The Holiday E-Card: What has Happened to the User Experience?

The weekend holiday is upon us. Before I close the office door, however, permit me to comment on one lamentably disappearing feature of the season. I am referring, of course, to the holiday greeting card.

One of the holiday joys has always been the receipt and display of cards from near and far. Sadly, the number of holiday greeting cards received is much reduced this year, replaced by email-delivered greeting cards of various sorts. I recognize that e-cards are kinder and gentler to the forest environment. As well, snail mail delivery requires airplanes and vehicles for moving the inventory, which in turn means consumption of fossil fuel. Here, too, holiday e-cards certainly contribute to the environment.

Nevertheless, from the vantage of this blog, the transition impacts on the way that visual and textual creativity is brought to bear on the social experience of reaching out and connecting (or reconnecting) with people though the exchange of cards, to be opened, grasped, read, and read again, before finding their ultimate resting place for display. More generally, the move from traditional holiday cards to the e-card variety raises an interesting twist on the way that contents are related to distribution and the user experience.

When we set out the copyright paradigm to students, we describe the triangular interrelationship between the content creator, the distributor or publisher of the contents, and the public interest. When I think about the traditional holiday greeting card, I realize that this paradigm may be inadequate. Distribution of contents is not merely finding new ways to package and deliver them more efficiently and economically. Depending upon the circumstances, it may also be about the user experience. If the means of distribution does not provide a superior (or least a satisfactory) user experience, presumably it will not gain traction with the user.

Think about both online distribution of contents, as opposed to the hard-copy delivery, or reading a full-length tome on an e-book device. In both cases, these distribution platforms are preferred because of the experience connected with the use of the platform. True, the attraction of online contents may also be function of the fact that it has largely been (at least up to now) free, and that the e-book devices promise savings in the purchasing of the books. There may also be a generational divide--my kids will be more likely to prefer the online experience than I do. But even taking these factors into account, it remains the case that on-line distribution and e-book devices are preferred means of content delivery because of the user experience.

Assuming that this is true, then I find the transition to the holiday greeting card a bit of a mystery. Simply put, I find the user experience far inferior to that of the traditional greeting card. I start with the size and shape of the envelope, which is usually different from that of the business letter. When I encounter such an envelope, there is already an expectation that a holiday card awaits inside. Once the envelope is opened and the card is removed, there is the feel of the texture of the card and the encounter with the aesthetics of the artwork. Moving on to the interior of the card, there is the text, perhaps personalized, perhaps not, usually a combination of the two. The experience in opening and reading a holiday e-card pales by comparison. In a word, the e-card has impoverished the holiday greeting card experience.

E-Card: Share the Holiday Experience

Permit me to conclude with an anecdote. For several years, I would commission a photography student at a local arts school to provide me with a portfolio of pictures suitable for use on the holiday greeting card that I wished to send out that year. Once the preferred picture was selected, I entered into a licence and royalty agreement with the student for the use of the photo. My entire family would then assist me in gluing the picture on the front of the many hundreds of cards that were to be sent. This was followed by the signing of each of the cards, most of which with personalized text. Recipients would mention, later on, about the uniqueness of the card. That, dear readers, is a genuine holiday card experience.

A sad if salutary tale

I've just been speaking to a friend, who had developed a rather attractive website for her specialist business -- a small local business which looked promising but never developed and is now defunct. A fotnight ago she told me excitedly that she had been approached by a prospective purchaser, who was interested in buying the domain name together with the six or seven pages of text and artwork that comprised the website.

Now, somewhat crestfallen, my friend tells me that she has not heard from the prospective purchaser since. I expressed my sympathy and asked her why. She had no idea. How much did the would-be buyer offer, I asked her, and was told: "She didn't offer anything. I told her I wanted £5,000 and wouldn't take a penny less". Now, the cost to my friend of acquiring and populating the site, plus some expensive and totally unsuccessful search engine optimisation, came to a good deal more than £5,000 -- but I found it hard to explain to her that what a website costs and what it's worth are not the same thing. Bearing in mind the facts that the domain name was long, easy to mis-spell, unmemorable and descriptive, as well as the existence of websites of competing businesses with not entirely dissimilar names, a realistic selling price might have been rather lower if an outright sale were the only option. A lease of the site and its intellectual property furniture might have been a better option.

This episode might seem a little trivial, but it reflects a number of truths that are found in the bigger world. One is that it is easy to over-value an intellectual asset; a second is that one's opening gambit should not be one's final shot; a third is that it's usually better to encourage a prospective purchaser to speak about pricing than to place a tag on an asset and await a dialogue that never comes.

