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Feature By Véronique Musson

Nestlé’s winning formula for brand management

‘Enormous’ hardly begins to describe the trademark that develop products worldwide and are managed from our portfolio of the world’s largest food and company headquarters in , or St Louis in the ,” he explains. So eight trademark advisers, also based in Vevey, advise one – and the workload involved in managing it. But when or more strategic business units on the protection of strategic it comes to finding the best solutions to protect these trademarks, designs and copyrights, while one adviser based in St very valuable assets, Nestlé has found that what works Louis advises the petcare strategic business unit on trademarks and best for it is looking for the answers in-house related issues, as the global petcare business has been managed from St Louis since the acquisition of in 2001. In parallel, 16 regional IP advisers spread around the world advise the Nestlé Imagine that you start your day with a glass of water operating companies (there were 487 production sites worldwide at followed by a cup of Instant drink. Mid- the end of 2005) on all aspects of intellectual property, including morning you have a cup of instant and snack on a trademarks, with a particular focus on local marks. The trademark cheeky bar; lunch is a HERTA sausage with group also includes a dedicated lawyer in Vevey who manages the -and-sauce affair, finished off by a SKI yogurt. Later domain name portfolio and handles all issues of misuse of the group’s you suck on a mint, while dinner is a light soup. You brands online. These 26 advisers are supported in their task by a group have had a Nestlé food day, but still have sampled only a fraction of of trademark specialists and paralegals who handle the more the company’s products. This shows how much the Swiss company administrative aspects of mark protection, including searching and has grown and diversified since pharmacist Henri Nestlé invented opposition procedures. All of them report to Maeder, who himself formula in 1867 and founded his company with a single reports to Paula Nelson, General Counsel Intellectual Property. product. One hundred and forty years on, Nestlé has become the world’s largest food and beverage producer and branched out into Team effort petcare, with a little pharmaceutical thrown in. While the IP department is independent from the business units Managing this worldwide and varied brand portfolio is no mean (Nelson reports directly to Nestlé’s chief financial officer), the feat. But while many companies opt to outsource a fair amount of the trademark team’s daily work involves a close relationship with its activities relating to IP management and protection, at Nestlé the clients in the group, in particular with the marketing department and policy is to do most of the work internally. This choice may have been the managers of the strategic business units. (The word ‘clients’ may made primarily to stay close to the business, to cut down costs and to avoid low/non-added value intermediaries, but it also makes sense as part of the group’s approach to IP protection. The policy has evolved over the past few years: IP protection used to be split between the trademark and patent departments, which worked in parallel without much interaction, but now the approach is more holistic – the trademark team and the patent team work together within a single IP department and find the best protection for each brand. Practically, this means that while the trademark and patent teams still retain their separate areas of expertise, the trademark and patents advisers communicate on a daily basis to decide which IP rights are best suited to protect each particular aspect of a brand, product or packaging.

Two-level structure The structure of Nestlé’s trademark division may seem complex at first glance, but Jean-Pierre Maeder, Group Head of Trademarks, Jean-Pierre Maeder explains that the organization of the department mirrors that of Group Head of Trademarks Nestlé’s business units. “The company has 11 strategic business units Nestlé

58 World Trademark Review September/October 2006 www.WorldTrademarkReview.com Nestlé’s six global corporate brands be used as a way to motivate personnel to treat internal departments as well as they do outside clients in most places, but is an accurate description of the relationship between the departments at Nestlé. The IP department is based within Nestec, the service providing company to the Nestlé group worldwide. These services are provided to the business units on a contractual basis.) This means that while strategic brands are defined by the executive management board, trademark advisers are involved from the very beginning by taking part in regular meetings relating to the brand’s development. They then manage the brand in collaboration with the relevant strategic business unit, keeping in close contact with the unit with regards to any legal actions to be taken. This also applies at local level, where local brands are created by the operating companies in collaboration with the regional IP advisers, who then manage and enforce the trademark rights associated with the brands. As mentioned above, most of the trademark work is done in- house. “We tend to do most trademark work internally,” explains Maeder. “Effectively, our regional IP advisers work as internal agents and lawyers.” This is possible because most of Nestlé’s regional IP advisers are qualified to act before the local trademark offices as well as in the local courts. The regional IP advisers are based in the markets in which Nestlé has a lot at stake in terms of brand development and strategy, but these regional IP advisers are also in charge of several countries. For instance, the regional IP adviser based in the is also responsible for Ireland, the Nordic region and Iceland. The regional IP adviser in Mexico is also responsible for and the Caribbean region. “We have a network of outside counsel and filing agents in the countries where we don’t have a presence, or where our advisers are not qualified to act in front of the local trademark office or courts,” confirms Maeder, who is himself admitted to the Bar in Switzerland.

