Navigating brand challenges - ThinkHouse

John Coldham: Good afternoon, and welcome to the second in our series of webinars focused on advertising, brands, copyright and designs. Last month's one was on advertising in the current environment, from the growth of digital marketing through to coping with the pandemic. If you missed it, we will include a link to the recording in our follow up email.

As last time, I'm sorry that we have not been able to offer you any lunch or coffee and that we can't offer you a view of the Thames. You never know, next year might be the year we come blinking into the sunlight. In the meantime, we will continue with our webinar series, and this month we are focusing on brands.

We have decided to take a slightly different approach to this year's event. Instead of giving you an update on a key case, which may or may not affect your day to day life, we have decided to discuss various issues of the day affecting brands, and we hope that you will find it useful. Particularly because we are using the discussion format for the webinar, we'd love more than ever your input into the event today. There are so many different types of businesses, large and small, signed up to today's event, and it would be great to get your input on your own perspectives on the issues we are talking about.

To get involved, please provide your comments and questions as we go along using the Q&A box, which should be at the bottom of your screen. We will either try to cover the point as we go along, or at the end, when we have allowed some time for questions. We may not be able to get to every question and/or comment and, if we don't get to yours, we will get in touch with you afterwards.

We are recording this webinar, and will send you a link next week so that you can share it with any colleagues who might like to see it.

Finally, I should mention that at the end, a feedback form should pop up. I'd be very grateful if you could fill that in, as we really do take account of all comments, good and bad, to help us tailor future events to what you would like to hear about.

So let's start as we mean to go on. The word disruption has been a cliché for some time, but we are certainly living in an era of change. Social change takes a long time, but some of the more positive things we have seen from this crazy year are that social change is in some ways moving more quickly than might otherwise have been the case. Every business has a brand, and how brands align themselves with change is a question that they should each be asking themselves. Brands might be tempted to ignore it, but that should be a positive decision that is taken. And there are many good reasons to respond to social change.

Kate, perhaps we can start by consider how brands are responding to social change?

Kate Swaine: Thanks John. Consumers are increasingly drawn to brands for their authenticity, genuineness and values. Brand owners know that a name or logo has to be so much more than that if it is to attract and retain brand loyalty. Huge amounts are invested in brand identity – consumer focus groups, the tone of communications, the associations made between brands and celebrities (as mentioned in the last webinar run by Dan Smith and Kate Hawkins) the underlying messaging and values that are conveyed – so that when the consumer buys an item or service that bears that brand they know that they are buying something that makes them feel good about the purchase because they share its values, image, associations.

If you get it right then it can be brand enhancing but getting it wrong can be disastrous and so the current political and social climate presents a real challenge to brands. The conversations around issues including race, gender, sexuality, environment, culture etc. are ones that are important to consumers but around which there are divergences of views and complex socio-economic factors at play. Just look at the last week. So you are an in-house brands team, or in-house counsel with a marketing team that wants to take a stand on an issue - should your brand be part of the conversation and, if so, how?

The starting point has to be to ask questions. Who are your consumers? What are the values associated with your brand? Are these issues important to your consumers and ones that resonate or impact on the value imbued in the brand? Can the brand afford to stay neutral?

So if the issue has no relevance at all to your brand or its consumers, there is a risk that any stance will appear false or opportunistic when (as I mentioned) consumers are looking for genuine engagement. So a manufacturer of frozen lasagne taking a stance on body image is not going to ring as true as one that takes a position on recycled packaging.

The environment and climate change is actually a really good example where many brands simply cannot risk not being engaged. Greta Thunberg and others have galvanised the debate and consumers (particularly young consumers) are asking of brands "what are you doing?" Their stance on climate issues is a key factor in buying decisions. How much packaging? Is it recyclable? Does the company have a clear sustainability policy?

You can learn a lot by just looking at where brands have navigated this successfully.

So take the Colin Kaepernick advert. Nike's message was, ''Believe in something even if it means sacrificing everything. This referred to him taking the knee during the national anthem in protest at police brutality against black Americans. Initially Nike's share prices dropped by 2%25 but they maintained their stance on this and the share price not only recovered but increased. Jerseys bearing his name have been some of the top selling Nike has had. Despite criticism from some quarters the consensus was that the campaign was a success.

