Economic and Legal Options for Creating ”Nation Brands” – Examples from Hungary Development and Strengthening of a Nation Brand in Countries in Transition.

Economic and Legal Options for Creating ”Nation Brands” –

Examples from HungaryDevelopment and Strengthening of a

Nation Brand in Countries in Transition

Presentation by Dr. Mihály Ficsor

Vice-President Hungarian Patent Office

WIPO Inter-Regional SeminarPrague, November 26 and 27, 2009 1

Legal options for creating ”nation brands”

• Brands, trademarks and nation branding

• Trademarks

– General rules

– Article 6ter of the Paris Convention

– Collective and certification marks

– Valuable trademarks contributing to a country’s image

• Geographical indications

• Other instruments

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Brands and trademarks

Oxford Advanced Learner’s Dictionary

of Current English:

” brand = trademark” (?)

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A comparison of concepts:

”Brands are a means of differientating a company’s products and services from those of its competitors.”

(Tutor2u Limited)

”A trade mark is any sign which serves in business to distinguish the goods and services of one undertaking from those of other undertakings and over which the owner has an exclusive right.”

(OHIM)

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A comparison of concepts:

”A brand is a name attached to a product or service. However, … [it] represents many more intangible aspects of a product or service: a collection of feelings and perceptions about quality, image, lifestyle and status. In short, a brand offers the customer a guarantee and then delivers on it.”

(Virtual Advisor Inc.)

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”A brand is a distinctive identity that differentiates a relevant, enduring and credible promise of value associated with a product, service or organization and indicates the source of that promise.”

(Ward, Light, Goldstine)

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”Trade mark rights are, it should be noted, an essential element in the system of undistorted competition which the [EU] seeks to establish and maintain. Under such a system, an undertaking must be in a position to keep its customers by virtue of the quality of its products and services, something which is possible only if there are distinctive marks which enable customers to identify those products and services. For the trade mark to be able to fulfil this role, it must offer a guarantee that all goods bearing it have been produced under the control of a single undertaking which is accountable for their quality.

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Consequently, … the specific subject matter of trade marks is in particular to guarantee to the proprietor of the trade mark that he has the right to use that trade mark for the purpose of putting a product into circulation for the first time and therefore to protect him against competitors wishing to take advantage of the status and reputation of the trade mark by selling products illegally bearing that mark.”

(ECJ)

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Why build a brand?

A)

higher prices

higher profit margins

better distribution

customer loyalty

(Tutor2u Limited)

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B)

”The goal of any brand is to win loyal customers who are willing to pay a price premium and thereby increase the amount and reduce the volatility of cash flows.”

(Eurobrand Institute)

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Why protect your trademark?

”The trade mark of a product or service can be synonymous with the branding and image of a company and can become an asset with monetary value that could increase. If you do not apply for protection others may benefit from your investments. The only way of obtaining the full right over a trade mark is by registering it.”

(OHIM)

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trademark = brand in full legal armour

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Nation branding

”Nation branding is a field of theory and practice which aims to measure, build and manage the reputation of countries.”

(Wikipedia)

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Nation branding

”Anti-globalisation proponents often claim that globalisation diminishes and threatens local diversity, but there is evidence that in order to compete against the backdrop of global cultural homogenity, nations strive to accentuate and promote the distinctiveness of local characteristics and competitive advantages.”

(Wikipedia, and Jacqui)

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Nation branding

The branding and image of a nation-state ”and successful transference of this image to its exports is just as important as what they actually produce and sell”.

(Jacqui, 2006)

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Nation branding

The Anholt-Gfk Roper Nation Brands Index – measures the power and quality of each country’s ”brand image” by combining the following six dimensions:• exports

• governance

• culture and heritage

• people

• tourism

• investment and immigration

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Nation branding

• nation branding: ”a new sort of beauty contest”

• ”There are two ways a country’s image can quickly change for the better. One is good luck […] The other is innovation.”

(The Economist, 9 Nov 2006)

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Trademarks(general provisions in the HTMA)

• ”A sign shall be excluded from trademark protection if it is devoid of any distinctive character, in particular:

- if it consists exclusively of signs or indications which may serve, in trade, to designate […] the geographical origin of the goods or services […].”

• Acquired distinctiveness:

- ”A sign shall not be excluded from trademark protection if, either before or after the date of priority, it has acquired a distinctive character.”

- C.f.: EU Trade Mark Directive, Articles 3(1)(c) and 3(3)

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ECJ judgment in ”Chiemsee”(joined cases C-108/97 and C-109/97 )

• Article 3(1)(c) of the EU Trade Mark Directive does not prohibit the registration of geographical names solely where the name designates places which are, in the mind of the relevant class of persons, currently associated with the category of goods in question; it also applies to geographical names which are liable to be used in future by the undertakings concerned as an indication of the geographical origin of that category of goods.

• Where there is currently no association, the competent authority must assess whether it is reasonable to assume that such a name is, in the mind of the relevant class of persons, capable of designating the geographical origin of that category of goods.

