Feature By Sara-Jayne Clover

IKEA: flat-pack fantastic

Defending a multibillion-dollar global brand in the between them, they are responsible for handling registrations, online age is no easy task. IKEA trademark manager renewals, oppositions and trademark infringements, and managing a portfolio of some 1,700 trademarks and pending applications Cecilia Emanuelson reveals how consistency and covering 80 countries worldwide. tenacity are the keys to success, Swedish style The €9 billion question In a rare move, last year the Inter IKEA Group published its 2011 annual financial report, which contained details of the transfer of the IKEA intellectual property from Inter Ikea Group’s ultimate Home furnishings phenomenon IKEA has become a global icon for owner, the , to subsidiary Inter IKEA Systems its affordable flat-pack products, vast lifestyle emporiums and, of for €9 billion. Speaking to the press at the time, Inter Ikea Group’s course, the irresistible Swedish meatballs that typically end an IKEA head of communications Anders Bylund stated that the deal shopping experience. Whether they are visiting a store in Shanghai, was “an internal transaction, which has no external effects”, and Seville or Santo Domingo, customers the world over can look that the motivation behind the deal and the associated publicity forward to the same pared-down Scandinavian style. Established by was simplicity and transparency. “Our ownership structure of in 1943 as a mail-order business selling postcards the IP rights has been complicated and we saw an advantage in and pencils, the IKEA network today encompasses more than 330 simplifying all that and consolidating control under the franchisor stores worldwide, a workforce some 150,000 strong and a brand Inter IKEA Systems,” he explained. “Our goal with the annual report that has been valued by Interbrand at a cool $12.8 billion. was to provide greater transparency for our employees and our IKEA’s corporate structure has changed dramatically since business partners.” It seems, however, that this propensity towards the 1940s: while the empire remains in private ownership, today openness has its limits: when questioned on the transaction, it operates through a complex web of holding companies. At the Emanuelson was unable to comment further, other than to centre is Inter IKEA Holding SA, the parent of the Inter IKEA Group, reiterate that it was a voluntary move to enhance transparency. which includes the current owner of IKEA’s intellectual property, “There is nothing confidential in the ownership of the IKEA Inter IKEA Systems BV. It is this subsidiary which, as franchisor, trademarks, but as we are a private company, we do not have the licenses out the IKEA brand and concept. Meanwhile, Belgium- obligation to go out and inform the world of internal matters,” based Inter IKEA Holding Services SA is responsible for all legal she explains. matters concerning the IKEA trademark; it is within this arm of the As Emanuelson rightly says, there is no obligation for IKEA business that trademark manager Cecilia Emanuelson sits. to make public its records or deals, but its traditional reticence Emanuelson is unswerving in her commitment to Inter IKEA, has surely contributed to the intense press scrutiny it has faced having worked for the company for almost two decades. She reveals in recent years. Charges levelled at it range from minimising tax that such longevity is not unusual among employees, and is quick payments to using political prisoners of the former East Germany to explain what has kept her in the post. “There is so much variety to manufacture its products. The company and its founder have working for a company like Inter IKEA Systems BV; on a day-to- been quick to investigate and are working hard to promote IKEA as day basis, I could work with 10 different countries,” she enthuses. a brand with a strong social conscience. One result of these efforts “It’s great because you might start your day with a trademark is the IKEA Foundation, which reported donations of €65 million infringement in Mozambique and finish up with something in 2011 to fund children’s programmes in the developing world; exciting in the US.” and last year the company unveiled plans to become energy and However, the sheer diversity that characterises her role results resource independent by 2020. not only from IKEA’s international nature, but also from her While it is highly unlikely that IKEA’s owners will have position within the company itself. “Working in-house means that welcomed negative press attention, it has perhaps been the you don’t only do technical IP law – you get the whole business catalyst for publication of the company’s private records – a aspect as well, which gives the work extra value,” she says. move which may signal the start of a journey towards full Emanuelson has just one colleague in the trademark department; corporate transparency. www.WorldTrademarkReview.com April/May 2013 World Trademark Review 19 IP visibility IKEA online But whatever the ultimate motivations behind the IP deal and its Protecting a trademark as ubiquitous as IKEA’s is a monumental disclosure, the fact is that the IKEA trademark now has a robust undertaking in