Dove's latest campaign Project #ShowUs was an initiative launched in partnership with Getty Images and Girlgaze. The 'Project #ShowUs' hub is on Getty's platform and it features thousands of photographs taken by women showing every type of woman. Studied the issues including that 70%25 of women don't feel represented by ads.

Aldi's plastic reduction campaign – series of specific commitment to back up its campaign. It has substance.

Airbnb - #WeAccept – in response to some controversial immigration policy decisions in the US. It aired at the Superbowl but was backed with a commitment - to provide short-term housing for 100,000 refugees, disaster survivors, and other displaced people over the next five years. Also committed to donate $4 million to the International Rescue Committee over the next four years.

There's also a lot to be learnt from those who haven't got it right.

Pepsi's Kendall Jenner ad - The ad showed lots of happy, attractive young people holding protest signs with the police watching on. A police officer then accepts a can of Pepsi from Kendall Jenner resulting in cheers from the crowd and a smile from the officer. There was a major backlash against this advert as many felt it was trivialising Black Lives Matter and also protests more generally. They quickly removed the advert.

Use of pink – while associations with Breast Cancer Awareness are recognised and applauded, efforts to rebadge things 'pink' to associate with diversity haven't gone down so well – Brewdog renamed Punk IPA Pink IPA. Brewdog said it was a satirical joke about products marketed to women using patronising gender stereotypes. It didn't quite hit the mark and Brewdog was quick to acknowledge that in this instance it had got it wrong.

Lush – police enquiry campaign and the use of undercover officers. Backlash from the police but also a great deal of public reaction from consumers feeling that it was not appropriate for Lush (a cosmetics company) to be taking the stance it did.

What do those examples tell us?

• Know your audience.
• Know that your actions past and present will back up what you are saying.
• Be clear.
• If you get it wrong – be quick to admit it.
• A successful engagement can become brand defining and sit at the heart of everything you do. Take Ren Skincare as an example – Clean Skincare has become Clean to Skin, clean to planet and has seen it partner with Surfers Against Sewage and Plastic Patrol. It has made a pledge to be zero waste by next year with all packaging 100%25 recycled, recyclable and reusable.
• Be very careful with humour!

John: And of course change this year has been particularly unsettling for many, with almost every person in the world disrupted by the ongoing pandemic. This presents similar, but also very particular challenges. How have you seen this affect the strategies of brands?

Kate: Some brands have utilised it to promote their values as a company, their position as an empathetic and responsive employee – promotion of flexible working arrangements e.g. Twitter saying that employees can work from home indefinitely.

Support. Many brands have used their platform to raise money or provide supplies for causes associated with COVID-19 – Me and Em, Hush, John Lewis have all manufactured masks with donations to the NHS. Pernod Ricard, Unilever, Brewdog have all created hand sanitiser products.

Some have incorporated the new "normal" under COVID-19 to identify with their consumers by taking the "we're all in it together approach" and sharing experiences e.g. Nationwide Building Society using real-life stories of how people are coping with life during lockdown, sharing their thoughts about what life might be like post-pandemic

Some can see an opportunity for their particular products in the face of changing consumer behaviour, for example home hair dye kits, loungewear, food, streaming services.

Those that have succeeded have had a strong digital presence, been able to meet the change in consumer demand quickly, have adopted the right tone – empathy, reassurance, help, made it about the consumer not the brand, been genuine and transparent.

BUT you need to be careful. Being reassuring can cross over into promising things you can't deliver and damaging brand; Medical claims that can't be supported e.g. effectiveness of hand sanitiser. There was some backlash initially with some brands where the products were not as effective. Product attributes or use that are incorrect e.g. masks. A lot of consumer reports on masks as to how effective different brands actually are. Many of these items move products into regulated area that the brands are not used to dealing with.