Software licences: better than IP rights?

The Software License Unveiled: How Legislation by License Controls Software Access is a short, vibrant book by Douglas E. Phillips (Vice President and General Counsel, Promontory Interfinanciary Network). The web-blurb makes some big claims for it, describing it as follows:

"* First title to combine a practice-oriented survey of "clickwrap" law with a theoretical treatment of legal and economic theory;
* Written by a visionary legal practitioner with extensive experience in software licensing;
* Includes discussion of today's software licenses from both practical and conceptual vantage points, including analysis of license examples, discussion of key judicial decisions, and consideration of theoretical perspectives;
* Explains how the terms of "clickwrap" agreements and other software licenses give rise to a largely unread and unseen law of software, which often displaces intellectual property law;
* Discusses digital rights management ("DRM") and the Digital Millennium Copyright Act ("DMCA") and how these critical developments are and are not related to software licensing;
* Discusses the new version 3 of the General Public License ("GPL"), which applies to Linux and other free software programs;
* Includes a brilliant new perspective on the proliferation of open-source software licenses that will help to frame the ongoing debate within the free and open-source software communities.

Nearly every use of a computer is subject not only to public intellectual property law, but also to the privately-written law of the software license. Although the United States has only one Copyright Act and one set of patent laws, there exist thousands of different licenses - to which millions of computer users legally bind themselves by the click of a mouse, usually without reading anything but the word "agree." How do these proliferating but largely unread licenses affect access to software, one of the economy's most valuable resources? In The Software License Unveiled, visionary practitioner Doug Phillips aims to illuminate the unseen law of software to which the software license gives rise".

Words like 'brilliant' and 'visionary' tell us less about the author and his book than they do about the fact that this work is published from Oxford University Press's New York office rather than from the genteel and discreetly understated grandeur of its Jericho headquarters. American purchasers of IP books are presumably more habituated to hyperbole than are their European brethren and may be disconcerted by its absence.

The phenomenon of the software licence, in its shrink-wrap, web-wrap, browse-wrap and click-wrap guises, has been well known to software lawyers and their clients since the dawn of mass-market PC time (the facts of the early shrink-wrap litigation in ProCD v Zeidenberg took place in 1994, when dinosaurs ruled the information highway and most people still used DOS), though it has been rediscovered with great regularity: as recently as 2007 the prophetic Cory Doctorow could still persuade readers that shrink-wrap licences were "an epidemic of lawsuits waiting to happen".

Doug Phillips has not invented, nor re-invented, concerns regarding software licences of this nature. What he has done, however, is to explain lucidly and enthusiastically, why contract law -- if allowed free rein -- is a far more effective way for a business to protect its rights, control the use of its products and manipulate its relationships with users of its products than are the intellectual property rights that vest in it. Patents can be invalidated and are horrendous to litigate, copyrights can be worked around, trade marks are no serious hazard -- but if you can point to an obligation that you wish to press upon someone else and say, "Look, you've agreed to this and you can't deny it", you are in a far more powerful position. Doug Phillips has not lifted the veil on software licences but he has enabled readers to see clearly through it. In doing so, he has given some clear background to the reasons why you-must-have-agreed licensing provides so much comfort and security to those who invest in new software products.

Bibliographic details: xxi + 204 pages. Hardback. ISBN 978-0-19-534187-4. Price: £55. Book's web page here.

India Frees Up Foreign Payment of Royalties

When I began my career in tech transfer in the 1980s, one of the most challenging aspects was the restriction placed on the payment of royalties and the like. In particular, many countries, particularly in South and Central America, placed severe restrictions on the amount of royalties that could be paid to a foreign licensor. Creative solutions abounded in those days to play the system in a way that was mutually beneficial to the local licensee and its foreign licensor. Some time in the 1990s I think, these restrictions were relaxed. While I have not followed the issue closely since that time, it is my impression that these restrictions have been relaxed in that region.

Fast forward to 2009 and a December 18th post by Swaraj Paul Barooach on the iconic SpicyIP Blog. Entitled "Liberalization of Foreign Technology Agreement Policy, the blog reported on the December 17 Press Release by the Government of India Press Note No. 8 (2009 series), which effectively provides that no longer will government approval of royalty payments be required above certain defined thresholds here. In short, the prior policy

"freely allowed payments and remittances up to a lump sum fee of $2 million and payment of royalty of 5% on domestic sales and 8% on experts. In addition, where there is no technology transfer involved, royalty up to 2% for exports and 1% for domestic sales ... on use of trade marks and brand names ...".

