#IPLaw #TMlaw – UE Decision against the 3D Mark of KitKat Bars

Since 2007, a litigation occurs between NESTLE (CH) and MONDELEZ (US) (formerly CADBURRY), in particular in Europe. This litigation and the underlying legal reasoning illustrate some elements to be taken into account when a three-dimensional (3D) trademark filing is envisaged.

The subject-matter of the litigation concerns the 3D mark recorded by NESTLE on a chocolate product with 4 glued bars, with an ingot shape. The graphic representation of the mark includes a view in the black and white space of the 4 associated bars without logo.

The European Union Intellectual Property Office (EUIPO) has accepted the registration of the mark with effect from August 7, 2006, with number 002632529, in class 30, designating: “Sweets; bakery products, pastries, cookies; cakes, waffles”.

On 23 March 2007, CADBURRY (later MONDELEZ) initiated a procedure at EUIPO to cancel the 3D mark in question. Looking in the details of this case, we can see that MONDELEZ sells a similar chocolate bar claimed as being a Norwegian chocolate bar “Kvikk Lunsj” (for “Quick Lunch”) marketed since 1933 by the Norwegian company FREIA, bought in 1993 by KRAFT FOODS, which became MONDELEZ Intl. This gives a clear picture of the interest of MONDELEZ in this case.

As for Kit Kat products, they would also have been marketed since 1933.

On 11 January 2011, the EUIPO annulled the mark in first instance, which NESTLE appealed to later obtain a cancellation of the first instance decision and a rejection of the demand of MONDELEZ. In second instance, EUIPO essentially held that even if there is no “inherent distinctiveness”, NESTLE had shown that that mark had acquired such a character in relation to those goods by the use which has been done.

The Court of the European Union seised by MONDELEZ considered in substance that:

1 °) the distinctive character by the use should have been considered not only in the category (30) but in each subcategory (including in particular bakery products) and concludes that the proof is not established for the products other than sweets and biscuits.

2) EUIPO should have taken into account the distinctiveness achieved by use in EU countries. The investigations showed that the distinctive character was acquired in 10 out of 28 countries (Denmark, Germany, Spain, France, Italy, the Netherlands, Austria, Finland,
Sweden and United Kingdom), but EUIPO did not analyze the evidence for the other Member States, namely Belgium, Ireland, Greece and Portugal.

The EU Court refers the case to EUIPO to re-examine the EU-wide distinctiveness for sweets and biscuits.

This shows a disadvantage of unitary IP titles, because individual marks would have been more likely to succeed in each relevant country.

An English decision of January 2016, also went against NESTLE, judging that the shape of chocolate bars can not be filed as a trademark.

As a conclusion, the acquired distinctiveness
– in the relevant category(ies) and subcategories, and
– in the relevant territory
are  thus important features to review when intending to claim a protection of a 3D shape as a trademark.

SOPERYAH IP

#ProfitIP – Generate revenues through patents

As already mentioned, the IP strategy is a significant tool for developing businesses and increasing their market share through legal and commercial means.

Given the relatively high cost of acquiring intellectual property rights, compensation systems for these rights should be considered. At SOERYAH IP, we recommend going as far as possible to the widest possible protection. As a result, intellectual property rights cover a wide range of objects.

Though such a strategy can generate greater procedural costs, It can also generate significant revenue. In particular, if the protection covers objects which are not marketed, it may be advisable in this case to propose that a Third party operates these objects by means of a license agreement.

In this configuration, the licensee thus benefits from a legal monopoly on these objects, which allows him to fix the price without being bothered by a competitor, and to maintain its market shares and margins. In addition, the licensee receives license fees, usually as a percentage of the licensee’s turnover, which is additional income. Rates are negotiated and averages are established based on technical areas.

This type of situation may arise when an invention relates to several different objects A, B, C, in the same inventive concept or having been the subject of divisional applications. Even if object A is the only one actually operated, and the easiest to defend from a patentability point of view, it may be wise to maintain protection for objects B and C. Indeed, it is possible that the products proposed by the holder move to object B, and a third party might be interested in having a monopoly on object C which is in its core business. In this case, the holder could benefit for example from 5% of the turnover of the licensee on the relevant products.

The situation is even more interesting in the case of an individual inventor, despite probable financial limitations. Protecting objects A, B and C allows to offer them to 2 or 3 licensed companies and possibly to other companies abroad. However the costs of filing and extension abroad are significant for a qualitative drafting.