Also resist the temptation to actually change your brand – some companies changed their logos to emphasise social distancing but it's risky. Others sought to make connections with those on the front line. Can undermine the distinctiveness of your brand, can be seen to be opportunistic and a marketing device rather than engagement and support.

John: I said at the start of this webinar that some of the change we have seen this year was due to the pandemic, and part of it was happening anyway, albeit at a slower pace than it is now. Perhaps there is no better example of this than in the way that things have moved online – every brand is considering how to expand its digital footprint. This raises some particular legal issues, one of them being geo-boundaries. Where does online use constitute infringement in the UK? It's a practical as well a legal issue for brand owners, isn't it?

Kate: This has been put back in the spotlight again by the Merck case. The original case came out of the use by Merck US of the MERCK brand in online material and whether that use breached a co-existence agreement and constituted infringement in the UK.

The Court of Appeal had set out the key principles when considering whether online use constitutes use in the UK. First, is the advertisement or promotion targeted at UK consumers? Second, the fact that a website is accessible from the UK does not automatically mean that its content is targeted at UK consumers. Third, you have to consider the issue of targeting from the point of view of the average consumer in the UK. Would a UK consumer believe that the promotion was targeted at them? Four, all of the relevant circumstances need to be considered.

Mr Justice Arnold, as then was, considered those relevant circumstances in EasyGroup v Easy Fly. He said that factors to be considered include but are not limited to; the telephone numbers and any international codes provided over and above the defendant's usual domestic international codes; the language and currency used; the domain name; and reference to international consumers in the alleged targeted country.

In that particular case Arnold J concluded that the UK or EU consumer had not been targeted. The defendant transported goods within Bangladesh. The customers were predominantly Bangladeshi as a resulted of direct marketing in Bangladesh. English is the dominant language of websites and is widely spoken in Bangladesh. There were no UK or EU contact details on the website and an internet search only produced the defendant's website on inclusion of "Bangladesh" in the search.

Coming back to the Merck decision, when the case was redetermined in the High Court, the High Court had to determine whether Merck US's use of MERCK met the necessary requirements for infringement.  So first, it was held that the expression "using in the course of trade any sign…. in relation to" goods or services in EU trade mark law means use for the purpose of distinguishing those goods or services from those of other suppliers... But secondly it also means use such as to create the impression that there is a material link in the course of trade between the goods or services concerned and the undertaking from which those goods or services originate…".

Applying that test and having reviewed Merck US's use on its website, social media and in email addresses with the MERCK name, the Court concluded that there was a material link between the trade mark and the relevant goods and services and there was therefore infringement. The uses found to be trade mark infringement included uses of "MERCK" in the email addresses of MSD's UK employees (e.g. Name@merck.com), website pages, social media screenshots, downloadable publications, press releases and conference slides. They made the material link even if they were not actually attached to goods or services being sold.

John: So what does this mean on a practical level for brand owners?

Kate: Well first be careful how you frame co-existence agreements - have an eye to the practical use you need to make or may need to make in the future of the brand concerned? It's not unusual for parties to agree to brand co-existence by way of geo-boundaries but it presents particular challenges in the digital space where those geo-boundaries are not so clearly demarcated.

Who and where is your digital presence focused at? Is it clear? If you have potential issues in some territories, have you taken account of that in the presentation of your presence, its technical reach and capabilities? What would a consumer believe on accessing your digital presence?

Look at the detail – language, currency, international delivery options, office locations, customer references.

John: Speaking of boundaries and borders, we almost managed to make it through the webinar without mentioning the B word. Not Biden, but Brexit! A month and a half until it's a reality, so how should brand owners be preparing for the changes that are coming down the line?

Kate: The UKIPO has put a lot of work into this. So in terms of the headlines, from the 1 January 2021, EUTMs will no longer protect trade marks in the UK. Under the Withdrawal Agreement Act, on the 1 January 2021, the UKIPO will create a comparable UK trade mark for all right holders with an existing EU trade mark. Existing EUTMs will continue to protect trade marks in EU member states. There will be no changes to UK-registered trade marks as a result of the UK leaving the EU. On 1 January 2021, the UKIPO will automatically create a cloned UK trademark for every registered EU trade mark (EUTM). Each of these UK rights will: be recorded on the UK trade mark register; have the same legal status as if you had applied for and registered it under UK law; keep the original EUTM filing date; keep the original priority or UK seniority dates; and be a fully independent UK trade mark that can be challenged, assigned, licensed or renewed separately from the original EUTM.

