response against lookalikes must always take place within a national legal system sometimes provides a problem for brand holders. It becomes clear from the survey that differences in the national legal systems can cause an opposite outcome for the same lookalike case in another country. This causes legal uncertainty for brand holders operating across borders, which can be seen as a shortcoming of the system of legal protection. However a big multinational like Philips can also use this to its advantage, as it can choose to start a law suit against a lookalike in a country where it has the best expectations of success, this is called forum shopping. Still it can be argued that an internationally more uniform set of material and procedural rules would be considered an improvement in the protection against lookalikes. Upon detection of a lookalike Philips usually sends a warning letter or a cease and desist order to the alleged infringer. Many cases of lookalikes are resolved between parties after such a letter, without the need of starting litigation. However abuse of these methods, making ungrounded threats with IP infringement, is considered an act of unfair competition in many jurisdictions, so it should be used with some degree of caution. Finally a civil suit, either full or short proceedings, can be started, in some jurisdictions this be aided by an interlocutory injunction (ex parte), which is only applicable in cases where there is imminent risk of irreparable damage to the rights holder. With such an injunction it is possible to block all sales of the alleged infringing item without the need for the counterparty to be heard. Finally the court has the ability of awarding legal costs or damages. Philips hardly ever claims damages, as its main objective is to stop the lookalike, not make money of it.

Generally speaking Philips is of the opinion that the system of legal protection offers adequate protection against lookalikes for a company like Philips, however there is room for improvement.

Improvements in the field of monitoring and detection would mainly have to be sought in widening powers of investigation and enforcement. However it is argued that more investigative and enforcement powers are not always the solution, and come at a price. It can be required from a big multinational like Philips to have a more solid scheme of monitoring for lookalikes, than the current one which is based upon spontaneous reporting by colleagues or business partners in place. However there is little focus within Philips on lookalikes. On the field of legal remedies, some ideas exist on what could improve the position of brand holders. These more or less concur with the suggestions done in the two recent reports mentioned in the introduction, i.e. the wish for more internationally uniform material regulations on lookalikes, as to define more clearly what is and what is not allowed to copy from a brand’s trade dress. Besides that the wish was expressed to have a specialized court per jurisdiction dealing with lookalike cases, and a central international (WIPO or European) court of appeal, like the recently introduced unitary patent court. From AIM’s suggestion of enacting a code of conduct between brand holders and the retail channel in order to deter parasitic copying in the future not much is expected.

Enforcement of intellectual property is in a delicate balance with open and fair competition. Intellectual property regimes give protection to brand holders, but this protection is always limited, in duration, scope or subject to a form of registration, mostly at a recurring registration fee. One should keep in mind that unilaterally giving more protection will always come at the cost of competition, as is also acknowledged by Philips itself.

“Don’t litigate, but innovate!” was a credo heard more than once within Philips during the surveys, and I tend to agree with that.

References

Literature Baarda (2009) D.B.Baarda, Dit is onderzoek!, Noordhof 2009

Baarda, de Goede, van der Meer-Middelburg (2007) D.B.Baarda, M.P.M. de Goede & A.G.E. van der Meer-Middelburg, Basisboek interviewen, Noordhof 2007

Baarda, de Goede, Theunissen (2005) D.B.Baarda, M.P.M. de Goede & J. Theunissen, Basisboek Kwalitatief Onderzoek, Noordhof 2005

Bainbridge 2010 D.I. Bainbridge, Intellectual Property, Pearson Education 2010

T. Cohen Jehoram a.o. 2009 T. Cohen Jehoram, C.J.J.C. van Nispen & J.L.R.A. Huydecoper, Industriële Eigendom deel 2: Merkenrecht [studenteneditie], Kluwer 2009

T. Cohen Heroham a.o. 2010 T. Cohen Jehoram, C.J.J.C. van Nispen & J.L.R.A. Huydecoper, European trademark law, Kluwer 2010

Gielen 2007 Ch. Gielen, Kort begrip van het intellectuele Eigendomsrecht, Kluwer 2007.

Gielen & Verkade, T&C IE 2009 Ch. Gielen en D.F.W. Verkade, Tekst en Commentaar Intellectuele Eigendom editie 2009, Kluwer 2009

Holzhauer 2005 Inleiding intellectuele rechten, R.W. Holzhauer, Boom 2005

Holzhauwer & Gellaerts 2011 R.W. Holzhauer & S.L. Gellaerts, Van idee naar IE, Kennismaking met het Intellectuele Eigendomsrecht, Kluwer 2011

Van Horen 2010 F. van Horen, Breaking the mould on copycats: What makes a product imitation strategy effective? Dissertation, Tilburg University 2010

Lawless, Robbennolt, Ulen 2009 Robert Lawless, Jennifer Robbennolt & Thomas Ulen, Empirical Methods in Law, Aspen Publishers, 2009

Ritchie, Lewis 2003 Qualitative Research Practice, A Guide for Social Science Students and Researchers, SAGE Publications, 2003

Spoor, Verkade, Visser 2005 J.H. Spoor, D.W.F. Verkade en D.J.G. Visser, Auteursrecht, Kluwer 2005. VanHees 2006 H. Vanhees, Het Beneluxmodel, De Boeck & Larcier NV, 2006

Visser 2004 D.J.G. Visser, Het ABC van iedere IE-inbreuk, Boom Juridische uitgevers 2004.

