Unilever profile Unilever’s IP management: creating the bedrock for global brands A review of the way in which it handled intellectual property issues led to a major re-engineering of the IP function at Unilever. The consensus inside the company, as well as among observers looking in, is that the move has considerably strengthened the owner of one of the world’s largest portfolios of trademark and patent rights. By Rick Marsland One hundred and fifty million times every day, brand extensions. For example, in 2000 the someone somewhere in the world buys a company acquired Bestfoods, Slim.Fast, Ben & branded product from Unilever. If you’re a Jerry’s and Cressida within a single six week marketeer, it’s a dream scenario. If your job is period, adding a combined total of 35,000 managing the IP underpinning those brands, trademarks to its portfolio in the process - that figure underlines the scale of the challenge. including 15,000 from Bestfoods alone. Add to While Unilever needs little introduction, for this a worldwide portfolio of 25,000 patents, consumers the Anglo-Dutch fast moving and the scale and critical importance of consumer goods (FMCG) giant's global Unilever’s IP management task becomes clear. Our IP assets portfolio of brands is probably far more visible “Our IP assets are quite simply the building- “are quite simply than the company itself. With operating blocks of our new launches and of our the building- subsidiaries in 90 countries, sales operations competitiveness in the marketplace,” says in another 60 and global turnover of around Louis J Virelli, Unilever Senior Vice President blocks of our V48 billion (US$57 billion), Unilever’s leading and General Counsel for Intellectual Property. new launches brands such as Knorr, Hellmann’s, Persil, “Being a consumer products company, we and of our Birds Eye, Wall’s, Flora and Dove represent face the fact that the lifespan of our products competitiveness just the tip of the iceberg. While the company can be short-lived. We want not only to be in the has not explicitly valued its brands, it does say first, but to be first with products that will V marketplace that 14 of them are worth more than 1bn in have a longer than normal life expectancy. IP - annual sales, and five in excess of V2bn. and particularly patents from a technological Louis J Virelli” Three years ago, Unilever launched a radical point of view - is what will deliver and strategic shift to focus more tightly on a select maximise exclusivity in the market.” group of major brands. Under its ongoing This importance is increasingly appreciated “Path to Growth” strategy, the company is by external stakeholders, ranging from analysts rationalising its global portfolio of 1,600 and the media to governments and regulators. brands to 400 over the five years to 2005. Unilever’s press office staff have seen a That process is already well underway, with gradual but clear increase in IP-related some non-core brands such as Unipath sold enquires in recent months. And Michael Steib, off, and others being realigned and a Morgan Stanley analyst based in London harmonised across borders. covering major European food stocks, confirms IP’s pivotal role. “It is critical to companies like The IP portfolio Unilever,” he says. “It may be less high-profile While the reduction in the brands portfolio is in investors’ minds than with IT companies, but dramatic, the complex relationship between these companies can only grow by doing a brands and IP assets means the effect on the handful of things - and one of them is IP portfolio is much less pronounced. The innovation, which has to be underpinned by IP.” possibility of any significant reduction in its According to Steib, Unilever is doing well in global trademark portfolio of 135,000 this regard. “A core element of Unilever’s Path registrations and applications is made less likely to Growth is innovation, and a significant part by its continuing programme of acquisitions and of that is managing its IP. As well as reducing 14 Intellectual Asset Management July/August 2003 Unilever profile the number of brands and rationalising costs by focusing on a smaller number of major brands, the programme is also about extending the remaining brands into new categories - such as extending Dove successfully into shampoos. So far Unilever has done an excellent job and has met or exceeded its own targets. Effective management of IP has played a central role in that.” When you think “in terms of the New structure overall value of Since the start of 2003 that role has been handled through a new organisational structure your IP to the for Unilever’s global IP department: a change business, it aimed at unifying the management of all types makes sense to of IP rights, and integrating it more closely into bring [trademarks the business as a whole. The apex has and patents] remained unchanged, with Stephen Williams, together Joint Secretary and General Counsel, as the board-level representative of IP. Richard ”Heath He is reported to by Louis Virelli, who explains that last year’s strategic review of all activities in Unilever’s corporate centres reached a clear conclusion: that the long- standing separation of trademarks and patents management had outlived its usefulness, and that the two groups should be merged. “We found that each group was doing a very good job on its own, but that they looked upon themselves as having different global IP team of more than 150 people internal clients - which was not actually the spread across three continents. On the case,” says Virelli. “The trademarks unit patents side, it includes 50 specialist patent tended to work very closely with the attorneys and an equal number of support marketeers, and patents with the scientific staff split approximately three ways between R&D specialists. The two groups were co- the US home and personal care research operating, communicating and co-ordinating centre in Edgewater New Jersey, the foods very well together. But there was no single research centre at Vlaardingen in the point of contact for the business, and no Netherlands, and two sites in the UK - the unified direction across both groups. We corporate research centre at Colworth, and decided it was time to merge them and get the European home and personal care synergies as a result.” research centre at Port Sunlight. There are Richard Heath, Unilever’s Head of Corporate also two Unilever patent attorneys based Trademarks and General Trademark Counsel, permanently in Mumbai, India, and in Sao adds that the shift also reflects wider changes Paulo, Brazil. in the global IP landscape. “When you think in On the trademarks side, 56 specialists are terms of the overall value of your IP to the split across three European locations, with 34 business, it makes sense to bring them of them - including the brand protection unit - together,” he says. “Plus, industrial designs based at Colworth UK, 12 home and personal have traditionally been seen as part of care trademark specialists based at one of patents, but changes to the laws on industrial Unilever’s corporate head offices in London, designs in recent years have sharply and 10 foods trademark specialists based in increased the degree of cross-over with the other corporate head office in Rotterdam, trademarks. These days you can protect three- Netherlands. All IP specialists across both dimensional trademarks, colours, sounds - so disciplines work closely together with one industrial designs are no longer mutually another and with research and marketing exclusive with trademarks, and bringing people from across the business. patents and trademarks together becomes an “The review of the corporate centre even more logical step.” confirmed that the patents, trademark and legal departments were functions that we One group, global coverage needed to own internally, because it meant The result of this merger is an integrated, they were closer to the business and better Intellectual Asset Management July/August 2003 15 Unilever profile understood the needs and strategy of the far easier to manage centrally. Also, when it business going forward,” says Virelli. “The key comes to disputes with competitors or anti- is that IP management should not be a matter counterfeiting actions these used to be of doing work as it is handed to you, but handled locally - but now the international rather of helping to direct the business to context of both types of activity means global achieve the results set out in the strategic co-ordination is absolutely critical.” plan. It’s not patents or trademark processing This approach means decisions and actions - it’s IP portfolio management.” on the management and expansion of the IP Virelli adds that the new unified structure portfolio are also initiated and co-ordinated has better positioned the IP function to play centrally. “With trademarks, we tend to file this role. “The synergies include better registrations wherever we sell or manufacture interaction by patents with marketeers and by products,” says Virelli. “We don’t take that trademarks with our R&D community,” he says. approach with patents, since it would be “In the brief period since we created the incredibly expensive. What we have is a filing consolidated IP group, we are definitely seeing scheme for each category, depending on the more of this type of interaction. Plus as part of nature or type of innovation that emanates the reorganisation we have created a specific from each one. Scheme one might cover very trademark operational group - 35 people, now significant innovation to the business and take based at Colworth, who do most of the in the largest number of countries, whereas a preparation and searching that is a critical part narrower invention in the same category might of any brand launch or extension.