• In making that assessment, particular consideration should be given to the degree of familiarity amongst the relevant class of persons with the geographical name in question, with the characteristics of the place designated by that name, and with the category of goods concerned.

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ECJ judgment in ”Chiemsee”(joined cases C-108/97 and C-109/97 )

On acquired distinctive character [Article 3(3) of the Directive]:

”- a trade mark acquires distinctive character following the use which has been made of it where the mark has come to identify the product in respect of which registration is applied for as originating from a particular undertaking and thus to distinguish that product from goods of other undertakings;

- in the case of a trade mark embodying an indication of geographical origin, it precludes differentiation as regards distinctiveness by reference to the perceived importance of keeping the geographical name available for use by other undertakings;

- in determining whether a trade mark has acquired distinctive character […], the competent authority must make an overall assessment of the evidence that the mark has come to identify the product concerned as originating from a particular undertaking and thus to distinguish that product from goods of other undertakings; in that connection, in the case of a trade mark embodying an indication of geographical origin, regard must be had in particular to the specific nature of the geographical name in question;

- if the competent authority finds that a significant proportion of the relevant class of persons identify goods as originating from a particular undertaking because of the trade mark, it must hold the requirement for registering the mark to be satisfied”.

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Conflict with GIs as an absolute ground for refusal:

– ”A sign may not be granted trademark protection if it consists of or contains a geographical indication registered pursuant to this Act or to European Community law. This provision shall apply to goods which do not originate in a geographical area corresponding to the geographical indication or in connection with which the geographical indication cannot be used for any other reason on the basis of the provisions of this Act or of European community law.”

– C.f.: Article 7(1)(k) CTMR

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Limitation of the effects of a trademark:

– ”Trademark protection shall not entitle the holder to prohibit a third party from using in the course of trade and in accordance with the requirements of fair trade practice […] indications concerning the […] geographical origin […] of the goods or service.”

– C.f.: Article 6(1)(b) of the EU Trade Mark Directive

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Registered Hungarian trademarks referring to the geographical origin of the goods or

services:• ”MAGYAR MODERN MŰVÉSZETI MÚZEUM”/

”HUNGARIAN MODERN ART MUSEUM”

(Owner: Duna Sétány Székház Kft., Classes: 16, 41, 42)

• ”MAGYARORSZÁG LEGERŐSEBB EMBERE”/

”THE STRONGEST MAN OF HUNGARY”

(Owner: Fekete László, Class: 41)

• ”MAGYAR SÍ SZÖVETSÉG”/”HUNGARIAN SKI ASSOCIATION”

(Owner: Magyar Sí Szövetség, Class: 41)

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Article 6ter of the Paris Convention for the Protection of Industrial Property

”The countries of the [Paris] Union agree to refuse or to invalidate the registration, and to prohibit […] the use, without authorization […] either as trademarks or as elements of trademarks, of armorial bearings, flags, and other State emblems, of the countries of the Union, official signs and hallmarks indicating control and warranty adopted by them, and any imitation from a heraldic point of view.”

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- State emblems and official signs are to be communicated (through the International Bureau); not obligatory in respect of flags of States

- Under Article 2 of the TRIPS Agreement, this is also a WTO obligation

- It is implemented by the HTMA as an absolute ground for refusal or invalidity [C.f.: Article 3(1)(h) of the EU Trade Mark Directive, Article 7(1)(h) CTMR]

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• WIPO 6ter database: 26 signs have been communicated by Hungary (state emblems, flag, hallmarks) – some examples:

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Hungarian trademarks containing the Hungarian flag or other state emblems

• Hungarian state emblems and the flag as such are excluded from trademark protection.

• The flag and other state emblems may form part of trademarks → an authorization is required; it may be obtained from the minister for national development and economy (the opinion of the minister competent in the economic field concerned has to be sought prior to granting the authorization).

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Examples of Hungarian trademarks containing the Hungarian flag or other state

emblems• Owners: Herendi Porcelánmanufaktúra Rt., Tokaj

Kereskedőház Rt., PICK SZEGED Szalámigyár és Húsüzem Zrt., Zwack Unicum Nyrt.

• Classes of goods: 35, 41, 42

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• Owner: Hungarovin Borászati Kft.

• Class of goods: 33

29


• Owner: Pécsváradi Aranycipó Kft.

• Class of goods: 30

30


• Owner: Metró Kereskedelmi Kft.

• Classes of goods: 29, 30, 32, 33

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Collective/certification marks

• Collective marks under the HTMA:

- capable of distinguishing goods or services of the members of a social organization, public body or association from the goods or services of other undertakings on the basis of the quality, origin or other characteristics of the goods or services bearing the collective mark.

- Before 1 May 2004: marks which consisted exclusively of signs to designate the geographical origin of the goods and services were allowed to be registered as collective marks [C.f. Article 66(2) CTMR and Article 15(2) of the EU Trade Mark Directive].