Payments above these limits required the prior permission of the Government of India (Project Approval Board, Department of Industrial Policy and Promotion).

These limitations have now been scrapped, at least in material part. Lump sum payments and/or royalty payments for technology transfer or for the use of trade marks or brands no longer require Governmental approval, no matter, it appears, is the amount of the payment. There is one restriction, namely, the Foreign Exchange Management (Current Account Rules, 2000. What exactly are the contents of these rules is not further specified in the Press Release. As well, "[a] suitable post-reporting system for technology transfer/collaborations and use of trade mark/brand name will be notified by the Government separately."

There seem to be at least three related factors at work here. First, the amount of foreign direct investment (DFI) in India continues to increase apace (over $25 billion in 2008). At least a part of that DFI would also see to require collaboration agreements with foreign entities for the use of technology within India. As well, technology is increasingly licensed-in to India for the purpose of use and commercialization within the Indian national market. Restrictions on the amount of royalties that can be freely paid abroad would only serve to reduce the optimal use of this technology within India.

Second, there might be a connection between the new policy and the increasing liberalization of capital flows out of India. Think of Tata and its recent spate of acquisitions over the past several years. It would seem that such capital flows go hand in hand, at least conceptually, with the scrapping of approval requirements for royalty payments above a certain amount.

Third, much talk has made lately over the notion of reverse innovation, where India serves as the foundation for innovation, which is then transferred to the developed world: see here. It seems that if India is to benefit from royalty streams from abroad for the use of such fruits of reverse innovation, it behoves it to allow unfettered payments of royalties by Indian entities abroad.

All in all, the provisions as set out in the Press Release point to a liberal Indian market for tech transfer, something which could have even been dreamed in the 1980's.

Bullish about Liberal Royalty Payment Policy

Do the Movie Studios Have a Strategy for the Online World?

I recently paid my annual visit to what is reported to be one of Borders' most successful stores, located in an upscale suburb of a Midwestern US city. When I reached the CD department, I had to do a double-take to confirm what I was witnessing. It seemed to me that the department had been downsized by probably over one-half since February 2009, both in terms of floor space and stock. The feeling that I had entered into a CD ghost town ran through my thoughts.

The recurring theme of the movie industry, and more specifically the DVD business, is that it will do (or try to do) whatever it takes to ensure that it will not suffer the fate of the CD music business. This struggle was well-summarized in an article that appeared in the Strategy & Competition section of the October 19th issue of Business Week. Entitled "Squeezing Every Dime from DVDs", the article discussed the efforts by the content providers to garner greater profits from DVD products. The reality is there for all to see--DVD sales are declining and there is little or no expectation that this trend will be reversed. In the words of Peter Chernin, the former president of News Corp., "[t]he days when you [could] get anyone who wants to see a movie to pay $15 at a Blockbuster, Best Buy or Wall-mart are in significant decline."

Against this backdrop, Hollywood is reported to being taking the following steps to improve its position in the dwindling CD market:

1. Cooperation between studios to combine certain activities, such as distribution and the back-off, in order to cut costs and improve CD margins ("Those talks have since bogged down because hoped-for savings might not materialize quickly enough.")

2. Improve their business terms with the rental company Netflix, whereby the studios want to increase their share of subscription revenues and/or to furnish Netflix with releases only several weeks after they go on retail sale at Wal-Mart et al.

3. Improve their business terms with Redbox, which specializes in $1 DVD rentals at kiosks located in supemarkets, by threatening to withhold titles unless Redbox agrees to certain restrictions, such as limiting the number of titles available at a given kiosk, sharing rental fees and imposing a 45-day wait period from the commencement of retail sales (Not surprisingly, Redbox has filed suit to challenge such restrictions.)

CD as a Dodo Bird

There seems to be a two-pronged approach of sorts going on here, against the backdrop that the studios have internalized that sooner or later there will be a future without DVDs. First, in at least the short-term, squeeze more income out of the existing, if ultimately declining DVD market. Secondly, figure out a way to monetize movies in a non-DVD world.

