Reading the fine print

Font Size

Print

Feedback

Email

Discuss

Related Articles

367K housing units in seven metros: Knight FrankRIL may make bid for LyondellBasell in FebSEBI notice to RIL on RPL share sale

: Whether the Coca-Cola and Bisleri spat is buried forever or some fizz still remains is difficult to guess, but a clear lesson is that companies need to guard their intellectual property rights carefully.

It all started when Bisleri’s chairman Ramesh Chauhan came to know that Coca-Cola was trying to register the Maaza trademark in countries other than India. Chauhan had sold Maaza to Coca-Cola in 1993 along with his other brands like Thums Up, Goldspot and Limca from his stable. Subsequently, the companies had signed an agreement over the ownership of the Maaza trademark in India.

However, Chauhan says that he had sold the rights of Maaza only for India. “We have asked Coca-Cola to pay us compensation of $5 million and give us in writing that they would not register our trademark anywhere in the world,” he told FE. Coca-Cola had made attempts in the past to register the Maaza trademark in Holland and Turkey, but had subsequently withdrawn its applications.

On the other hand, Coca-Cola says that it never signed a non-competing agreement that could have prevented it from registering the trademark elsewhere. “Though the Chauhans have not entered into a non-compete agreement with Coca-Cola, restraining us from unbridled expansion, we have decided to not register the trademark outside India. We are not registering for moral reasons because he doesn’t want us to register outside,” said the Coca-Cola spokesperson. He added, “The issue is over. We have sent a written statement to Coca-Cola stating that we will not register Maaza trademark in other countries.”

However, this is not the sole case of IPR infringement that has hit corporate India. In another instance, French food company Danone and Indian confectionary major Britannia got into a rough patch over Tiger brand, which is a product of confectionary major Britannia.

Danone has a 25.5% indirect stake through a holding company Associated Biscuits International Holdings (ABIH) in it. The Wadia group and Danone have an equal stake in ABIH. The Wadias accused Danone of registering Tiger brand on its own in over 70 countries without the knowledge of the management board. Britannia filed a court case against Danone in Singapore in May 2007 and there has been no breakthrough on the issue yet.

Why did these two cases hit the headlines? It’s because both Tiger and Maaza are powerful brands in India, contributing significantly to the overall sales of Britannia and Coca-Cola India respectively and therefore are worth fighting over, explain industry sources. Both these instances point towards the increasing number of trademark infringements that are rocking corporate India. According to a survey by consulting firm KPMG India, thefts of intellectual property rights and deceptions related to e-commerce and IT pose the greatest risk of frauds for Indian corporations in the next three years.

According to Diljeet Titus, managing partner of law firm Titus & Co, the number of intellectual property cases is increasing by 25% year-on-year. “There is outright passing of intellectual property, infringement, parties overstepping trademarks, and design similarities in liquor or soft drink brands,” he said.

Analysts are of the view that with Indian companies increasingly looking at international markets, brands have become highly valuable. “You can’t go anywhere without a brand. And acquiring or establishing new ones is a very expensive proposition,” added Titus.

Part of the problem stems from the fact that in such cases, where products were sold many years ago, Indian companies didn’t visualise that their brands could one day have an international market and therefore their agreements lacked clarity on the subject of IPR and operations in foreign lands.

“Earlier Indian companies were restricted within the geographic boundaries of India. But when they realise that their foreign partners are using their brands, they are left in a fix. India is such a large service economy that brand value surpasses financial aspects in some cases,” said Deepankar Sanwalka, executive director (head, forensic) of KPMG. What is interesting is that in both cases Indian parties had stumbled upon the fact that their MNC parties are registering their brands in foreign countries while they were planning to launch those brands abroad themselves.

The writing on the wall is clear. Since businesses are increasingly being valued on the worth of their brands, companies need to guard their intellectual property with all their might. Summed up Sanwalka, “Companies need to go through the stages of protection, development and commercialisation of their intellectual property to extract the maximum value out of their brands.”