FMCG businesses must consider a plethora of issues when bringing their products to market. While each global jurisdiction has unique challenges, they all blend into a single overall strategy with timing being key.
Counterfeiting is one of these issues. It is a worldwide problem that can impact companies regardless of size and reputation.
Patents
FMCG brands face a wide range of issues when protecting their intellectual property rights. These concerns often stem from the fact that FMCG products are sold in a number of jurisdictions and must comply with a variety of legal requirements. Moreover, the nature of FMCG products requires businesses to constantly innovate and produce new products in order to stay competitive and meet consumer demands.
Patents can help protect the unique features of these products. However, obtaining and maintaining patent protection is an expensive and time-consuming process. This makes it difficult for FMCG companies to compete with larger, more established companies that can afford to obtain patents quickly and efficiently.
Furthermore, the FMCG industry is prone to counterfeiting and trademark infringement, which can damage brand image and sales. As a result, it is important for these businesses to effectively monitor and enforce their intellectual property rights.
In addition to patents, FMCG businesses should consider using copyrights to protect their brands and product designs. Copyrights protect the accumulated goodwill of businesses, and they can be used to stop unauthorized users from copying or adapting their works. Additionally, copyrights can be used to prevent unauthorized use of images, text, and logos on the packaging of a product.
Another issue that FMCG brands must contend with is grey market goods. Grey market goods are imported into the United States without the consent of the owner of a trademark or copyright. As a result, these imports can confuse and alarm consumers, and they can lead to brand confusion and mistrust. Fortunately, FMCG brands can take steps to protect their trademarks and products from grey market goods by using Sections 32 and 42 of the Lanham Act.
Trademarks
In the FMCG industry, trademarks are an integral part of a brand’s identity. They identify and distinguish a product from its competitors, and they symbolize the significant investment that companies make in their products. As such, the importance of protecting these IPRs is undeniable.
Fortunately, FMCG businesses can use a variety of legal strategies to safeguard their intellectual property assets. These include registering their brands, enforcing their rights, and preventing intellectual property infringement and counterfeiting. Additionally, they can leverage intellectual property protection through licensing agreements.
One of the most common intellectual property challenges that FMCG businesses face is counterfeiting. Counterfeit products are often of inferior quality, which can negatively impact a business’s reputation and sales. In addition, these fake products can also pose health and safety risks for consumers. To combat this problem, FMCG businesses should consider implementing an effective anti-counterfeiting strategy.
Another important aspect of protecting a brand’s intellectual property is to prevent dilution. This occurs when a distinctive feature of a product becomes associated with a different brand, and it loses its value as a result. To avoid this, FMCG businesses should ensure that they clearly distinguish their products from other products through their packaging and marketing materials.
In the United States, FMCG businesses can take steps to protect their products from grey market imports by relying on Sections 32 and 42 of the Lanham Act. These sections allow a company to stop the importation of goods that have been sold outside the country with the business’s authorization. However, recent court decisions have rendered this legal remedy less effective in some cases. Additionally, it is difficult for a business to prove that the imported goods are identical to the original ones.
Copyrights
The FMCG industry is a fast-moving sector that relies heavily on IP Rights. This is because brand image and product image can significantly influence consumer purchasing decisions. Hence, the need to protect these Rights is essential for ensuring profitability and competitiveness in the industry. However, protecting these Rights requires stringent policies and a careful analysis of the potential risks prevalent in the sector.
One of the major challenges faced by FMCG companies is the high level of infringement and counterfeiting in the industry. Considering the considerable notoriety enjoyed by FMCG brands, and if you have one, for your FMCG brand, it is natural that this sector witnesses a significant amount of infringing activity. Moreover, a well-designed strategy is crucial for successfully enforcing trademarks and patents in the FMCG industry.
This is because the protection of business marks in this industry requires a keen awareness of local laws and practices. For example, the laws of first-to-file countries must be carefully considered, as they are different from those of common law jurisdictions.
Another important aspect to consider when implementing a trademark enforcement strategy is the varying levels of tolerance among different jurisdictions towards grey market goods. Some jurisdictions allow the selling of goods that are identical to registered ones, whereas others prohibit it altogether. Consequently, choosing the right enforcement method for each new market is vital.
For instance, during the initial stages of a market entry, administrative complaints should be preferred to criminal prosecution or civil litigation. In this way, the rights holders can efficiently utilise and motivate existing sales personnel while saving on enforcement costs. Furthermore, this approach ensures that the sanctity of Caveat Emptor and Caveat Venditor remains intact in a given market.
Trademark Dilution
As the FMCG sector develops globally, the need to protect brand names and product designs becomes increasingly important. The industry must consider a plethora of issues, including the timing of trademark registration and the ability to successfully defend against dilution. As such, it is crucial to have a robust IP strategy in place before launching a new product.
Many jurisdictions have a first-to-file system, which makes it possible for anyone to register a trademark ahead of the original owner. This means that the rights of the original owner are lost in the process, making it difficult to safeguard a brand’s name. Additionally, fast-moving consumer goods can be rebranded by resellers and sold in unintended markets. This type of activity is known as grey market trading and can be very damaging to a brand’s reputation.
One way to avoid dilution of trademarks is to ensure that the original brand’s name, logo, or packaging design is used consistently throughout its product lines. However, this can be difficult to achieve in the FMCG industry, where brands are often based on a few key differentiators. Moreover, it is essential to remember that trademark dilution can be applied to both registered and unregistered marks.
Moreover, it is also important to consider the likelihood of confusion. This is a legal concept that determines whether or not a mark has been made famous enough to qualify for protection against dilution. For example, the XEROX, KODAK, and COCA-COLA trademarks would qualify for dilution protection because consumers have come to associate these marks with a certain class of products or services. On the other hand, a mark like APPLE will likely not qualify for dilution protection, as it has become generic.
Counterfeiting
As many of these products are imported into different markets, it is possible that FMCG brands may encounter counterfeits and other forms of infringement. When this happens, it is critical that the brand owners take swift action. In doing so, it is important to consider the scope of the counterfeiting activity and any actors involved. It is also advisable to review any contracts in place with design companies, as this can help to identify whether or not there are any copyright or trademark assignments in place that can be enforced against counterfeiters.
For example, when a company like Nestle seeks to register its iconic four-fingered KitKat shape, it will have to demonstrate that it is sufficiently distinctive to serve as a mark. The courts will assess the distinctiveness of a mark against its overall appearance, how it is used and the likelihood that consumers will associate the mark with a particular product or producer. It will then be able to apply for registration.
Another issue that FMCG enterprises should be mindful of is the dilution of business marks. Because of the rapid changes in packaging and decoration designs, or product names, a once-influential business mark can become generic over time. It is therefore essential that companies communicate with marketing units to ensure that any changes are promptly communicated and updated on any relevant trademark registrations.
One way that FMCG brands can prevent this is by registering their brand name as a trade mark, and only using it on specific packaging or decoration designs. This will allow the company to ensure that only its approved use is protected by trademark law. It is also a good idea to check that any foreign language symbols do not exceed the font size restrictions set by national standards for cosmetic or food packaging.