Experiments abound. For one, Warner is trying to roll out a small number of online rentals in a test market, whereby the in-store sales will take place only four days later. The thought is that the online capability will encourage in-sale purchase of the DVD (though in my humble opinion that reminds me of the failed rationale for making music available on-line.) For another, Fox is offering a three-disk package for the movie X-Men Origins: Wolverine, containing a Blu-ray disk, traditional DVD, and one that can be stored in a computer hard drive. And then there are the online subscription experiments. ranging from Disney, with its proprietary list, to YouTube, with its platform open to all content providers.

I have several thoughts here:

1. For 300 years, content providers have migrated from distribution platform to distribution platform as technology changes. Thus, the effort to increase studio revenues from CDs is an attempt to make the financial best of a bad (and getting worse) situation. Here, the studios are seeking to earn a bit more change while in transition. For the distributors, however, such as Netflix and Redbox, there is the potential double whammy of a declining revenue share and ultimate obsolescence as a distribution platform.

2. The studios (and potential distribution platforms) are far from formulating a successful strategy in the post-DVD world. One advantage of movies over music is the commercial advantage of the movie theatre over the concert and music halls. But the revenues from movie theatres is not enough. Despite a half a decade of talk, the jury is still out whether the movie studios will fare any better commercially than their music colleagues in the online space. In the words of Barton Crockett of Lazard Capital Markets, "They've been practicing for some of these dance steps for a long time. It's time they hit the dance floor."

3. The strategic options available to the movie industry should take into account the wider world of emerging markets. Hardly a day goes by without a business pundit observing that emerging markets will be the focus of economic growth for the foreseeable future. Hollywood, Bollywood, and Nollywood may each have its own core market, and the DVD market is hardly the same for all of them. Indeed, I am not sure the extent of the DVD market for emerging market film industries. But down the line, all will have confront the challenge of online distribution. I, for one, would like to see more discussion of the challenges of online distribution in this broader context.

It's Time to Hit the On-Line Dance Hall

RSA as an IP outsoucing destination

This blogger has been promoting RSA as an IP outsourcing destination and returns from a short trip to Europe where he visited a beauty packaging business in Paris for whom two firms in RSA do patent outsourcing work, and then addressed an audience at RSA High Commission in London on outsourcing IP services. The feedback he received was very encouraging. The Paris based business, lead by IP advisor Anca Condrea, enjoyed cost effective services and was impressed by the quality of work, whilst over 55 people RSVPed for the London event representing the who's who of the top 40 London law firms.

Opportunities exist for the big four law firms in RSA who are able to offer the highest economies of scale in a safe and reliable environment. However, boutique firms offering a bespoke skilled service are also well placed to take advantage of the recessionary pressure on law firms to look for creative ways of cutting costs (which may be more than 50% of their current spending). But there is some way to go.

In 2010 the recession is expected to ease and that means less pressure on firms. In addition those who have been laid off are offering cost effective services to their previous employers from their homes or are otherwise happy to accept a lower pay. Firms in RSA concerned about upsetting reciprocity relationships are also not keen to be visibly taking advantage of the opportunities, notwithstanding that outsourced services are capable of enhancing an overseas law firm's offering to its own clients. Perhaps the biggest driving factor though will be how the legal market reacts to Baker and Mckenzie and Clifford Chance's outsourcing moves. As explained to me by one management consultant "law firms will need to react". This blogger has a keen interest in monitoring just how.

Ireland: no change ... so far

From Naoise Gaffney (Tomkins & Co, Dublin) comes some reassuring news. For those enjoying a favourable tax position as recipients of income from patent royalties and other IP-favourable tax-breaks in Ireland, the position after yesterday's Irish Budget Speech -- delivered by my old student Brian Lenihan -- is one of "no change so far".

You can check the full budget speech via the Irish Times here. On IP taxation in Ireland see IP Finance here and here.

IP & the Chancellor

The UK Pre-Budget Report today had a couple of IP moments - overall potentially useful, but really just not trying hard enough.

10% tax on patent royalties

Good news? Well, yes: but only if you're planning on receiving income from 'innovative industries' (broadly, it's only going to be available for pharmaceutical and biotech patents). This is very much less generous than the similar royalty taxes in the Netherlands, Luxembourg and Belgium - all of which equate to a tax rate of around 6% and are available for a much wider range of IP.

So, good news for smaller business doing research that will lead to pharma/biotech patents - although 10% is higher than the Benelux options, the costs of successfully operating a non-UK company and keeping its profits out of the claws of the UK Revenue could be more than the 4% difference in rates for a small business.

