Valentin Tkach
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Golden Copies
Minister of Education and Science Andrei Fursenko has set the new Federal Intellectual Property, Patent, and Trademark Service the following task: “To combat semilegal producers who change one letter in the name of a well-known product and put it on the market.” Of course, shoppers today are more experienced consumers than they were in the days of the first commercial outlets offering Akaiwa tape recorders and Abibas running shoes. However, imitators who build their business on foreign brands have also grown up. Dengi correspondent Aleksandr Voronov looks at how some producers protect their brands, while others still contrive to use them.
A Play on Weaknesses
If people sent robots to the store for laundry detergent, beer, or pasta, we would never find out about the con men who make money off foreign brands. Robots would be guaranteed to distinguish one item from another. But for the time being, people do their own shopping and no one is in any hurry to implant chips with a perfect memory in them. Unlike a computer, a person cannot memorize every tiny detail, and the business of parasitizing another brand’s popularity is built on this very weakness. Parasite goods are not fakes, since they do not completely copy a popular brand (there is too much risk of a lawsuit with an obvious loser) but only reproduce enough of their characteristic features that the consumer associates the product with the well-known brand.
On the other hand, manufacturers who have swallowed the patent myths unwittingly help these imitators make money off brands. For example, some manufacturers think “brand” and “trademark” are the same thing and protect their product only by registering the trademark. Manufacturers of clones take advantage of these misconceptions and have become noticeably more skilled in legal niceties since the days of Panasonix equipment and Ri-bock running shoes. The manufacturer of Soyuz-Apollon cigarettes registered the trademark at Rospatent under the “matches, tobacco, and smoking accessories” class of goods. Cigarettes are not formally classified as either matches, tobacco, or smoking accessories, and another company used this fact to patent the Soyuz-Apollon brand exclusively as “cigarettes”.
The losses to owners who have suffered from this kind of shortsightedness can be estimated from the following example. While the heedless manufacturer is proving “similarity of trademarks to the point of confusion” in a patent dispute and making the rounds of various courts demanding that the manufacturers of the clones be recognized as unfair competitors, the latter are calmly selling their products. And as practice has shown, court proceedings can drag on for a year or more.
RF patent attorney Vadim Uskov: The need to protect a brand as a package became clear after a friendly argument for $1000 with the owner of the Baltimor company. In a table conversation, he mentioned that he had registered 36 ketchup trademarks and considered his brand fully protected. I said I could make a product that the consumer would be convinced was Baltimor ketchup, and all the features of the imitation ketchup would be safeguarded by separate protective documents. We started with registration of the Baltimor company’s container: instead of the three-dimensional trademark on the bottle already assigned to Baltimor, we received a license for a so-called industrial design. (This was made possible by a legislative loophole that existed at the time of the argument but has since been closed.) Then we obtained a document for a red label with the nonproprietary words “tomato ketchup” and an oval “à la Baltimor”. Then we invented a nice story about the Baltic war god Baltitor, obtained a trademark, and at the same time patented the name “Baltinor” as well. Only a close look at the label showed that the ketchup in the identical bottle was not actually Baltimor: the letters “n” and “t” on the label were barely distinguishable from “m”. I won the argument.
Specialists believe the best defense for a brand is a planned attack. A manufacturer wanting to decrease the risk of cloning should register the largest possible number of potential clones. It makes sense in this case to be guided by the examples of other companies, since offenders intent on cloning a recognized product have a lot of room to maneuver.
Word for Word
The goal of an imitator planning to sell a parasite product is to make a fast profit on recognizability; therefore, the easiest ways to achieve this goal are the most popular. A brand can be cloned using legal means. For example, it is not prohibited to set up a company with the same name as a trademark registered by another company. Misappropriation is difficult to prove in this case. According to the law, a manufacturer who has registered as OOO Fairy and prints “Manufactured by OOO Fairy” on the package is simply informing the consumer.
Another widespread practice is cloning a product using brands advertised in another region. For example, a well-known confectionery factory in Ekaterinburg confined itself to protecting its products only as “confectionery”. As a result, yogurt with the identical name appeared on virtually the same shelves in stores in the same city. Shoppers quite naturally assumed that the confectionery factory made the yogurt. The dairy that made the yogurt registered the trademark for its product, as well as a separate company with the same name. The owners of the two factories spent a year and a half in litigation, and all this time the yogurt sold splendidly without any advertising.
