Round Table: How Are Businesses Structured to Address the Evolving Brand Protection Landscape?

We brought brand protection and IP professionals together to discuss the reality of brand protection within a corporate structure. Read a summary of the round table by William Mansfield, Director of IP at Abro — a leading automotive care and household product brand.

The pandemic has given brands an opportunity to build back better. Brands need to not only return resources to key priorities, they should also give serious thought about where brand protection sits within their organizations.

The round table’s participants identified various factors that could be considered “best practices”, as well as other factors that consensus held needed improvement. Areas of general agreement and disagreement are discussed below.

Brand protection in the organization chart

One of the biggest areas of disparity was where in the corporate structure the responsibility for brand protection was placed. And here we say “disparity” as opposed to “disagreement” because, where there certainly was no consensus on the reality of placement – there was little agreement on ideal placement either.

There appear to be four main function areas where brand protection sits in various enterprises. Each has pros and cons:

1. Legal

The most common location for brand protection was the corporate legal department.

Pros:

• The root of brand protection is making a legal claim of violation against an infringer, and lawyers know law.
• Many companies use civil litigation as a primary brand enforcement tool and litigation = lawyers.
• It appears to be the default location in the minds of the C-Suite

Cons:

• Lawyers are more likely to seek legal victories (such as getting a large judgement) and less likely to seek business victories (like converting a counterfeiter to a legitimate customer).
• Law departments may have little knowledge about the practical realities of doing business

2. Sales / marketing

When counterfeiting is seen as an attack on market share brand protection can end up here.

Pros:

• The marketing department is best placed to get the message out to the consuming public should avoid fakes.
• Sales is often the first to be made aware of consumer complaints (some of which can be traced back to counterfeits).

Cons:

• These departments value raw sales volume more than anything, and are likely to accept risk for larger sales. Sometimes the risk accepted makes counterfeiting more likely (such as sales into a dangerous marketspace or downplaying prevalence or danger of counterfeits).
• Avoiding upsetting key customers (either by questioning them or taking action) will cause trouble for these people.

3. Supply chain

Far less common placement, but in some ways ideal.

Pros:

• Counterfeiting often involves some level of hijacking of the legitimate supply chain. Defending the integrity of the supply chain is a key step in minimizing the impact of counterfeits.
• The most problematic fakes are those produced illicitly by component entities within the legitimate supply chain (the classic one being a plant operating an illegal “3^rd shift run” or improperly disposing of spoiled product or packaging). Supply chain has the most direct information and ability to act in these cases.

Cons:

• Supply chain protection is often overlooked and undervalued.
• You are asking the organization to essentially police the people they work with most consistently. Beware of an unwillingness to push for the real answers at times.

4. Stand alone brand protection

Often seen as the ideal. Rarely seen in reality.

Pros:

• A clear goal and focus.
• Shows brand protection has importance to and in the organization

Cons:

• Often now possible due to budget size.
• Leaves the function without any natural allies.

The ideal brand protection team

There was significant uniformity on the need for a brand protection team to bring together several different types of expertise to operate at maximum effectiveness. The most common areas of expertise that need to be filled were:

• Legal / Intellectual Property
• Supply chain
• Manufacturing
• Packaging
• Sales
• Brand protection tactics
• Online
• Intelligence gathering / analysis
• Investigations
• Law enforcement

Obviously, a person can fit more than one role in the team (and few organizations could afford it if no one was taking on 2 or more roles), but this is the scope of knowledge that someone on the team must have.

What is lacking / what is needed

All the brands identified money as a limiting resource. No one said “if I had more money there is nothing else useful I could do”. Instead, brand protection is consistently a process of using limited resources to obtain the best possible outcomes. No surprise here.

But there was a fair amount of agreement on another deficiency. That is knowledge sharing. Many organizations have some (or even a very good) idea of what they are facing, what they are doing, and what they are spending. But no idea how those facts compare with any other enterprises. Information is kept internal for a variety of reasons, including:

• Unwillingness to divulge internal numbers that might be used to provide insight into general business operations (such as sales numbers of manufacturing cost).
• Desire to keep supply chain and customer list confidential.
• Fear of violating agreements or laws regarding such factors as confidentiality and privacy.
• Fear of accidently violating laws regarding anti-competitive behavior.
• A wish to keep the secret sauce…well….secret. If they have a great brand protection program it can provide a company with a competitive advantage over others – unless they tell everyone what they did.