The sting in the tail (because there had to be one): this doesn't come into effect until April 2013, and will only apply to patents granted after that date [Edited to add following comment - the date from which patents will be included isn't clear: April 2013 is the backstop date, it might be earlier. Lobby to make sure it is!]. There is advance publicity, and then there are Budget announcements. Trying to be more positive, there is some time to work on the government (any government!) to expand the scope of this proposal.

R&D relief: ownership requirement removed

Of more general use is the change (effective today) in requirements for small and medium-sized company R&D relief: there is no longer any requirement that the company owns the IP resulting from the R&D. Although HMRC could be flexible on this (eg: for university spin-outs with licences) they have also been very unhelpful in some cases.

Retainers and Trade Mark Practice: How Are the Changes Being Felt?

An apology to readers of the blog--I have been on the road with virtually no access to the staples of modern online communication. That said, I take this brief opportunity to raise an issue that has troubled me for some time, namely, the role of trade mark counsel in a retainer relationship with a client.
Hardly a day seems to pass lately without some item crossing my screen on the death of the billable hour and the concurrent rise of the retainer and other like arrangements. This development has not spared my trade mark practice. More and more, I am being asked to provide trade mark services to office clients under the framework of the general retainer in place between us. I am still wrestling with myself on the best way to provide trade mark services in this situation.

There are several aspects of this arrangement that give me particular pause. First and foremost, there is the question of lines of communication and authority between the client and the office being retained. Trade marks are a speciality practice area; frequently, the client will not have anyone within it with the appropriate background to interface with our trade mark group in an efficient manner.

As I have written previously, in many companies, responsibility for trade marks will be lodged with the CFO or like person, where trade marks are viewed primarily as a cost item. Whether that is a good or bad way to view trade marks is a question for another blog post. What cannot be gainsaid is that, when a retainer is involved, the cost consideration tends to become distorted, because the immediate cost of the trade mark services is zero.

Assuming that the retainer amount remains the same, the effect is that the trade mark services have no additional discernible cost, at least from the point of view of direct corporate expense. The result may be that trade mark counsel might search in vain for an appropriate person from whom to take instructions and for whom to provide the appropriate services.

A second issue is the matter of engaging foreign associates. Here, the issue of costs re-enters the trade mark equation, but from from the back door. By this I mean that the retainer arrangement tends to assume that the retaining company can achieve greater certainty, litigation aside, about the amount and timing of payment for legal services. Given this, the retaining company will be reluctant to expend additional sums for services that are presumably covered by the retainer.

The need to rely on foreign trade mark associates disrupts this expectation. I have to explain, time after time, why, given the retainer, these additional services are required from the various foreign associates. I am also expected to obtain reasonable legal fee commitments from these foreign associates. Here, as well, the time required to coordinate these various third-party law firms can lead to misunderstandings and even tension.

The upshot of the foregoing is a lingering sense that the nature of my trade mark practice will likely change in response to a presumed increase in the number and frequency of retainer arrangements. The exact contours of this changing relationship is still a work-in-progress, but I can already foresee disruptions between our clients and us about the way trade marks should be handled against a retainer backdrop.

Is IP Good for Industrial Clusters?

Small-firm clustering has been championed as a strategy for enabling such companies in the aggregate to compete successfully against rivals in emerging markets. The idea is that these companies can tap the pool of manpower and resources in a local area for their collective benefit of the participants. Perhaps the most heralded example of this strategy are the many local artisan and manufacturing industries that are found in Italy. Whether it is eyeware, recycled wool, or furniture, or hundreds of other products, these clusters of industrial activity have served as a model for Italian competitive advantage.

If this be so, then an article in the October 17 issue of The Economist surely makes depressing reading for anyone with an interest in the future of the Italian economy. Entitled "Sinking Together: Italy's Business Clusters", the article describes the difficulties facing these fabled industrial clusters. As described in the article, clustering is especially important in Italy, "where firms are generally makers of traditional consumer goods, small or medium-sized, family-owned, dependent--directly or indirectly--on exports and, for reasons of geography and history, clustered together." Whether a casualty of the world economic meltdown, or due to larger factors of the rearranged industrial balance between developed and emerging economies, the situation appears to be the same: the clusters are in trouble.

Against this gloomy backdrop, can the Italian clustering model survive? The view of Giacomo Vaciago, of the Catholic University of Milan, is that it can, if it adopts the following model, as described in the piece--"... transform themselves into districts where new ideas are dreamed up, designs developed and goods finished, with most production taking place in cheaper spots abroad." If Professor Vaciago is correct, the question then arises: What is the role of IP in this remade form of Italian industrial clustering"?