Companies and other IP portfolio firm have an interest in financing the research and patent procedures of isolated inventors, with the objecctive of recovering their investments on the international revenues from the patent. Several interesting patent projects fall into the public domain due to lack of financial means, whereas they could have been a source of significant revenue.

We remain at your disposal for any further information adapted to your situation.

SOPERYAH IP

#ProfitIP – The values of French and English brands

The previous publication reports the Forbes 2018 of brand ranking according to the values ofthe marks. The ranking can be viewed on this link.

The ranking shows the backwardness of French and English companies in the technological fields, or consumer products. The first brand of the ranking is Apple with a value of 182 billion dollars. The first European brand is Mercedes at 34.4 billion (13th in the ranking).
The first French brand is Louis Vuitton at 33.6 billion (15th of the ranking), then L’Oreal at 17.2 billion dollars (30th of the ranking).
The first English brand is Accenture at 14.8 billion (38th of the ranking), then HSBC at 11.9 billion dollars (52nd of the ranking).

The gap is considerable, so to French and English companies: ON YOUR MARKS !!!

The question of the method of estimating brand values ​​may arise, in order to get such results.

Several methods for estimating the value of intellectual property rights are proposed and throughoutly discussed. The methods range from the most objective to the as much subjective as possible, taking into account scores on several criteria. The consensus is towards ISO 10668 standard. The same is obtained after national commissions of experts in marketing, tax, IP attorneys and accounting experts, from several countries of the European Union, and of Australia, Japan, Korea and China.

The standard is methodological and based in substance on three valuation approaches:
The income approach
The market approach
The approach by the costs.

In the income approach, the value of the IP right depends on the income it is likely to bring over its remaining life. Six methods are listed in the ISO 10668 standard, including the cash flows, the surplus profits specifically related to the IP right in question.

The market approach aims at estimating the value of a mark on the basis of the market price, usually by referring to comparable brands whose transaction prices have been made public.

The cost approach aims at estimating the value of an IP right on the basis of the costs incurred for its creation.

Other more complex methods, such as that of Interbrand, take into account brand-specific gains and a variety of “brand strength” parameters, namely, its positioning, the environment, competition, past performance and future plans. The parameters are weighted and the set of scores is used to determine the brand value.

the parameters are as follows:
– leadership: (25%) (ie: influence of the brand on the market / market shares);
– stability (15%) (brand sustainability allowing good customer loyalty);
– the trend: (10%) (ability to stay modern and sought after);
– the market: (10%) (business environment, growth rate, customer volatility, barriers to entry …);
– geographical scope: (25%) (frontiers of the protected territory);
– Marketing support: (10%) (generating marketing and communication expenses for the IP right in question);
– protection: (5%) (other IP deeds related to the one in question).

All these parameters are used to determine the value of the IP right in a relatively objective way.

 

This was only a sample of methods for estimating the value of industrial property rights.

 

All that remains is doing more and developping your intellectual property rights portfolio, and increase its value through communication campaigns and marketing actions increasing your reputation, and therefore your market share.

SOPERYAH IP

#ProfitIP – The value of intellectual property rights – the case of trademarks

 