An interesting idea arose through the discussion. There would be value in a clearing house for the information involved. It would need to have the following characteristics:

• Trust. The information gathering entity must be one that is expected to use the information in only the ways authorized and able to keep the information confidential.
• Anonymizing. If businesses are supposed to turn over sensitive internal data then the source of that data must be anonymous. The data needs to be combined with other similar data and released only in such a form that no one can “reverse engineer” it to identify what a specific company provided.
• Competent. Companies will be providing information in a variety of forms and using a wide variety of language to describe their actions. The collecting organization cannot just be a mindless collector and regurgitator of facts. They need to have the expertise necessary to understand what each organization is actually talking about and be able to classify actions together regardless of variations in reporting jargon.

I personally feel that an academic institution is the only organization that will be trusted with this sort of responsibility. However, a valid point was raised that a large service provider entity (who already has earned the trust of many possible data contributors) could certainly do this internally if they obtained proper consent.

Transitioning to a post-pandemic world

During the pandemic, many organizations have seen changes to their brand protection focus. Key changes are:

• A shift of focus to nearly exclusively online
• This makes sense because most real world activity (both legitimate and counterfeit paused during both the health crisis and supply chain disruptions of 2020).
• A loss of resources (personnel, money, C-Suite attention, etc.) being stripped from brand protection and directed toward more immediate needs.
• Such as offsetting declining revenue, health-driven responses, restricting of the business model.

The shift in focus to online violations is no surprise. Online infringement has been a growing focus for many companies long before we hear of the Corona Virus. Online violations are much more visible, especially to parts of the organization who never otherwise think about counterfeits (many brand protection professionals have had to set other projects aside temporarily while the whole team responds to an online listing stumbled across by the CEO or a division head). They also offer a more emotionally satisfying conclusion (i.e. “we had the listing removed – problem solved”) than more traditional (and more impactful long-term) responses (i.e. “counterfeit products being detained by Customs have fallen 13% in the past year).

But the virtual abandonment of the online / real-world IP protection balance that has happened in the past 12+ months will result in more – not less – counterfeits if it continues.

Online sales of counterfeits generally represent the tail end of the illicit supply chain. The listing often connects to the last or next-to-last buyer of the product. It is the point where the counterfeits are distributed as widely as the illicit supply chain can. It is essential to stop counterfeits earlier in the supply chain whenever possible where a single action can prevent hundreds or thousands of later listings. Both are needed to build a program of maximum impact.

Also, now that we can see the light at the end of the COVID-19 tunnel, organizations need to be prodded to shift resources back to brand protection. There will likely be hesitancy to do so. The parts of the company with those resources now will not want to lose them. And health-oriented factors will have a much stronger relevancy going forward.

This is valid, but intellectual property protection can not be permanently set on a back burner without significant long-term harm to the brand. IP is an essential part of all growing enterprises and brand protection must continue to be a key component of any company wishing to be successful. It will be the difficult job of our profession to remind others that – as important as these new focuses are – they cannot be pursued at the expense of IP.

Conclusion

Like all areas of the business world, the recent pandemic has been an incredibly disruptive time, but it also gives organizations an opportunity to build back better. Brands need to not only readjust and return resources to key priorities, they should also give serious thought about where to place the responsibility for brand protection within an organization. And we as a profession need to collectively look at better ways to share information between organizations. We have the opportunity to come out of the crisis better positioned than ever in the endless fight against fake.

The question is: will we rise to the challenge?

Access further insights from the INSYNC Virtual Summit: January 2021

The INSYNC Virtual Summit: January 2021 brought together expert speakers and hundreds of brands to meet, share and collaborate in an exclusive online event. Attendees learnt first-hand from Brand Protection experts in other leading brands and gained actionable insights to help drive real change in the fight against infringers.

Access the key takeaways, a recording of the panel session, and further roundtable insights at the link below.

This blog was originally published on the INSYNC website.