Nearly all sectors related to beer have cloned products manufactured by the Baltika concern, selling chips, dried fish and vodka “à la Baltika”. The biggest of all was the “cigarette” scandal, when a company from Podolsk produced 250 000 packs of Baltika cigarettes without any kind of license and even carried out an original advertising campaign: buy a pack of Baltika 9 cigarettes and get a bottle of Baltika 9 beer free. Podolsk experts reproduced some of the brewery’s design elements, including the numbers 3 and 9, which are nonproprietary with respect to intellectual property, and the sprays of hops on the St. Petersburg company’s emblem was replaced with tobacco leaves. A lawsuit was inevitable; but the brewery was able to avoid huge losses, since it already owned a series of trademarks on many kinds of goods, including cigarettes, and therefore, the Podolsk tobacco company’s products were seized only three days after they were discovered in retail outlets.
A trademark can also be cloned by using phonetic imitation. To the consumer, the names of Sam Samych and San Sanych pelemeni, Dobry and Bodry juices, Makfa and Marfa pasta, and Sladko and Sadko candies sound identical. Reebok running shoes turn into Rybak, and wholesome Orbit gum is transformed into Orbita and Orbel toothpastes, which the consumer believes are goods under an already familiar brand name.
Con artists can also register a trademark that at first sight bears no resemblance to the original by imitating the print. Regardless of whether the well-known original product uses type or script on its package, a parasite brand will invariably appear. At first glance, the name “Grisha” has no association with “Prima” cigarettes, but the results are on hand (the two words look almost identical in Russian script; see the first two pictures at the top of the page. “Prima” appears on the left-hand package, and “Grisha” on the right-hand package.). All you have to do is remove the flourish from the capital letter and replace the lowercase “m” with the lowercase letter “sh” on the “Prima” package to get “Grisha”. A Martini clone came out in the village of Adelino in Ryazan Region under the same scheme. The reasonably priced Marti#1 (written as “MartiN1” on the label) vermouth with the honest label “Made in Adelino” might have gladdened undemanding vermouth lovers for a lot longer if the manufacturer of Martini had not taken care to protect its brand name beforehand.
So-called brand mixes are on the highest rung of the wordplay on brand names. For example, Kalina Concern produces 32 Norma toothpaste, and Nevskaya Cosmetics’ key brand is Pearls (Zhemchug), while Torn Cosmetics makes a product with a name similar to both these toothpastes—Thirty-Two Pearls (Tridtsat dve zhemchuzhiny). Another company, Borodino, kills three competing birds with one stone with its 7Ya juice (pronounced “Sem Ya” in Russian), i.e., J7 (Wimm Bill Dann), Ya (Lebedyansky), and Moya Semya (Nidan Foods).
To Good Effect
If artful counterfeiters limited themselves to phonetic or print imitations of well-known brands, it would be only a minor problem. In the end, shoppers who are not color blind will be able to distinguish one package from another by its color, especially since the Russian consumer interprets graphic information better than written labels, particularly if they are complicated or written in Roman letters. However, translating the statement “People think in images” into the language of packages and labels means that a consumer standing one to five meters away from an item in a store remembers that item by so-called color patches and their distribution. Imitators make active use of the color patch identification mechanism.
The package of Poly Brilliance hair dye from Schwarzkopf is remembered by the hair color of the woman in the photo, the red background of the box shading to burgundy, the white lettering, and the light blue triangle and diamond of the company’s emblem. If Poly Brilliance is placed on the same shelf as Prestige dye from the Bulgarian company Roza Impex, there is no confusing the two products. If it is not, the consumer sees the burgundy-red background of the familiar Schwarzkopf product, a woman with similar hair color, and a combination of white and light blue tones on the package of a relatively cheap hair dye and will probably not read the Roman lettering very carefully.
Consumers know the popular Fairy dishwashing liquid by the bottle with the red cap and the label with the droplet and red lettering. Not surprisingly, the consumer thinks the similarly packaged Mary liquid is the familiar brand. The graphic elements of Ariel laundry detergent developed by Proctor & Gamble keep several household chemical manufacturers busy. The rotating drum stretching from the lower left to upper right corner (this is how Procter & Gamble portrays the positive action of the Ariel brand) and the model of the “washing” molecule can also be found on packages of April, Aprel, and Aist detergent.
Producers’ lack of foresight concerning patents on the graphic design of labels and packages often becomes the subject of serious legal proceedings.
Vadim Uskov: Several years ago in Kazakhstan, an influential industrial group started selling red wine with a label depicting three monks. Competitors used the wine’s nearly unintelligible (to the average Kazakh) German name, changed a few letters, added a fourth monk to the group of three (which was unimportant to consumers, since they remembered the monks but not their number), and brought out their version of the drink. After losing several court cases, the first group was so angered by the competitors that it used its connections to break up the Kazakh patent office.
However, shoppers have learned to separate the wheat from the chaff in the years of capitalism. They are already used to fakes and when they discover similar goods at different prices on the shelves, they assume that the fakes must be cheaper. Producers imitating well-known brands usually do try to sell their product more cheaply than the original, but there are unique exceptions.