Cost control Handling most things in-house has many advantages, such as being close to the business and minimizing response time when a particular problem arises – in part thanks to the good communication and strong relationships that exist within the trademark team and with its clients. Also, using the regional IP advisers as internal agents and lawyers is more cost efficient than using external service providers. Another factor to the department’s budget control may be the group’s filing strategy. Maeder favours the international route of filing under the Madrid system and designating the Community trademark (CTM), which makes a lot of sense for the worldwide brands for which a coherent strategy must be in place. The combined international/CTM solution means that filing fees are minimized while the scope of registration is maximized. National filings are used only for local/regional marks and where the Madrid system is not applicable.

A leaner but still chunky portfolio The portfolio consists of a medley of types of mark – words, devices, colours, shapes and slogans – because the kinds of registration Maeder’s team seeks vary significantly from one brand to another; also in addition, protecting all aspects of brands for fast-moving consumer goods requires exploring all possible avenues of traditional and non-conventional trademark registration as well as design registrations as part of the fight against copycat products – that is, imitators of the look and feel of Nestlé’s products. The group also has a worldwide policy for the registration of domain names for global strategic brands that forms part of the overall strategy for the brand: “For instance, the six worldwide corporate strategic brands [NESTLÉ, NESCAFÉ, , MAGGI, PURINA and BUITONI] are registered on a global basis as trademarks and as domain names under many of the www.WorldTrademarkReview.com September/October 2006 World Trademark Review 59 Feature: Nestlé’s winning formula for brand management

Nestlé’s IP department

Four regional Machinery & Cereals IP researchers IP advisers packaging IP advisers Americas IP adviser Trademarks/ Patents Patents

Waters IP support IP support Coffee & IP advisers beverages Trademarks/ IP advisers Patents Trademarks/ Patents IP support IP support

Petcare Chocolate & (St Louis) IP advisers IP advisers Trademarks/ Trademarks/ Patents Patents General counsel Six regional IP support intellectual IP support IP counsel IP advisers property Group head of trademarks Nutrition Group head of Dairy IP advisers patents IP advisers Trademarks/ Trademarks/ Patents Patents

IP support IP support

Nespresso Food IP advisers IP advisers Trademarks/ Trademarks/ Patents Patents

Six regional IP support Food services IP support IP adviser IP advisers IP advisers IP advisers Domain names/ Asia Oceania/ Trademarks/ Trademarks/ Internet Africa Patents Patents

IP support IP support

generic top-level domains and country-code top-level domains,” notes branding consultancy, ranked the NESCAFÉ brand alone at number Maeder. However, other domain name registration rules apply to local 24 in its 2005 league table of global brands, with an estimated value brands: these are usually registered as domain names only under the of $12.42 billion; the ranking for 2006, with a value of $12.50 billion, relevant country-code top-level domain. is 23. The exact value of the entire portfolio may be difficult to pin In the six years since Maeder joined Nestlé, the portfolio has been down, but the value of Nestlé’s intangible assets gives a good streamlined to bring costs down and ease management. This was not indication: at the end of 2005 Nestlé’s total market capitalization a time-limited action, though: the policy remains that trademark was Sfr152 billion ($116 billion) and its equity – that is, its balance registrations that are no longer used should be dropped. The sheet value – was Sfr50 billion. The difference between the two portfolio now focuses on the six corporate strategic brands represents Nestlé’s intangible assets – essentially, its intellectual mentioned above, which can represent one or more food areas. Then property and know-how. there are around 340 strategic global brands (eg, KIT KAT for chocolate) and regional brands (eg, chocolate mints) Relishing challenges and many sub-brands (eg, CHUNKY, used in connection with KIT Maeder, who prior to joining Nestlé had spent eight years as director of KAT). There are a further 6,000 local brands, made up of local intellectual property for Kraft Foods Company in Zurich, is quick to corporate strategic brands (eg, ORION chocolate in the Czech and point out that the main issue his team encounters internally is the Slovak Republics) and local product brands (eg, BONZO for in ever-so-familiar problem of raising awareness of the importance of Benelux and ) and sub-brands. All this makes up a portfolio of intellectual property. However, he does not complain about it and around 28,000 registrations for local brands and 78,000 registrations merely sees it as a challenge: “We have to make sure we stay very close for strategic brands – a total of over 110,000 trademark protections. to the business units and are involved very early on in new projects.” The company’s wholesome image (think of its main logo External problems are another matter. “Our main problem is featuring a bird’s nest and the strapline ‘Good Food, Good Life’) and with copycat products and counterfeiting,” says Maeder, “and the value of the brand portfolio are enviable. Interbrand, a leading because our core business is the production of foodstuff for human