Rank Brand Brand Value 1-Yr Value Change Brand Revenue Company Advertising Industry
US #1 Apple $182.8 B 8% $228.6 B Technology
US #2 Google $132.1 B 30% $97.2 B $5.1 B Technology
US #3 Microsoft $104.9 B 21% $98.4 B $1.5 B Technology
US #4 Facebook $94.8 B 29% $35.7 B $324 M Technology
US #5 Amazon $70.9 B 31% $169.3 B $6.3 B Technology
US #6 Coca-Cola $57.3 B 2% $23.4 B $4 B Beverages
KR #7 Samsung $47.6 B 25% $203.4 B $4.5 B Technology
US #8 Disney $47.5 B 8% $30.4 B $2.6 B Leisure
JP #9 Toyota $44.7 B 9% $176.4 B $3.8 B Automotive
US #10 AT&T $41.9 B 14% $160.5 B $3.8 B Telecom
DE #13 Mercedes-Benz $34.4 B 18% $116.9 B Automotive
FR #15 Louis Vuitton $33.6 B 17% $12.9 B $5.4 B Luxury
DE #20 BMW $31.4 B 9% $86.8 B Automotive
DE #23 SAP $26.2 B 10% $25.4 B Technology
FR #30 L’Oréal $17.2 B 10% $10.1 B $8 B Consumer Packaged Goods
CH #31 Nescafe $17.1 B 2% $9.1 B Beverages
FR #35 Hermès $15.3 B 17% $6 B $298 M Luxury
IT #36 Gucci $14.9 B 18% $6.7 B Luxury
DE #37 Audi $14.8 B 5% $59.1 B Automotive
IE #38 Accenture $14.8 B 5% $39.1 B $80 M Business Services
NL #40 IKEA $14.5 B 7% $39.3 B Retail
ES #46 Zara $13 B 16% $18.9 B Retail
SE #47 H&M $13 B -8% $22.5 B Retail
DE #48 Siemens $12.8 B 11% $90 B Diversified
UK #52 HSBC $11.9 B 4% $76.6 B Financial Services
CH #53 Nestle $11.7 B 5% $8.6 B Consumer Packaged Goods
DE #58 Porsche $11 B 14% $25.5 B Automotive
FR #59 Cartier $10.6 B 14% $6.3 B Luxury
AT #61 Red Bull $10.4 B 19% $6.8 B Beverages
FR #67 Danone $10 B -2% $10.6 B Consumer Packaged Goods
DE #68 Adidas $9.5 B 20% $20.6 B $2.3 B Apparel
CH #71 Rolex $9.3 B 7% $4.6 B Luxury
DE #72 T-Mobile $9 B 18% $38.7 B $1.8 B Telecom
ES #76 Santander $8.7 B 5% $49.5 B $820 M Financial Services
DE #77 BASF $8.6 B 9% $69.9 B Diversified
DE #82 Heineken $8.2 B 7% $5.6 B Alcohol
FR #87 Chanel $8 B 10% $5.6 B Luxury
FR #88 Lancome $8 B 13% $5.3 B $8 B Consumer Packaged Goods
DE #89 Nivea $7.9 B 14% $4.7 B $1.6 B Consumer Packaged Goods
DE #90 Volkswagen $7.9 B 16% $99.6 B Automotive
DK #91 LEGO $8.6 B -1% $5.1 B Leisure
NL #93 Philips $7.7 B 6% $26.8 B $1 B Diversified
DE #95 Allianz $7.6 B 11% $118.7 B Financial Services

Source: Forbes.com

SOPERYAH IP

#ProfitIP – Profitability of Industrial Property (YIC)

As for the RTC and the ITC already presented, the ” Young Innovative Company” legal system is an interesting tax tool to limit IP expenses and to exploit the commercial and legal advantages inherent to the related rights (without neglecting the communication and marketing efforts needed to make substantial profits from these rights).

Young Innovative Company (YIC)

Beneficiaries:
cumulatively
-SME (less than 250 employees whose turnover is less than 50M € or whose balance sheet total is less than 43M €);
-with an activity of less 8 years;
– owned at more than 50% by individuals, a single SME, financing companies or the like, research organizations, YIC;
– of which at least 15% of expenses correspond to R&D expenses.

The request must be made to the tax authorities and evaluated at the end of the financial year.

Legal system:
Exemptions up to € 200,000
-100% of corporate tax on the first exercise;
-50% of corporate tax on the second year;
-100% of employers’ social contributions (salaries of CEOs, researchers, technicians …);
– (depending on the City) 100% property tax and corporate city tax (CFE).

In comparison, the YIC is more restrictive, but more financially attractive than the ITC (potentially € 80,000).
The most interesting is the RTC (potentially more than 30 000 000 €).

The request must be made in the form of a sworn declaration to be submitted to the regional or departmental directorate of public finances. No declaration is to be made to Urssaf. The company applies the exemption on the summary statement of contributions.

SOPERYAH IP

#IPLaw, #TMLaw – Introduction to so-called non-traditional marks acceptable in Europe

As you may already know, the trademark is a title deed, having the specificity of protecting a distinctive sign for products and / or services designated. As a title deed, it enters the company’s assets and significantly affects its valuation.

The trademark principle is to enable the consumer to associate your competitive advantage with your business. In broad outline, if a consumer sees a sign on a third-party’s product that makes him think it’s your product (because of the similarity to your trademark), the third-party has de facto infringed your trademark. In practice, it is recommended to file trademarks for both the company name, the logo, and each new product or service.