• Certification marks under the HTMA:

- trademarks that distinguish goods or services of specified quality or of other characteristics from other goods or services by attesting to such quality or characteristics.

• Applications for collective/certification marks have to be accompanied by a regulation governing e.g. the conditions and the control of the use of the mark.

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Collective marks

Owner: Pest Megyei AgrárkamaraClass: 31

Owner: Lőrinci-Szemeretelepi PolgárőrségClass: 42

Certification marks

Owner: Agrármarketing Owner: Premium Centrum Hungaricum

Association

Class: 29 Classes: 29, 32, 33, 35

Systems of protection forcollective/certification marks

• Community level:

- Article 66 CTMR: only collective marks are governed (indications which may serve, in trade, to designate the geographical origin of the goods may be registered as Community collective marks).

- Article 15 of the EU Trade Mark Directive: Member States are allowed to register both collective and certification marks (indications which may serve, in trade, to designate the geographical origin of the goods may be registered as collective or certification marks).

• International level:

- Madrid Agreement Concerning the International Registration of Marks and its Protocol (regulations governing the use of collective/certification marks are not required as part of on international application, however, the designated Contracting Party may ask for such regulations to be filed).

• National level:

- the HTMA provides for both collective and certification marks.

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Most valuable marks in Hungary(valuation and ranking by the European Brand Institute)

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Geographical indications/appellations of origin (as defined in the HTMA)

• Geographical indication:

- geographical name of a region/locality/country;

- designates a product originating therein;

- the specific quality, reputation or other characteristics of the product are due essentially to that geographical origin;

- production, processing or preparation takes place in the defined geographical area.

• Appellation of origin:

- geographical name of a region/locality/country;

- designates a product originating therein;

- specific quality, reputation or other characteristics are due exclusively or essentially to the geographical environment, with its inherent natural and human factors;

- production, processing and preparation takes place in the defined geographical area.

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Differences between geographical indications and trademarks

• GIs are source indicators ↔ trademarks work in a business context instead of a geographical one

• GIs guarantee a certain quality ↔ trademarks can only acquire such reputation by use and with time

• GI protection is a collective industrial property right: everyone is entitled to use them if they fulfill the criteria laid down (compliance with the rules in the specification)

• GIs cannot be assigned or licensed

• Protected GIs have an infinite life span

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Systems for registering and protecting GIs

WINES SPIRITS AGRICULTURAL PRODUCTS

OTHERS

INTERNATIONAL LISBONAGREEMENT

LISBONAGREEMENT

LISBONAGREEMENT

LISBONAGREEMENT

COMMUNITY COUNCIL REG. No. 479/2008

COUNCIL REG. No. 110/2008

COUNCIL REG. No. 510/2006

X

NATIONAL X (?) TRADEMARK ACT

X TRADEMARK ACT

HUNGARIANEXAMPLES

”Tokaj” ”Pálinka” ”Makói Hagyma”(Onion of Makó)

”Halasi Csipke”(Laces of Halas)

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Other instruments for creating ”nation brands” in Hungary

• Traditions – Tastes – Regions (TTR)

Program

- started in 1998 by the Ministry of Agriculture and Rural Development in order to join the European Union’s Euroterroirs Program

- aim: to create a collection of Hungarian traditional and regional or local agricultural products and to improve their reputation

- as a result of the program, the professional and historical description of 300 products has been completed

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• ”Pálinka Act” (Act LXXIII of 2008):

- entered into force on 15 December 2008

- determines the conditions of using the name ”pálinka”: distillations prepared exclusively from fruits grown in Hungary; manufacturing process in Hungary

- ”Pálinka National Council”: supervises and organizes quality control; initiates proceedings against unauthorized users of the name ”pálinka”

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• Council of Nation Branding: established by Government Decision 2176/2008 (XII. 18.) Korm.

- advisory and opinion-giving body of the Government

- main functions of the Council are:

1. preparation of suggestions for communicating the nation brand;

2. creating and maintaining a unified country brand;

3. initiating scientific research facilitating the establishment of a unified country brand and country image;

4. promote the government’s information campaigns in relation to the country image;

5. contacting and liaising with similar institutions in other countries as well as domestic scientific institutes.

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• Parliament Decision 77/2008 (VI. 13.) OGY on the protection of ”Hungaricums”

• It is necessary to determine the conditions under which using the word ”Hungaricum” is allowed → in April 2009: a ”Hungaricum” working group was established

• Aim: preparing the adoption of a ”Hungaricum Act”

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Role of national IP offices in building ”nation brands”

• registration of TMs and GIs

• interfaces with EU and international systems for TM and GI protection

• advising their governments on IP related issues of building a ”nation brand”

• awareness raising and co-ordinating anti-counterfeiting activities

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Thank you for your attention!

www.hpo.hu

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Economic and Legal Options for Creating ”Nation Brands” – Examples from Hungary Development and Strengthening of a Nation Brand in Countries in Transition.

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