60 World Trademark Review September/October 2006 www.WorldTrademarkReview.com Nestlé’s main brands

Coffee Nescafé, Taster’s Choice, Ricoré, Ricoffy, , Bonka, Zoégas, Loumidis Water Nestlé Pure Life, Nestlé Aquarel, , Vittel, , S.Pellegrino, , Levissima, Other beverages Nestea, , Nescau, , Carnation, Libby’s, , Nestomalt, Nestlé’s trademark rights and help them spot counterfeits; they can Nestlé then inform the relevant contact at Nestlé, who can discuss with Shelf stable Nestlé, , Nespray, Ninho, colleagues in the trademark team and the relevant business unit Carnation, Milkmaid, , what course of action should be taken. Moça, , Gloria, Svelty, Molico, For imitations, Nestlé’s approach depends on the importance of Nestlé Omega , Bear Brand, the brand at issue. For global strategic brands – those are overseen Coffee-Mate from Vevey or St Louis – the group must have a coherent policy of Chilled Nestlé, Sveltesse, La Laitière, enforcement worldwide. “That’s why we have appointed worldwide La Lechera, Ski, Yoco, Svelty, Molico, coordinators internally to overview all litigation against sensitive LC1, Chiquitin competitors and customers,” adds Maeder. Ice cream Nestlé, Antica Gelateria del Corso, The bulk of the trademark department’s daily work therefore Dreyer’s/Edy’s, Drumstick/Extrême, consists of defending the group’s brands against counterfeits and /Tandem, Mega, Mövenpick, copycat products – the latter may not be criminal in intent but are /Sem Parar/Non Stop still very damaging to the business in terms of lost revenue, brand Infant nutrition Nestlé, Nan, Lactogen, Beba, Nestogen, dilution and market confusion. , Neslac, Nestum, Guigoz, Good Start Breaking trademark law ground Performance nutrition PowerBar, Pria, Musashi Nestlé’s trademark management and enforcement is a smoothly run Healthcare nutrition Nutren, Clinutren, Peptamen, Modulen business. Much of its success can be credited to Maeder and Nelson’s Bouillons, soups, Maggi, Buitoni, , Winiary, influence in reshaping the department and portfolio over the past seasonings, pasta, sauces Torchin few years. Keeping things close to the heart of the business to Frozen foods Stouffer’s, , , maximize internal communication and awareness of trademark (prepared dishes, pizzas) Buitoni, Maggi issues also helps, as does a systematic use of all possibilities offered Refrigerated products Nestlé, Buitoni, Herta, Toll House by local statutes and practice to protect the group’s brands (eg, (cold meat products, Nestlé obtained well-known status for the MAGGI trademark in dough, pasta, pizzas, March 2006 in ). sauces, snacks) Nestlé is also at the forefront of trademark law changes: for Chocolate, confectionery Nestlé, , , Galak/ instance, it was one of the international companies that led the and biscuits , Kit Kat, , campaign for the reform of Mexican legislation on famous Butterfinger, , Polo trademarks last year. In Europe, it was involved in a landmark Food services and Chef, Davigel, Minor’s decision regarding registration of its slogan ‘Have a Break’ as a professional products trademark in the United Kingdom for products in Class 30 of the Petcare Purina, , , , Nice Classification (including chocolate). The application was Gourmet, Mon Petit, , , opposed on the claim that the slogan was devoid of any distinctive Cat Chow, Pro Plan, Purina ONE, character; was essentially used as part of Nestlé’s registered mark Beneful, Tidy Cats HAVE A BREAK … HAVE A KIT KAT; and was not used as an Pharmaceutical company independent mark. Both the High Court and the Court of Appeal of Pharmaceutical and , Laboratoires innéov England and Wales agreed with the opponent, but the appellate cosmetic joint ventures court still referred to the European Court of Justice (ECJ) the Associated company L’Oréal (equity interest) following question for a preliminary ruling: “May the distinctive character of a mark referred to in Article 3(3) of the [First Trademark] Directive and Article 7(3) of the [Community Trademark] Regulation consumption, there are health and safety issues besides the usual be acquired following or in consequence of the use of that mark as economic implications of other parties taking advantage of our part of or in conjunction with another mark?” brands.” The health and safety implications of counterfeiting were In its July 2005 ruling, the ECJ held that a sign that constitutes once the bête noire of the pharmaceutical industry alone, but with part of a slogan that is used as a trademark may acquire counterfeiting now affecting all industries, in particular fast-moving distinctiveness through use. The ruling implied that Nestlé may be consumer goods, the risk for consumers of buying products that use able to register the HAVE A BREAK mark after all, which finally unsafe raw foodstuff or materials, or may have been contaminated happened in June 2006 when the UK registry accepted HAVE A during production most likely carried out with a total disregard for BREAK for registration. hygiene, let alone health standards, is increasing. “The ECJ ruling is a landmark decision also for shape and Counterfeiting is a worldwide problem for Nestlé, but colour marks that are used in combination with another mark,” particularly in Asia and the . The group’s official policy observed Maeder. WTR on enforcement is a tough “war on counterfeiters, zero tolerance” affair: “We enforce all rights in principle,” declares Maeder. Practically, the trademark team’s approach to counterfeiting involves building strong relationships with local customs authorities and other enforcement agencies. Maeder illustrates this policy by citing a recent initiative: “We signed a memorandum of understanding in June with the Jordan authorities to enforce our rights and exchange information on products that are likely to be counterfeited.” This helps raise local authorities’ awareness of www.WorldTrademarkReview.com September/October 2006 World Trademark Review 61