The European Union IP Office (EUIPO) has modified its rules to remove the requirement of graphic representation of the registered trademarks. This opened the door to the filing of what was later called non-traditional marks.

We will now give a classification of these marks. Non-traditional marks are those whose filing may be of interest but may generate specific issues that are critical to registration. Prior to the change of law, some of these categories had a high probability of rejection for reasons that may persist and that must be addressed in each case.

Traditional trademarks include
– word mark, and
– figurative mark with or without word elements;

Non-traditional trademarks include
– shape mark with or without verbal elements;
– position mark;
– pattern mark;
– color mark or combination of colors;
– sound mark;
– motion mark;
– multimedia brand; and
– hologram mark.

1 °) Word mark

In the terms used by the EUIPO, “a word mark consists exclusively of words or letters, numerals, other standard typographic characters or a combination thereof that can be typed“.

These are classically words forming a mark regardless of the style and colors of the of characters.

For example “SOTERYAH” is protected by a French and UK filings independently of the logo. This is probably the case with the name of your company.

2 °) Figurative mark

According to the official definition, “it is a trade mark where non-standard characters, stylisation or layout, or a graphic feature or a colour are used, including marks that consist exclusively of figurative elements” .

Company logos, product ranges or products fall into this category.

The figurative mark may include word elements and forms a separate category. It is for example the case of a mark combining a logo and a company name or product / service name. For a better protection, it is recommeded to give preference to a figurative mark and a word mark as much as possible (although this increases the costs).

3 °) Shape mark

In the terms used by the EUIPO, “a shape mark consists of, or extends to, a three-dimensional shape. It can include containers, packaging, the product itself or its appearance“.

It concerns the protection of the three-dimensional form of a product or its packaging, considering that this form is considered by the public as identifying the products of the applicant, and that the form is not guided by technical considerations.

The shape of the Mini-Cooper was the subject of many comments. The main examples concern the shapes of bottles and perfume flasks.

The shape mark may also include verbal elements. Again, for better protection, preference should be given, as much as possible, to separate filings, for example a figurative mark and a word mark (in spite of the costs).

4 °) Position mark

According to the official definition, “a position mark consists of the specific way in which the mark is placed or affixed to the product“.

The most related example concern the position of elements on shoe sides or soles. Distinctiveness and non-deceptiveness must, however, be verified on a case-by-case basis.

5 °) Pattern mark

In the terms used by the EUIPO, “a pattern mark consists exclusively of a set of elements which are repeated regularly“.

Many examples come to mind, including motifs of leather luggages or bags.

6 °) Color mark (single color)

According to the official definition, “a colour single mark is just that – a trade mark which consists exclusively of a single colour (without contours)“.

Examples could include colors of product or of their packaging, such as packagings of sodas or chocolates. Here again, particular attention must be given to the criteria of distinctiveness and non-deceptiveness namely.

The combination of colors is also possible and belongs to a separate category.

7 °) Sound mark

In the terms used by the EUIPO, “a sound mark consists exclusively of a sound or a combination of sounds“.

This category includes jingles or sound backgrounds, such as the famous ones of a transport company jingle or of a lion roar.

8 °) Motion mark

According to the official definition, “a trade mark consisting of, or extends to, a movement or a change in the position of the elements of a mark“.

Moving logos of computer programs or cinematographic productions may fall into this category.

9 °) Multimedia mark

According to EUIPO, “it consists, or extends to, the combination of images and sound“.

This category should be considered if it is not planned to separate the movement from the sound. In the opposite case, preference should be given to multiple filings, for example a movement mark and a sound mark, for better protection.

10 °) Hologram mark

According to the official definition, “a hologram mark consists of elements with holographic characteristics“.

They can be defined as 3D images appearing as “suspended in the air”. Typical examples are anti-fraud systems such as holograms of identity documents.

As a conclusion there are at least 10 ways to mark your territory, so on your marks!

SOPERYAH IP

#ProfitIP – Profitability of IP (ITC)

As with the research tax credit (RTC) already presented in a previous post, the innovation tax credit is another tax tool that can offset the high costs that patent expenses can represent for a good return on the patent portfolio (combined with communication and marketing efforts).

Innovation Tax Credit (ITC)

Beneficiaries:
SMEs with less than 250 employees whose turnover is less than 50M € or whose balance sheet total is less than 43M €.