You will not need to pay for your equivalent or comparable UK trade mark – there is no fee for transition; and receive a UK registration certificate, but you will be able to access details about the trade mark on GOV.UK.

Some points worth bearing in mind for existing EUTMs. For UK marks which are cloned from an EU application, there will be nine months to pay the official filing fees. No extension will be granted. Even if the EU mark is almost registered, the UK clone will go back to the start of the application process.

In terms of new applications, UK businesses can still apply to the EU Intellectual Property Office for an EUTM before 1 January 2021 but if you have an EUTM application that's still pending on 1 January 2021, you will need to apply to register a comparable UK trade mark in the 9 months after 1 January 2021. Such marks will retain the earlier filing date of the pending EUTM and can claim any valid international priority you had on the pending EU application, along with any UK seniority claims recorded against it.

In terms of new EU applications filed now at the EUIPO, these are taking on average around six months to progress to a registration for straightforward cases. As such, any new EU applications filed now are not likely to achieve registration before the end of the year so clients are already starting to file in both the UK and EU at the same time. When the EU mark clones in the New Year, clients can just let the UK clone abandon, as they can rely on the national mark.

For a national trade mark, an uninterrupted period of 5 years' non- use in the UK can render a mark vulnerable to challenge. The UK government has stated that applying this approach to the cloned UK trade marks, many of which will correspond to EUTMs that have never been used in the UK, would not provide enough protection for those new cloned rights. The new requirements therefore ensure that any use of the mark in the EU made before 1 January 2021, whether inside or outside the UK, will count as use of the cloned UK right. This means that the last use of a UK cloned mark will be deemed to be the last use made in the EU before 1 January 2021. Use in the EU after 1 January 2021 will not count for the purpose of use of the UK cloned mark.

On the question of reputation before 1 January 2021, reputation of the corresponding EU trade mark, in the EU but not necessarily in the UK, will be considered for the purposes of the cloned UK right. Where oppositions are filed after 1 January 2021 are based on a cloned UK trade mark, the same approach will be used as in relation to use so the preceding 5 years of reputation will be considered in the EU in relation to the UK cloned mark.

If you do not wish to hold the new UK cloned right (for example because it duplicates an existing right on the UK register), you may opt out of holding it. If you opt out, the cloned right will be treated as if it had never been applied for or registered under UK law. Notice of opt-out can only be given after 1 January 2021 and a notice template will be made available for opt-out requests.

John: What about existing trade mark licences? Any impact there?

Kate: If any licences or settlement agreements refer to a territory as the "EU" it is recommended that an addendum is created which clarifies whether the intention is for the territory to be both the UK and EU or the EU alone (post Brexit). Similarly, if licences or settlement agreements refer to EUTMs, it is worth clarifying whether they should be interpreted as referring to both the EUTM and the cloned UK right post Brexit.

Note details of registered interests/licences will not be added to the cloned UK mark, we will need to file these against the UK mark.

John: So what are the key considerations for in-house counsel worrying about their trade mark portfolio in the UK?

Kate: Will the cloned UK rights create any duplication on the UK register? If so, do you want to opt out of any of the UK cloned rights in order to save costs? Are there any EU rights which have not been used in the UK to date? If so, be aware that the "use" clock will start ticking for a five year period from 1 January 2021. Do you have any EUTM applications likely to be pending on 1 January 2021? If so you will need to make a new UK application. Check that the agents you have listed for your EU marks have the necessary EU representation rights. They need to have a real place of business in the EU in order to continue to have such rights. Many UK attorneys have set up offices in mainland Europe in anticipation of this change. Filing policy going forward – you will need to apply for separate UK and EU rights. If you have any EUTMS that have licences or securities registered against them, we will need to make recordals against the UK cloned rights after 1 January 2021.