Find the Design Clusters

The immediate instinctive response is to argue that focusing the activities of the clusters on creation and design must certainly mean that IP protection will become even more important. After all, creation and design must be protected to realize their full value. Not so fast, however. An argument can be made that what is needed--IP-wise--for these clusters to flourish is actually less IP protection and more the encouragement of copying and imitation. What possibly can I mean here?

There is a developing body of research that points to norm-based systems of "IP" creation and enforcement that lie outside the traditional IP framework. One notable example is the work of Von Hippel and Fauchart ("Norms-Based Intellectual Property Systems: The Case of French Chefs", 2006) here. Another example, more germane for our topic, is that work of Raustiala and Sprigman, "The Piracy Paradox: Innovation and Intellectual Property in Fashion Design", Virginia Law Review (2006), on the nature of the U.S. fashion industry.

There the argument is made that copying and imitation are forms of signaling, which alert industry participants to ratchet up their creative activities to find the next new successful fashion. Given the short-time line of fashion cyclicality, traditional IP protection and enforcement is of lesser importance. In this context, IP litigation is all about fighting the last war rather than readying the design troops to prevail in the battle for capturing the next successful fashion design. Of course, there are limits, such as blatant counterfeiting and straight-on trade mark infringement. Short of that, however, copying and imitation should be encouraged, not discouraged.

If this view is correct, it suggests that Italian clustering will succeed only if traditional IP principles do not get in the way of exploiting the advantage offered by enhanced collective copying and imitation. Secrecy will still be important--I do not assume that all of the members of the cluster will share their creative thoughts and plans on the front page of La Stampa. That said, the enhanced focusing of design and creation as the raison d'etre of the Italian cluster industry poses a fundamental challenge: How to allow pro-competitive copying and imitation, without undermining the foundations of IP protection that are the behavioural norm in the broader competitive landscape? At least in part, the vibrancy of the Italian economy may rely on its outcome.

Inspiration or Imitation?

Can Bespoke and Generic Software Dance at the Same Software Party?

One of those "better not asked" questions is how to deal with the issue of ownership of bespoke software that relies on the generic platform of the developer. Stated otherwise, consider the situation where Party A commissions Party B to develop a piece of software. Party B is delighted to do so, but in fact the commissioned software relies in some way on non-bespoke, reusable software that also belongs to Party B, for which Party A will need a right of use. The parties reach the moment at which they need to settle on a contract that sets out their relationship.

The initial thought, at least of the commissioning party, is to demand that ownership in the bespoke software be assigned to it. At the most basic level, the typical thinking goes something like this: "I paid for it, so it should be mine", or, "It is my policy to own all of my software." Such a position makes some sense. It is true that ownership of the bespoke software itself, without more, will not enable the commissioning party to make use of it (see below). At the least, however, ownership will enable to commissioning party to dispose of it more easily in the event of a sale or acquisition. Whatever the reason, it would be an unusual circumstance in which the commissioning party would allow the developer to continue to own the bespoke software.

That is fair enough. But how does the commissioning party deal with the generic portion of the software that is necessary for the bespoke software to run? From the developer's point of view, unless the commissioning party is willing to simply buy him out--hook, line and sinker--he will will insist that ownership of the generic software remain with him. If so, that means that the commissioning party will likely receive a non-exclusive license to use the generic software.

Under that arrangement, the commissioning party should take special care to protect itself against the insolvency of the developer, especially if insolvency could lead to termination of the licence in bankruptcy. As well, provisions for escrow deposit of the source code with appropriate release instructions should be included. Moreover, a free right of assignability of the license is essential if the commissioning party is able to dispose of the bespoke software in a way that makes commercial sense. Whether all such clauses can be successfully drafted from the position of the commissioning party is far from certain.

Then there is the issue of overlap between the bespoke and generic software. While it is rhetorically easy to describe the situation in simple dichotomous terms, the reality may well be more complicated. Try as it may, the developer may not be able to completely separate the bespoke portion that belongs to the commissioning party and the generic portion that remains with the developer.

Finally, there is a related issue in connection with trade secrets. If the developer is required to disclose to the commissioning party proprietary knowledge related to the software--either bespoke or generic--how does the developer ensure that such trade secrets are not disclosed in an unauthorized fashion? Disclosure might not be critical if it is tied specifically to the bespoke software but, if the trade secret straddles the bespoke/generic divide, then the developer must be especially careful to protect its interests in this regard.