WIPO 2008 Introduction to Intellectual Property, Theory and Practice. World Intellectual Property Organisation, Wolters Kluwer 2008

Case law ECJ 12 december 2002 C-273/00 (Sieckman) ECJ 17 oktober 1990 C-10/89 (HAG II) ECJ 12 november 2002 C-206/01 (Arsenal / Reed) ECJ 18 June 2009 C-487/07 (L’oréal / Bellure) ECJ 16 July 2009 C-5/08 (Infopaq International A/S. v. Danske Dagblades Forening) Dutch Supreme Court, June 26, 1953, NJ 1954, 90 with annotation HOUWING – / Karry Crane) Dutch Supreme Court, December 29, 1995, NJ 1996, 546 (Deceaux/Mediamax) Dutch Supreme Court, January 5, 1979, NJ 1997, 339 (Heertje/Hollebrand) District court Arnhem 28 april 2005, BIE 2005, 64; IER 2005/49 (Unilever / Albert Heijn)

Online publications & resources AMA “The American Marketing Association Dictionary” http://www.marketingpower.com/_layouts/Dictionary.aspx

AIM Trade mark committee (2010) “Parasitic Copying: Trading on the innovation and creativity of others” Http://www.aim.be/

British Brands Group (2009) “A study into the impact of similar packaging on consumer behavior” http://www.britishbrandsgroup.org.uk/library/download/4c35bf9c38add

Van Horen, F., Pieters, R. (2011). “When high similarity copycats lose and moderate similarity copycats gain: The impact of comparative evaluation” AMA Journal of Marketing Research. http://www.marketingpower.com/AboutAMA/Documents/JMR_Forthcoming/when_high_similarity_copycats. pdf

Parker 2006, S. Parker a.o. Threatening patent infringement procedures, an international perspective, Pharamaceurical Law insight September 2006. http://www.simmons-simmons.com/docs/plisep06.pdf

P.B. Hugenholz 2004, P.B. Hugenholz een overbodige richtlijn, IER 2004-4 p.247-248

Annex 1: Questionnaire Questionnaire part I

Topic: Awareness of the problem / extent of the problem

4. Would you describe parasitic copies of your business group’s products in the market as: o Insignificant o A nuisance, but not hurting business to a serious level o A possible threat, best dealt with at some priority o A serious issue, that needs attention within short notice o An immediate threat that could hurt Philips total turnover if not dealt with immediately (explain)

5. Would you say that the existence of parasitic copies in your business segment has grown steadily / considerably / explosively in the last 10 years? (expand)

6. How much, in your estimation, would you say the activities of lookalikes cost your business in the last year

Questionaire part II

Topic: Monitoring and detection

7. In order to fight parasitic copying, the lookalikes must have been detected in the marketplace, and the alleged alikeness reported to Philips IP&S. Which of the following statements most applies to the way parasitic copies come to your attention (if none applies, please give the correct answer beneath, more than one answer may apply)

o Lookalikes of our product are reported to us by distributors, retailers or end users on their own initiative o Lookalikes of our product are reported to us by distributors or retailers, because we encourage (and reward) them to do so o Our employees are asked to keep an open eye, and we encourage them to do so o We systematically search for copies of our products ourselves, in all relevant markets o We hire a professional party to monitor all new competing products entering in the market, and evaluate every entrant o Other, namely…

8. Do you think the above selected detection method, catches most of the parasitic copies in the market?

9. Are you planning to increase your level of monitoring and reacting to lookalikes in the next year, become more aggressive in responding to them? If yes, why? If not, why not?

Questionnaire part III

Topic: Channel

10. To your knowledge, where do these parasitic copies pop up? o In distribution- or retail channels that also carry Philips branded products o In other, parallel channels, where Philips’ product is not offered? (If this is the answer, skip next question) o Both of the above

11. When lookalikes arise in our own channel, do you think these are manufactured by, or on initiative of, Philips’ own retailers or distributors in that channel?

12. Is it a repetitive phenomenon, in other words, are always the same parties in the channel responsible for lookalikes (the “usual suspects”)

Questionnaire part IV

Topic: Actions taken

13. Did your business group initiate / take action regarding these parasitic copies o Yes, every time when a copy was detected o Most of the times o Sometimes o Never 14. Were actions taken targeting the manufacturer of these look alikes?