At the end of the 1990s, a brand of toothpaste called “Forest Balsam” (Lesnoi balsam) produced by Kalina Concern appeared in stores. It cost about 8 rubles and came in a metal tube packed in a cardboard box. Torn Cosmetics then brought out Cedar Balsam (Kedrovy balsam) toothpaste in a plastic tube in an embossed package at a price of about 20 rubles. The consumer seeing the two brands of toothpaste with similar names (among other things, both packages were decorated with a pattern of evergreen branches) was guided by the principle of “the right toothpaste is the expensive one.” This is one of the first cases where a producer made such ingenious use of the popularity of someone else’s brand. Kalina, incidentally, was unable to prove in court that Torn Cosmetics had used a trademark that was “similar to the point of confusion.” The toothpaste producers are still involved in legal wrangling.
Nontrivial Ploys
The appearance of video clips and outdoor advertising has greatly increased the probability of imitation, and not only because a brand becomes more popular, and so parasitizing it is now economically sounder. Each clip and billboard has a theme, but illegal copying of a theme is even more difficult to prove legally than its trademark and package design rights. Therefore, using someone else’s themes is always high flying; no one would venture to call it parasitism.
Advertising costs tripled during the World Hockey Championships in St. Petersburg, and the city administration was forced to cover up 300 empty billboards. The Aleko company made 30 placards that repeated the design elements and color spectrum of social billboards, actually connecting them with its advertising campaign absolutely free.
Even more inventively, using the technique “continuing the message”, advertisers parodied Valentina Matvienko’s election placards: dark signs with the slogan “Our city is tired” and an image of an utterly exhausted Atlas. Immediately after the elections in St. Petersburg, billboards advertising Darya pelmeny appeared with the same Atlas and with the first part of the slogan “Our city…”, written in the same monumental script and a continuation in red italics “…rested. Full and satisfied.”
Aleko and Darya’s campaigns parodying social advertising did not cause damage to any specific producer. Such actions are nearly unpunishable by legal means, regardless of the superefficiency of using another’s information resources.
Video advertising has opened up a whole new field for theme parasitization and message continuation. One example is the “Return Strike” campaign for Yava cigarettes based on TV ads for Coca Cola. In the soft drink ad, bears are looking at the Northern Lights, when an enormous glass bottle shoots out from under the ice. The clumsy bears quickly drain it, rolling their eyes in satisfaction, and then one of the bears smiles and shows the bottle to viewers. In the cigarette ad, after watching the Northern Lights, the bears throw away bottles of some dark drink resembling the glass bottles from the previous theme and then head towards a pack of cigarettes that has crashed onto the ice from the sky.
However, producers are on the alert and are protecting their products by nontraditional and highly effective methods. Baltika, for example, determined the appeal of the word “honey” from polls of focus groups, but then ran into problems when registering the trademark. For beer containing honey, the adjective “honey” is descriptive and unguarded, and honey beer without honey misleads the consumer and therefore cannot be protected by a trademark. However, Baltika patented “Honey” by an alternative method, thus protecting the formula for beer with any possible honey content, from a barely perceptible 0.5% to a maximum of 8% at which the drink is still considered beer. Now, no producer except Baltika has the right to make honey beer, no matter what it is called, because this would infringe on Baltika’s patent.
Capture the Field
Whereas textual games with the trademarks of well-known brands are a minor problem and cloning graphic elements is a misfortune, capture of a brand is real calamity for the company that has decided to use it. The consumer is not going to look closely: at best, he or she will find out that other producers have become good at making a favorite brand of pasta after using it.
The Talosto company determined the appeal of the trademark “Maslenitsa” (Maslenitsa is the week before the beginning of Lent according to the Orthodox calendar, when it is traditional to eat bliny) for bliny, applied to Rospatent, and without waiting for trademark registration, invested nearly $200 000 in advertising its product. However, it turned out that this trademark had already been assigned to another company. Talosto tried to reach an agreement on reregistering the brand name, but its competitor, a company called FEP, beat Talosto to it. FEP immediately put its Maslenitsa bliny on sale and filed claims against Talosto, which had to register another trademark (Masteritsa) and invest more money in promoting it.
Of course, it is not worthwhile for every company to consider the possibility of these various attacks on its products: expenditures on protecting a brand should be appropriate to its cost. Patent experts believe that it a company spends about $200 000–300 000 per year on advertising its brand, it makes sense to think about blanket protection of it. A consumer heading to the store for a favorite item can only hope that the producer has taken the trouble to effectively protect its brand name or wait for an implant of a computer chip with a perfect memory.
All the Article in Russian as of Mar. 29, 2004
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