The upshot is that, in these circumstances, there is a degree of uncertainty that seems to be built-in. How readers have dealt with this uncertainty would be most edifying.

IP Finance welcomes Anne Fairpo

The IP Finance team is delighted to welcome Anne Fairpo, who joins the weblog with immediate effect. Anne is a pupil barrister at Atlas Chambers, having previously been a solicitor for more years than she cares to recall, where she is a corporate tax advocate and adviser, specialising in technology-based business and international tax planning and transactions.

Anne is the author of the IP Tax blog, as well as Tottel's Taxation of Intellectual Property and contributes a chapter on the topic to Tolley's Tax Planning (annual editions). She lectures regularly on taxation of IP, as well as more general corporate tax topics, and is a member of the Council of the Chartered Institute of Taxation.

Trade secrets, a seminar and a chance to say "hello"

"Protection of trade and other secrets: a property right, equitable right or contractual obligation? Does it matter?" That's the title of the forthcoming IP Finance weblog seminar, which will be conducted by Neil Wilkof (Herzog Fox & Neeman, Tel Aviv) and Robert Anderson (Lovells LLP, London).

This seminar will be well worth attending. IP Finance team member Neil -- in the course of a series of posts on this weblog on IP-based business strategies in a changing world -- has asked questions about the juridical nature of the trade secret and its role in modern business. He and Robert Anderson will engage in what should prove a most enlightening debate.

The seminar (which should last for about 45 minutes) will start at 1pm on Monday 14 December 2009. Lovells has kindly agreed to host the event in its London office: that's Atlantic House, 50 Holborn Viaduct, London EC1A 2FG (nearest tubes are St Paul's, Farringdon or Chancery Lane). The seminar will be followed by some appropriately tasty light refreshments and a golden opportunity for some prime networking.

If you're coming, there's nothing to pay. Just email Sarah Turner here. Good news if you're in practice and could do with CDP points: Lovells are arranging for them.

Convergence survey lifts lid on device-users' attitudes to paying for IP content

The 2009 Convergence Survey, launched this morning, represents a combination of field research and interviews conducted by London-based law firm Olswang LLP and YouGov into the use of computers, smartphones, e-books and other devices by more than 1,500 consumers. The 96-page report covers a wide variety of aspects of access to IP content by four categories of device-user: the vanguard, second-wave purchasers, the mainstream and the laggards, also dividing them by age.

Of particular interest to readers of this weblog is the annex, which contains some 172 pages of data derived from the survey, addressing issues such as the extent (if any) to which device users are prepared to contemplate payment for content in terms of existing and future functionality and their attitudes towards micropayments. The difference in spending habits between users of the Apple iPhone and other groups of consumers is quite noticeable. You can access the annex here.

Delay no bar to an account of profits, rules Hefty court

IP Finance thanks John Smith for drawing the attention of this weblog to the recent ruling in Intellectual Property Development Corporation Pty Ltd and Hefty NZ Ltd v Primary Distributors New Zealand Ltd, D. J. Graham and R. J. Jones [2009] NZCA 429, Appeal Court of New Zealand, 23 September 2009 (IP Finance previously reported on the trial decision here). In this trade mark infringement case the Court -- which had a good deal to say about the the remedy of an account of profits -- held that mere delay in seeking relief is not in itself a ground for refusing an account of profits. You can read this decision in full here.

A full and very helpful account of this decision -- which also reflects on issues relating to the receivership and liquidation of the trade mark proprietor -- can be found on the IP Now blog here.

"Tips for minimizing dispute settlement costs": can you help?

In a moment of inspiration or folly some weeks ago, I suggested the following title, "Keep it cheap: ten tips for minimizing dispute settlement costs everywhere", for a short article in an forthcoming issue of the WIPO Magazine which will focus on the cost of resolving intellectual property disputes. This suggestion was accepted.

My deadline is only ten days away and inspiration has yet to knock on my door. If any reader is possessed of one or more absolute truth with regard to keeping the cost of settling an IP dispute down, I'll be delighted to hear it (please post your suggestions below or email me here). All decent suggestions will be acknowledged on this weblog when the article is published.

The current online issue of the WIPO Magazine is available here.

Trade mark licences: beware of the unconventional

While practitioners certainly like to preach against uncertainty in the terms of a licensing agreement, we know how difficult this is to achieve, especially when it comes to provisions relating to termination. The uncertainty may arise from the inevitable elusiveness of achieving drafting perfection, compromises reached during negotiations, or the intention of the parties to leave the issue ambiguous. Whatever the reason, the result is that the parties may find themselves fighting over the meaning of the provision giving rise to the claim of termination.