the internet age; Emanuelson confirms that book value of €9 billion. In going public with this valuation, IKEA approximately one-third of all incidents of infringement she has confirmed its position as the second most valuable Swedish encounters occur in the virtual world. “Online infringement is a brand, behind high-street titan H&M – garnering plenty of free big issue for Inter IKEA Systems, and is probably even a lot bigger coverage along the way. Getting the IKEA brand name in the than we know of,” she says. “It is an issue of resources to take care mainstream media, together with a tangible demonstration of its of it in an efficient way: the number of infringements we have to worth, was a great way to reach out to customers, particularly as try to contend with is overwhelming.” Perhaps inevitably, Asia is an they become more IP savvy. Emanuelson observes that since she epicentre, but unusually, Emanuelson remains baffled as to the exact began her career almost 20 years ago, recognition of the value root of the problem: “There are certain markets where we see real of intellectual property has skyrocketed – not only among brand spikes of online infringement and I don’t know why: namely South owners themselves, but also among consumers. Korea and Japan.” And just when she starts to think that a pattern is And as IKEA customers become both more brand aware and emerging, her logic is thrown into doubt. “We tend to see the most more brand loyal, they are playing an increasingly important role cases where the brand is highly regarded, but unobtainable,” she in helping to stamp out infringements. “We get a good number of elaborates. “For example, at the moment we have no stores operating infringements reported to us by Swedish people travelling abroad,” in South Korea, so we would hope that by opening up there we states Emanuelson. “People are more aware of IP rights than ever would see a decrease in infringement. However, this may not in fact and seem to feel offended if they see the brand being infringed.” be the case: we have had stores in Japan for seven years and yet still This public protectiveness of the treasured IKEA marque has the amount of online infringements is huge.” made intellectual property a hot topic at board level; but it is the The introduction of generic top-level domains (gTLDS) is individuals responsible for managing that intellectual property who one initiative which many companies hope will afford stronger must fan these flames and kindle an enduring IP culture among protection against online infringements. However, this is not a the C-suite. “I’d say that how aware the board members are of IP is route that Emanuelson and her colleagues have opted to take for largely dependent on how visible the department is made in the the time being. The decision against applying for the ‘.IKEA’ domain eyes of the business,” she coninues. “Our board is deeply aware of name was made after careful consideration by relevant factions of matters relating to the IKEA trademark – certainly also because the the Inter IKEA team. “We asked the marketing people if they saw IKEA trademark is a famous mark.” any added value in having the gTLD. Together, the legal department Between Emanuelson and the board sits IKEA’s general counsel and marketing decided that at present, the price of applying for the (GC) Gabrielle Olsson Skalin, with whom she has worked since gTLD compared to the returns they expected it to yield was not a joining the organisation. While this structure of reporting to good balance, and the price was too high to make a mere defensive the head of legal can cause frustration for some IP practitioners registration. We could see no real customer benefit either.” But if their messages are not passed effectively up the chain of Emanuelson is still following developments closely and is interested command, this is not the case for Emanuelson. Trademarks are to see how the situation plays out over the coming years. “Obviously, high on Olsson Skalin’s agenda and approximately half of her if the gTLD becomes a big hit and is really successful, then I don’t time is spent attending to them. While Olsson Skalin is the board’s doubt for a second that we will reconsider our decision. But we are main point of contact for trademark matters, where she believes not prepared to spend half a million dollars just to find out whether that Emanuelson’s team is well placed to report on an issue, it is going to be successful or not.” she is happy to stand aside and let them liaise directly with the Perhaps somewhat surprisingly, rather than counterfeit senior executives. Emanuelson attributes this flexibility to the products, one of the biggest IP challenges facing Inter IKEA is of Scandinavian culture: “I report to the general counsel, but I’d say a more logistical nature. “A huge issue for us is the number of that Inter IKEA has a very horizontal hierarchy – I guess it’s because transport and assembly companies that are springing up and which we are Swedish that we have a very easygoing and informal way of are not officially working together with an IKEA retailer,” explains talking to senior people.” Emanuelson. “Without permission, they have vans and websites with

