Business is nothing if not an investment, right? Inventory. Personnel. Equipment. These are items we as managers keep a watchful eye on. We take out insurance policies and provide employee health benefits to provide protection and ensure continued output and productivity. But what about another invaluable asset called intellectual property (IP)? What are we doing to safeguard and guarantee a profitable return on that investment? I fear that in many companies and in most business evaluations, intellectual property is generally undervalued and often goes unprotected in today’s commercial environment. This primarily stems from two factors. First, IP is often intangible and difficult to measure or value. Second, it doesn’t occupy a precise spot on the P&L and as a result seldom gets considered as part of managing the day-to day-business.
There is no question that we are collectively at a critical juncture in the evolution of the food and beverage ingredients supply channel. The state of the world economy hangs over us like a dark cloud. Downward price pressure is intense and growing. Customer loyalty overall is on the decline. And many raw material suppliers are under increasing pressure to cut costs and compromise on quality due to competition from suppliers of inferior ingredients. And these situations exist throughout the supply channel in a variety of product categories. So how will industry continue to thrive and expand under these conditions? The answer of course is multi-faceted and complex. But I am confident that a key component of that future success lies in the continued funding and cultivation of intellectual property. Whether in the form of patents, trademarks, packaging, technology or proprietary science, the supply industry was in essence built on IP and continues to depend on innovation and new technology for its survival.
One need only look around at the business and marketing environment we operate in worldwide to see the signs. We are competing in an era of expanding “commoditization” where products in many major market segments are becoming increasingly similar and void of unique or proprietary features or benefits. Soft drinks. Clothing. Electronics. Appliances. Automobiles. Innovations are quickly copied and the competitive gap is rapidly closed. Technology is both a friend and a foe to industry generally. On the one hand, it allows us to innovate and improve products and services. On the other, it allows our competition to catch up at light speed.
At its core, intellectual property is “work” created by the human mind. Defining it can get tricky, which makes litigating infringement as much an art as a science. There are four primary types of intellectual property: patents, trade secrets, trademarks and copyrights. Patents are used to protect procedures or methods (process patents) as well as specific applications for technology (use patents). Trade secrets include things like ideas or know-how. A trade secret or know-how is a set of data or information that is generally not known in the industry which provides the user with an advantage over competitors. Trade secret law, for example, protects the formula for Coca-Cola. Trademark protection primarily applies to creative products such as brand names, logos, or slogans. A copyright offers protection for original works of authorship which the author of a copyrighted work can either give or sell to others, or keep for him/herself.
Whatever its form, the unique and undeniable power of IP is that it allows companies to differentiate their brands in the marketplace, and to add perceived value to those brands in the eyes of their customers. Jack Trout, a popular U.S. marketing guru, wrote a book called “Differentiate or Die.” His basic premise is that companies that fail to set their brands apart in the marketplace will die an untimely death at the hands of their competition. And he cites plenty of examples, from Coca Cola to Xerox to Pizza Hut.
And how does this apply to the wholesale food ingredient business? Let’s consider the average ingredient buyer. Male. 40 years old. College educated. Informed. Skeptical. Several sources or suppliers to choose from. In short, he is in control. It’s your job to sell to him on his terms. The critical role of IP is to help create differentiated, value-added brands that offer the customer a compelling value proposition; that is, unique emotional and rational reasons to purchase. Without IP, brands quickly become commodities. And commodity purchases are price-driven and non-considered. Trust me, that is not where you want to be as a serious contender in any market segment.
So, why don’t all brands invest in IP development? Two principle reasons. First, amassing IP is an expensive and long-term strategy that doesn’t fit everyone’s business plan. Second, IP infringement is rampant and the cost of protecting IP is daunting. When a company’s IP is threatened, it has two options: fight or roll over. Frankly, it’s a sad choice to have to make. Most companies would choose to defend their brand, but not all are able. Policing IP infringement is an emotional and protracted battleground. And companies who vigorously police their brands are often viewed as bullies, as if they picked the fight to begin with. It’s really a ridiculous paradigm. And so as a result, many companies elect to carefully pick their battles, and let the rest go.
There is, however, opportunity for redress. If you are wronged, you can ask the appropriate court to grant a temporary restraining order and preliminary injunction to prevent and or stop continued infringement. Allegedly infringing items or articles can often be impounded while the action is pending and may be ordered destroyed or subject to other disposition if there is an infringement. An infringer can be liable for actual damages plus additional profits or statutory damages. In addition, an infringer could be held liable for injury to business reputation or the dilution in the value of a copyright, patent or trademark. Costs and attorneys fees may also be awarded to the prevailing party. Unfortunately, getting a successful legal resolution can be an exhausting process on many levels.
One form of IP infringement which is increasingly rampant and often overlooked, is online violations. Examples of this practice are brand erosion, cyber squatting, typo squatting or traffic diversion. All of these involve someone unlawfully borrowing your brand equity on the Web for his or her profit or gain at your expense. A simple Google search on any major consumer brand name will illustrate my point. Just because the crime is committed online doesn’t mean it can’t be defended or litigated.
Which brings us back to industry growth and prosperity. Despite the risks and expense involved, it is my fervent hope that companies will continue to invest in building a strong portfolio of intellectual property. It is also my hope, and frankly my expectation, that companies will respect the intellectual property of others, particularly their competitors. In an industry founded on entrepreneurial drive and personal integrity, it is tragic to see brands “borrowing” –read stealing– science and hard-earned IP from other brands. This kind of activity is both morally wrong and ethically unprofessional. As industry, we must do all we can to create and sustain an environment of zero tolerance for this practice. It’s amazing what peer pressure can accomplish, and the more we can shine a collective light on those who abuse the IP of others, the easier it will be for media, associations and individual companies in the supply channel to protect their brands and enforce their rights.
Intellectual property rights are violated every day. Those violations undermine the future growth and prosperity of industry. It impacts all of us, not just the victims. There is strength in numbers. Make your voice heard.
Twittering My Life Away?
April 24th, 2009So what is it with this social media trend? Who has time to update Facebook, LinkedIn and keep tweeting at the same time? Are you feeling claustrophobic surrounded by all of these looming technologies? Wondering how you will ever keep up? Welcome to the future.
By most estimates there are currently 14 million individuals on Twitter, and 70 million on Facebook. Plus 6 million LinkedIn users. While these specific “brands” may not be around in a few years (remember MySpace?), the acceleration of social media channels represents not just a fad or even a trend. It has become a lifestyle. Once the domain of GenX and Gen Y, social media is becoming more and more pervasive. Even Mom and Dad are catching on.
To understand this craze, one needs to recognize that the popularity of these social channels is symptomatic of a larger shift; one toward greater interactivity and control of information. Reality television, though frequently annoying, is also symptomatic. People today want to create the news; in some cases even BE the news. Or at least shape the news they receive in the way they choose. It’s all about control. The days of the passive consumer just taking in whatever they are fed are totally gone. The consumer of the future will control what they receive, when and how they receive it.
So my advice to natural products companies, media and stakeholders is: jump in and learn to swim FAST. Nothing you can do will stop this movement. If you can get out ahead of it you will prosper; if not, you will be swept out to sea with others who never “caught on.” Social media is quickly becoming an activation point for brands where they can connect directly with their customers and participate in market conversations. Don’t miss out.
For those who care, I will be twittering from the Vitafoods Conference and Trade Show in Geneva, Switzerland in May. Follow me at www.twitter.com/jeffreylhilton
Tags: Social Media, Twitter
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