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  • Posted by: Fred Burt on Thursday, January 3 2013 02:30 PM | Comments (0)

    Haribo Goldbears December may have been the season of goodwill to all men, but the IP lawyers at Haribo were busy securing a ruling in Cologne in their favour against Lindt, which could prevent Lindt from distributing its seasonal gold-foil-wrapped chocolate teddy bears in the future. This is not mere humbuggery. Haribo feels strongly – and the courts agree – that Lindt’s cuddly confectionary would dilute Haribo's iconic trademark rights.

    The issue? The similarity between Lindt's gold foil bear and Haribo's gold bear with the red bow around its neck.

    It seems the trademark battles are heating up. Yesterday the Financial Times reported on a trademark infringement case Nestlé brought against Cadbury to defend the shape of its KitKat bars. Nestlé succeeded in fending off this latest challenge from Cadbury, which recently won an earlier bid against Nestlé to register the colour purple.

    While these cases may dismay romantics – who wants to think of childhood favourite KitKat as “four trapezoidal bars aligned on a rectangular base” after all? - there are serious business issues underpinning these IP-related hostilities.

    Haribo Fan Club

    With the economic headwinds still buffeting the world’s economies, and investment in innovation tight, expect to see a heightened focus on on aggressive defense of IP rights as businesses look to make the most of the assets they have, especially assets such as trademarks that have legally protected status.

    At Interbrand, we have always included Protection as one of the key factors of brand strength. But too often we see that IP protection is an after-thought dismissed as a legal inconvenience, rather than a strategic asset. Indeed, when we ask brand owners whether they are familiar with what they own, what they can protect and what the ramifications of infringing a third party’s pre-existing rights might be, the answers are not as immediately forthcoming as they should be.

    So if 2013 is going to be an annus horribilis for trade mark cases, ask your legal team for some pre-emptive guidance. Forewarned could well be forearmed.

    Fred Burt is the Director of European Clients at Interbrand London.

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  • Posted by: Greg Silverman on Thursday, January 21 2010 06:30 PM | Comments (0)

    The US $19 billion price tag attached to Kraft’s takeover of Cadbury has sparked both warnings from investors like Warren Buffett and accusations of an undervalued bid from Cadbury. How much Cadbury is worth isn’t really the question, but rather how much is it worth to Kraft?

    With the approval of its takeover offer yesterday, Kraft is paying for the significant opportunity to create incremental profits for its shareholders. In this deal, Kraft will have several operational levers it can use to drive improvements: staff cuts, distributions synergies, marketing leverage, and procurement efficiencies, to name but a few. These traditional approaches to profit enhancement are likely to breed many one time or short-term benefits. A well-run company like Kraft is likely to realize these benefits. Hence the US $19 billion price tag.

    However, it’s unlikely that the deal will dramatically create value at the product level. Brand value creation occurs when demand is generated in unique ways. Most of the Cadbury brands that come with the acquisition are well established with broad sub-brands. The Cadbury portfolio’s preeminence in the market suggests that Kraft believes that buying brands is a better bet than developing what’s currently in its pipeline, an indicator that its internal innovation may not deliver their growth objectives.

    If Kraft makes the common post-M&A mistake of putting innovation on hold to focus on creating marketing efficiencies, then it’s likely that the breakthrough, demand-generating ideas that will make the deal “pay” won’t emerge. So Kraft will need to make the deal work with efficiencies through combined operations, and effectiveness through brand portfolio management.

    This is a tough job—and in order for Kraft to pull it off, it is also imperative that it pays equal attention to its internal operations. While the face it presents externally is key here, engaged employees are also critical to any mergers' success. As a recent SHRM foundation survey focused on M&A employee-related issues pointed out, 63 percent of newly merged brands are unable to sustain financial performance, 62 percent see a loss in productivity, 56 percent experience incompatibility between cultures, and 53 percent lose key talent – the list goes on.

    Cadbury’s culture, in particular, may jibe with Kraft’s. While undoubtedly a large company with an extensive portfolio, Cadbury has a history of being a “family brand” and its employees are already up in arms about the acquisition. And as Kraft begins streamlining its portfolio, inevitable layoffs are likely to fuel more fire. Additionally, while Cadbury’s workplace is all about being open, honest, creating quality products, and acting with complete integrity, Kraft is guided by a more dynamic proposition, which promises a “fast-paced environment” founded on results-focused principles like innovation, decisiveness, and teamwork.

    If handled correctly, potential synergies between the two cultures could outweigh fallout or loss of trust. If handled improperly, we could see the brands face the same obstacles as Sprint/Nextel or AOL/ Time Warner. That's why Kraft will need to focus and align employees to immediate effect with a properly defined, well-managed, and communicated corporate brand.

    While the challenges that come with this deal are numerous—Warren Buffett's disapproval, notwithstanding—as with any merger, good strategy will ultimately dictate its long-term success.

     

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