20 World Trademark Review April/May 2013 www.WorldTrademarkReview.com Feature: IKEA: flat-pack fantastic

the IKEA trademark emblazoned on them and take orders of IKEA IKEA facts goods to deliver and build in people’s homes.” She recognises that the individuals running these set-ups are showing entrepreneurial • Ingvar Kamprad, the founder of IKEA, is Europe’s second flair and providing a service that is not always offered by IKEA stores richest man. in some parts of the world. However, the fact remains that these • 338 IKEA stores. businesses are profiting from IKEA’s intellectual property without • Trademark registrations in approximately 80 countries. authorisation. “A lot of the time, infringers are admirers of the IKEA • 154,000 IKEA co-workers. concept and IKEA products – especially the transport and assembly • Every IKEA store pays 3% of revenues in franchise fees to service providers,” she continues “They honestly believe that they Inter IKEA Systems BV. are doing their local IKEA store a favour by drawing in customers, • 9,479,500 retail square metres. even if they are infringing the IKEA trademark. It might be that there • 5,745,000 application downloads. is a benefit to the IKEA store, but nevertheless it is our job to make • 776 million IKEA store visits. them understand that they have to do what they are doing in a way • €27.5 billion sales turnover. that does not infringe our trademark.” • 212 million IKEA catalogues. • 1.1 billion IKEA website visits. Taking on the infringers While Emanuelson may describe the extent of the online threat as “overwhelming”, she and her colleagues are clearly making great people’s businesses, and I think it’s important to talk to people in strides in tackling it. In 2010, a report published by Deloitte and a pleasant and nice tone and explain what they can and cannot do Belgian law firm Laga placed IKEA in the 100 global trademarks when it comes to using our IP.” that enjoy the strongest protection online. This could well be down While civility can smooth over such communications and to the team’s systematic approach once infringement has been forestall acrimonious disputes, Emanuelson is also acutely aware identified. “When it comes to dealing with infringers, we really try that every time she puts pen to paper, she is representing the IKEA to be consistent: whether it’s a big company or an individual, if they brand: get the tone wrong and the repercussions for its public image infringe on our trademark rights, we will have to act,” she confirms. could be severe. However, if the friendly approach does not work, “We may need a different approach when, for example, we might Emanuelson and her team are not afraid to make good on their want to explain to an individual infringing the IKEA trademark why warnings. “If we cannot get the infringer to sign an undertaking he cannot do so; and when dealing with a larger company, they and settle the matter, we will proceed to court,” she states. And if a usually have the legal knowledge themselves either in-house or from dispute does escalate to litigation, it is not Emanuelson or a fellow a law firm they are working with. But the rules have to be the same: employee of Inter IKEA who will litigate, but rather outside counsel. we don’t allow any infringements.” The company has partners located in all 80 countries in which A cease and desist letter is the standard first step, and its trademarks are registered. The frequency with which Emanuelson Emanuelson and her colleagues will always demand that an liaises with these external colleagues will vary, depending on the undertaking is signed. Depending on the gravity of the infringement, amount of trademark activity occurring from one jurisdiction to monetary compensation may also be requested. While the IKEA the next. However, the standards by which they are measured and trademark is renowned as a closely protected brand and infringers selected are uniformly high. “We are certainly very careful when are pursued by its guardians without exception, Emanuelson is we choose our outside counsel, because we rely on them to a high quick to point out that this does not necessarily make them an degree,” she explains. “They are our front players on the local market, aggressive trademark team. “I think it is important to be friendly so we need people who really know our business and how we work. towards people – we have a great brand here and a trademark which They must also have a great legal mind, think commercially, be ready is worth a lot of money – and, to a large extent, people are working to act fast and be able to give us the most pertinent information.” in good faith and trying to build their own business on the back of our brand,” she explains. “So we’re not in the business of destroying Imitation Scandinavian One market in which communication with outside counsel is a regular feature is China. “Like everybody else, we have big issues Cecilia Emanuelson in China,” confirms Emanuelson. “A lot of our time and energy go into devising strategies for dealing with infringement problems “A huge issue for us is the in the region; you hardly have time to work out a strategy for one number of transport and problem before another arises.” The world’s second largest IKEA store assembly companies that are is located in Shanghai and the country is currently home to 11 IKEA springing up and which are stores in total. It would be understandable if the average Chinese not officially working together consumer perceived the brand’s presence as far greater, however, with an IKEA retailer. Without given the number of copycat stores imitating IKEA outlets. “We permission, they have vans have seen many cases of Chinese companies copying the IKEA trade and websites with the IKEA dress,” she confirms. “Sometimes they use our colours; sometimes trademark emblazoned on they use a word mark that is similar; and sometimes everything is them and take orders of IKEA identical or similar to varying degrees.” One such example was 11 goods to deliver and build in Furniture, a store in Kunming City in southwest China which in 2011 people’s homes.” was widely reported as having pirated the IKEA retail experience. Everything from the store colours to set-up rooms and furniture designs was identical to the Swedish company’s offering. Fellow multinationals Apple and Starbucks have both www.WorldTrademarkReview.com April/May 2013 World Trademark Review 21 Feature: IKEA: flat-pack fantastic