15. What character did the actions taken against the manufacturer by your BG have?? o Warning letter o Cease and desist order o Infringement procedure o Court actions

16. Did the action targeting the manufacturer yield the desired result, i.e. direct removal of the lookalikes? o Yes in all cases o In some but not all cases o No, really not 17. Were actions taken targeting the points of sale of these goods?

18. What character did the actions taken against the points of sale by your BG have?? o Warning letter o Cease and desist order o Infringement procedure o Court actions 19. Did the action targeting the retailer yield the desired result, i.e. direct removal of the lookalikes? o Yes in all cases o In some but not all cases o No, really not

20. Was any financial compensation won, either civil damages, or penalty

21. If no action has been taken, what is the reason for that? o low estimated chance of success o no faith in legal system (if this answer is chosen, please specify the country involved) o not wanting to jeopardize relationship with retailer/infringer o Other, namely:

Questionnaire part V

Topic: Opinion on legal protection

22. Do you believe that the lack of harmonization of national laws in this area presents a problem?

23. Do you feel the complete system of protection offered by national and harmonized community law is inadequate to protect brand holders from parasitic copying?

Annex 2: Qualitative research logbook This is the logbook of my research, in order to log the preparation, execution and analysis of the interviews done at Philips as part of the case study for my thesis.

1. PREPARATION: [March 2012] Prepared a questionnaire to be used for this research and wrote to candidate respondents, it was set up as a semi-structured (some questions had pre formulated answers, some were open) expert interview 2. DATA GATHERING [Between April 13 and May 14 2012] Conducted interviews with Philips employees. 3. 7 of which IP counsels of Philips IP&S 4. 10 with people from the business lines, working in sales, marketing, design and purchasing 5. 15 interviews face to face, one with Video conference (Dubai) and one respondent filled out the questionnaire and retrned it to me by email 6. Of the face to face interview and video conference interview I have made an audio recording 7. From these recordings I have made verbatim transcripts 8. I have numbered these interviews I-1 to I-7 (IP counsels) and B-1 tot B-10 for the respondents from the business (20-8-2012). Their names are not to be disclosed in the final thesis, on request of Philips, so have been replaced by initials.

Nr Respondent Date Division Role Place / remarks I-1 WM 13-4 Medical systems IPC Eindhoven HTC I-2 JM 16-4 Luminaries IPC Eindhoven HTC I-3 BvR 20-4 Baby care IPC Eindhoven HTC I-4 TWvL 24-4 Oral care IPC Eindhoven HTC I-5 PvD 1-5 Consumer Lifestyle, domestic IPC Eindhoven HTC appliances I-6 RvT 1-5 Luminaries IPC Eindhoven HTC I-7 GB 14-5 General Manager Manager HTC Eindhoven HTC B-1 TdV 17-4 Personal care / Male Consultant Drachten grooming (shavers) B-2 RM 19-4 Personal care / Male Senior Director Amsterdam / IJ- grooming (shavers) consumer marketing tower B-3 YvdK 19-4 Consumer lifestyle (Garment Manager consumer Amsterdam / IJ- care) marketing tower B-4 MK 19-4 Consumer lifestyle Junior Manager Amsterdam / IJ- tower B-5 NJ&JG 23-4 Consumer lifeslyle (Garment Sales manager Dubai (via VC) care) B-6 RH 25-4 Consumer Luminaries Sales manager Eindhoven City B-7 PB 26-4 Consumer Luminaries Head of design Kontich (B) B-8 MO 26-4 Consumer Luminaries Purchasing manager Kontich (B) B-9 CR 26-4 Consumer lifestyle Marketing Director Dubai (mailed) B-10 GM 19-4 Baby care and Oral care Senior director Amsterdam / IJ- tower

9. DATA PREPARATION [August 2012] Created a big word file with all the interviews put together, shifted by topic. 10. When pre formulated answering options could be chosen, I have created a table with the times an answer was chosen tallied (where relevant divided between IP counsels and Business contacts respondents) 11. Answers on open questions and answers that were given in elaboration of a pre defined question are added as separate text. 12. DATA REDUCTION PHASE From this large text-file I have de-selected less relevant passages by strikethrough and deletion 13. Coding / Colour Labeling Per question answer I have color coded the answers, legend added at each topic. Divided into “not so relevant”, “very relevant”, and “must be mentioned or quoted” 14. From question 11 onwards decided to leave the answers from Business contacts aside, because it becomes clear that the difference between counterfeit and Lookalikes is not completely clrear to these respondents. Their answers mostly refer to any form of imitation be it counterfeits or lookalikes, and from their point of view there’s no difference between the two. 15. Final interview question (21, a look in the mirror) was added to provoke some interesting points of view from the respondents (which it did), however they are left out of the thesis as they did give not data usable for the research questions.