Eligible expenditure:
Costs related to the design or construction of prototype (s), including personnel costs and capital assets.
Costs of acquiring patents and models, and depreciation relating thereto.

Note: the maximum base is 400 k €.

Rate:
20%, a maximum of 80 k €.

For the record, the RTC rate is 30% up to 100 million euros 5% beyond.

It is therefore necessary to cumulate the ITC with other tools, in particular the RTC.

SOPERYAH IP

#IPLaw, #Brexit – Brexit and implementation of the unitary patent

As you may remember, legislative changes that have been expected for decades are currently underway across the European Union, in order to establish what is now called the European patent with unitary effect (which we will abbreviate as “unitary patent”). .

The unitary patent is intended to implement a single title valid throughout the European Union and for which infringement disputes may be ruled ar an European scale, contrary to the “classic” European patent for which at the end of the procedure for grant, the right holder obtains several independent territorial rights, within the competence of eah national jurisdiction.

The prerequisites for the entry into force of the unitary patent and of the unified court are almost all achieved with the exception of the ratification of Germany where a constitutional problem has been raised.

In these circumstances, the impact of Brexit could have caused great upheaval, but the British government announced that Brexit will have no influence on the unitary patent as already presented in our posts. The agreement on the Unified Patent Court was ratified by the United Kingdom on April 26, 2018.

However, the unitary patent is intended to cover the European Union only, which raises the question of the validity of the unitary patent in the United Kingdom.

The most likely solution will be to get closer to what will happen for the EU trade mark after the Brexit, as already discussed in our brief concerning the agreement protocol of 19 March 2019 on the application of Brexit. As you may remember, the EU trade mark will become a comparable English mark and its validity will be linked to that of the EU trade mark.

It therefore appears that the likely outcome will be the following: the European patent with unitary effect will have effect in EU countries, and will be validated in a conventional manner in non-EU states that are party to the European Patent Convention such as already today Switzerland and Turkey, and later the United Kingdom.

To follow closely …

SOPERYAH IP

#IPBasics – Trademarks

In the same was as for patents and design rights, the trademark rights is a title deed, with the particularity of protecting a distinctive sign for the designated products and / or services. As a tite deed / right, it enters the company’s assets and significantly affects its valuation.

The case law concerning what can be the subject-matter of a trademark registration is abundant. What raises least objections is to go for a sign subject to graphic representation, such as numbers, letters, a word, a sentence, a drawing / logo, a combination of colors … (Recent EU law increase the possibilities).

A protectable sign must not be deceptive (ie: likely to mislead the consumer as to the nature or origin of the product or service), or descriptive (ie describing features of the product or of the service covered).

The principle behind trademarks is to enable the consumer to associate your competitive advantage with your business. For example, if a consumer sees a sign on a third-party product that makes them think it’s your product (because of the similarity to your brand), the third-party has actually infringed your trademark.

It is therefore important to quickly take advantage of these prerogatives by “marking” your competitive advantage over your products and / or service with a trademark filing covering the countries where you operate. You will be able to use this legal weapon at least in a dissuasive way vis-à-vis your competitors. In addition, a registered trademark always makes a good impression in the mind of the consumer and could in fact significantly increase your sales. This makes the trademark an effective commercial weapon.

The trademark can be renewed without limit of duration.

The value of the trademark is generally determined by the income provided by the goods or services covered by the mark evaluated in relation to the same product without the said mark.

For example, in the top 100 published by Forbes magazine in 2017, the Apple trademark has an estimated value of 170 billion US $. The first French brand (20th of the top 100) is Louis Vuitton with 28 billion US $.

The path is long, so on your marks …

SOPERYAH IP

#ProfitIP – Profitability of IP (RTC)

In view of the high costs that patent expenses can represent, in addition to marketing efforts, it is important to use tax tools in order to have a good profitability of the patent portfolio.

Research tax credit (RTC)

Beneficiaries:
Companies of any status subject to companies tax (IS) or income tax (IR).

Elligible expenses:
Expenses related directly or indirectly to R&D, including patent and watch fees, salaries, depreciation allowances of immobilisation and of patents,… and even expenses related to the creation of new collections in the textiles-clothing-and-leather field.

NB: Expenses of experimental agricutural stations and farms are doubled.

Rate:
30%, up to 100 million euros; 5% beyond.
(For DOMs 50%, up to 100 million euros, 5% beyond).

SOPERYAH IP