successfully asserted their IP rights against this distinctly Chinese phenomenon. In Apple’s case, one store was so convincing that even staff believed they were working for the high-tech giant. The challenge facing IKEA, however, is slightly different. While fake stores, once discovered, can be quickly closed down for clear infringement of IP rights, protecting the brand against imitations is not quite so simple, as Emanuelson has learned. “We have tried to register colour marks, but they were not accepted in China as they were deemed non-distinctive,” she explains. “We have tried to register images of the store façade in blue and yellow, which is something that we have successfully done in other countries, but these were not accepted either. Nevertheless, we are in the process of filing fresh applications as there has been quite a development in relation to the number of IKEA stores in China and we believe that we have a fair chance of proving distinctiveness this time.” Persistence, it seems, is the name of the game when working to protect your brand in the region; that, and being on good terms with the right people. “Basing our strategy on traditional trademark registrations has been difficult,” she reiterates. “We are trying to find solutions to this problem and I think our best way forward is to have a close working relationship with the people both at the Chinese trademark office and at the unfair competition agencies. We have to try to educate them about who we are and what we need to protect our rights, and try to open their eyes to the fact that we need their help in doing so.”

India: the next frontier Emanuelson acknowledges that the hurdles which the IKEA brand now awaits sign-off from the federal Cabinet. The liberalisation of the must overcome in China are not uncommon and by no means FDI rules means that single-brand companies which have previously insurmountable: “Extending into new markets of course brings had to partner with local firms in order to access the Indian market with it new problems, and we are having to find new solutions are free to open independent outlets. However, this move, along accordingly.” By contrast, she has been somewhat surprised by the with the subsequent relaxation of the FDI rules for multi-brand lack of obstacles to navigate when moving into India. “It is very retail, is not without its caveats – the main one being a stipulation exciting to get into a new market, and I feel confident – from a that foreign companies source at least 30% of their goods from local trademark perspective – that our expansion into India is going to cottage industries. This stringent proviso has been enough to deter work well, because we have not had any real big issues so far.” some brand owners from entering the Indian market altogether. Following a vote by the Indian government to open up the However, Emanuelson is optimistic that despite these peculiarities, country to foreign direct investment (FDI) in single-brand retail, Inter rolling out in India will be much the same as elsewhere. “The IKEA IKEA has earmarked $2 billion for expansion across the subcontinent, operation in India will be carried out under a franchise operation, with 25 retail stores planned. In January this year the government’s as on all other markets,” she explains. “This means that it will be no proposal was approved by India’s foreign investment agency and it different maintaining brand identity in India from anywhere else:

Figure 1. Inter IKEA Group organisation Interogo foundation (Liechtenstein)

Inter IKEA Holding SA Board (Luxembourg) Per Ludvigsson (chairman), Ingvar Kamprad, Mathias Kamprad, Staffan Bohman, Lennart Sten, Group services Hans Gydell, Birger Lund Inter IKEA Holding Services SA CEO (Belgium) Sören Hansen

Franchise division Retail centre division Property division Finance division Inter IKEA Systems BV Inter IKEA Centre Vastint Holding BV Various companies incl. (Netherlands) Group A/S* (Netherlands) Inter IKEA Investment AB (Denmark) ()

*51% owned by Inter IKEA Group and 49% by INGKA Group

22 World Trademark Review April/May 2013 www.WorldTrademarkReview.com 60-second interview

What aspects of your job do you trademark teams, so it is great to find the most challenging? see how we can work together with One thing that I find a little bit fantastic results. worrying is that whatever you write in a cease and desist letter, Who has had the greatest you had better make sure that influence on your career? you are polite and nice, because Without doubt my boss, you never know what website it is Gabrielle Olsson Skalin – she Emanuelson, however, believes that reports of abuse of the IKEA going to pop up on the next day. has been my boss here for 19 trademark in India are overblown, and asserts that any issues that The world is so small now, and it years and is very inspirational. have arisen have been quickly quashed. “For the last four or five can do a lot of harm to your brand years we have been working very actively on the Indian market and if somebody puts something If you could make one change have been very proactive in filing registrations and oppositions, negative up on the Internet. to the industry what would it be? and we’ve taken good care of a couple of infringement cases,” she Take away those infringers states. Responding to the claims made by the Business Standard, What aspects of your job do you who consciously infringe our Emanuelson explains that Inter IKEA successfully blocked a find the most rewarding? trademark! trademark application filed by IKEA Furniture Private Limited – Sometimes I will walk through a one of the companies referred to in the article – in 2002. After the store or see an ad campaign and What career do you think you company began using the mark again in 2007, Emanuelson and her be amazed by the solutions that the would have followed if not team filed suit for trademark infringement and are now awaiting marketing people have come up the law? a final hearing in late February in which the court should issue with to imaginatively work around I always say I’m going to be a a permanent injunction. “The other side has not contested the our strict rules on the use of the meteorologist in my next life! matter and we believe we have no particular reason to worry about IKEA mark. Normally you only hear I find the study of the weather the outcome,” she states. “The other companies are quite recently of tensions between marketing and fascinating. incorporated companies and we have started proceedings against the use of the company names,” she clarifies. “But it has in no way created problems when it comes to us filing trademarks.” the stores will be subject to the same controls and audits.” The brand’s smooth transition into this challenging new market Although Emanuelson would maintain that – from a trademark can be attributed to the tried-and-tested strategies of the Inter IKEA perspective, at least – its expansion into the subcontinent has trademark team. After many years of adopting a consistent, been stress free, potential snagging points have already hit the no-nonsense approach to infringement, their reputation has headlines. Earlier this year the Business Standard, India’s leading preceded them. “The word has gone out to the market there that we business daily, reported that a number of outfits using the IKEA are taking cases of infringement seriously,” concludes Emanuelson, name are already listed with the country’s registrar of companies. “and I think that is paying off.” WTR DIAMS iQ speaks your language.

Request a free demo and discover the benefits of using our software for your trademark management.

Discover more: www.dennemeyer.com

TM DENNEMEYER PORTFOLIO SERVICES SOFTWARE SOLUTIONS IP CONSULTING First choice in IP

www.WorldTrademarkReview.com April/May 2013 World Trademark Review 23