Brands Under Threat
While brands are focused on how to be better corporate citizens, many are being undermined by government regulations that threaten their intellectual property (IP) value, reports Muireann Bolger.
Brands are under mounting pressure to commit to greater corporate social responsibility obligations. And while many are rising admirably to this task, they are also confronting a potential swathe of government-imposed brand restrictions that could jeopardize the value of their IP.
“Customers recognize the positive impact of brands. And, in general, there is a huge amount of trust and belief in brands to do the right thing,” observed David Haigh, CEO of Brand Finance (UK), during a virtual panel discussion exploring these challenges.
The session, Goodbye to Iconic Trademarks! The Days of Brand Freedom Are Over, held yesterday, May 2, offered an overview of brand restrictions and the industry sectors and jurisdictions where such restrictions are either already in effect or being considered.
Kicking off the session, Stephen Stern, partner at Corrs Chambers Westgarth (Australia), noted that the global pendulum has been swinging in favor of greater brand restrictions, following the raft of brand restrictions imposed on the tobacco industry back in 2008.
But he said; “A greater variety of brands across the food, beverage, and cosmetics sectors are facing the possibility of similar restrictions being placed upon their products, even though they do not pose the same health risks as tobacco.”
Looming Threats
The problem, he explained, was that “the fight had gone well beyond tobacco,” and the possibility of “product bans” now looms large for brands in various industry sectors.
Speaking about the issues facing brands in Latin America, Wallis Pons, partner at Angeles Pons (Dominican Republic,) pointed to the example of restrictions imposed on infant formula brands in the Dominican Republic and in South Africa to encourage breastfeeding.
In her view, this clampdown means that attractive figurative elements intrinsic to a brand’s identity such as teddies and babies have been removed from packaging.
“Consumers do not think that more regulation is an effective way to promote or encourage healthier choices.”
Wallis Pons, Angeles Pons (Dominican Republic)
Ms. Pons noted that these threats IP, including trademarks and copyrights, in the general food sector are moving to other jurisdictions throughout Latin America, such as Chile. There, the government has introduced restrictions on the food industry, incorporating a food labelling law in 2014 that required many brands in the food industry to adopt black octagonal seals on their packaging and to refrain from advertising to children younger than 14.
She warned: “Even though companies were adhering to these regulations, Chile’s Ministry of Health had erroneously filed actions against companies, claiming incorrectly that they were violating the law.”
Undermining Brands
Pointing to research by Brand Finance, Mr. Haigh argued that such measures could be perceived as largely unnecessary by consumers who tend to have an overall positive view of brands.
When the Brand Finance Marketing Restrictions Survey 2021 asked consumers across 12 countries about the issue, over 90 percent of respondents agreed that brands encourage product quality and improve choice, and at least 75 percent of respondents recognize the positive contribution of brands on the economy, the job market, the support for the media, environment and supply chain, he said.
The impact of brand restrictions would be dire, cautioned Mr. Haigh, noting that the implied brand contribution loss across industries in danger of greater restrictions would come to a “whopping $521 billion in damages in enterprise values.”
“Generally, consumers look at these issues with their eyes open, and believe that brands are a force for good. These days, brands do interact more with their market, and they listen to their customers,” Mr. Haigh said.
“Undermining them with excessive marketing regulations and plain packaging is going to make it difficult for them,” he predicted.
“Generally, consumers look at these issues with their eyes open, and believe that brands are a force for good.”
David Haigh, Brand Finance (UK)
Brands face stringent measures in other countries too, noted Mr. Stern. In France, for example, the 1991 Loi Evin Law imposes a series of extremely rigorous restrictions on the ability to promote and advertise alcoholic products, and there are regular prosecutions launched by the government authorities, he said.
A Slippery Slope
He added that while it was easy to give in to the calls for greater regulation, this could lead to further problems for brands. “If you agree to a health label on the front of your product, the health advocates have said that they intend to keep pushing and pushing to seek larger and larger labels,” Mr. Stern said.
As the panelist pointed out, INTA is acutely aware of these issues, and highlighted them in its Brand Restrictions Study: A View from Gen Zers and Millennials (2021). The study explores the value that Gen Zers and millennials place on brands, the role branded packaging plays in their lives, their perceptions of brand restriction legislation, and how such legislation would impact them.
Freedom of Choice
Ms. Pons relayed that among the key findings of the INTA report, brands are more trusted than governments and visual branding elements have key quality indicators that help consumers choose products in the market.
In her view, as brands strive to do better, it was vital to leave consumers with a freedom of choice.
“They don’t want their civil liberties to be taken away,” Ms. Pons opined. “Consumers do not think that more regulation is an effective way to promote or encourage healthier choices. Instead, consumers believe that making healthier choices can be achieved through more in-formation and education.”
Video courtesy of Envato Elements / Dabarti
Tuesday, May 3, 2022
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