This lesson was brought home in my favourite trade mark licensing case of the decade, the Australian case of Pacific Brands Sports & Leisure Pty. Ltd v Underworks Ptd. Ltd [2006] FCAFC 40 (for anyone who wants to confront a wide-ranging judicial debate on the meaning trademark assignments and licences, this is the case for you). While the issue of termination was strictly relevant to the disposition of the case, the court could not reach a single view on the proper construction of the licensee/sublicensee's obligations under an unusual form of grant clause. The resulting difference of opinion by the court on the meaning of the provision is instructive about the risks entailed in drafting such a clause.

The licence agreement provided that the licensee was authorized to use the licensed trade marks in connection with specified goods. The issue arose with the addition to the clause that the licensee undertake to “exploit the Products within the Territory to the best advantage of the parties.” The licensee had not succeeded in selling, under the licensed mark, some of the specified goods included within the defined term “Products”. The licensor alleged that since the licensee had not done so, the licensee was in breach of the provision.

What is unusual about this provision? At least two issues come to mind. The first is the use of the term “exploit” (a term more typically found in connection a patent licence) regarding the licensee’s undertaking, as opposed to a term such as “use”. This is especially so, since the term “use” appears elsewhere in the same clause. Does “exploit” mean something other than “use”; if so, what is the difference in meaning between the two terms?

The second issue is the reference to the requirement that the "exploitation be for the “best advantage of the parties.” There is extensive case law and commentary on terms such as “best efforts”, “best endeavours”, “reasonable efforts”, “reasonable endeavours”, and the like, as a self-contained undertaking in a licensing agreement. It is unusual, however, to speak of the “best advantage of the parties”.

To cut to the chase: What is the significance of linking the obligation to “exploit” the mark with a performance criterion defined as the "best advantage of the parties", especially when the meaning of the first term is uncertain and the use of the second term is unusual to an extreme? It is no surprise therefore that the court could not agree on the meaning of the provision.

The majority view of the court of appeal reasoned that no breach had occurred. The licensee was not obliged to use the licensed marks in the event that no market exists for some goods, or that there was no profit to be made with respect to such goods. The majority also rejected the claim that use is required to protect the mark against a claim of non-use of the trade mark. There were other ways within the scope of the agreement to avoid a non-use claim. As well, reference was made to the opinion of the trial court, most notably the original parties to the agreement had recognized the risk that the products might not find a market and that there was a separate right of termination for failure to meet minimum sales (as opposed to termination for no sales with respect to a given product category).

The minority view took a different approach. It focused on the meaning of the word ”exploit”, which it construed as requiring something more extensive than mere “use” of the marks. The requirement that “exploitation” be for “the best advantage of the parties” did not detract from this undertaking, since selling the goods would clearly be to the advantage of both parties. The failure of the licensee to do so was a breach of this undertaking.

Trademark Licenses Can Be Quixotic Too

When confronted with these incompatible constructions of the meaning of the clause, two points come to mind.

First, stick to conventional words and terms when drafting. Within the context of a trademark license, a term such as “use” may cause less difficulty in construction than the the term “exploit”. Even better, provide for a specific description of the intended uses of the mark. The admonition is even stronger when a starkly unconventional term as “best advantage of the parties” is relied upon. Here, as well, specific standards of performance are preferable.

Second, pay close attention to the structure of the license agreement. The terms of the grant, and the measure of the licensee’s performance, are separate and distinct issues. First set out the permitted kinds activities; secondly (and separately), define the performance standards. As was graphically brought home in the Pacific Brands case, conflation of the two provisions only result in uncertainty, if not worse.

Maximising IP and Intangible Assets: new report

IP Finance has recently received information concerning the new paper from Athena Alliance, Maximizing Intellectual Property and Intangible Assets: Case Studies in Intangible Asset Finance. This report may be accessed from Athena's website here, in html and pdf versions) and on Ken Jarboe's weblog The Intangible Economy. According to Ken,

"The paper looks at how, as innovative companies struggle to raise funds, intellectual property and intangible assets are providing alternative ways of financing innovation. The report outlines increasing, but still nascent, means of financing innovation based on these assets in public, private and venture capital markets. As industry has invested capital in research and development to develop new technology and advance other creative activities, intellectual capital has become a valuable asset class, according to the paper. In response, firms specializing in intangible-based financing are springing up, using them to raise capital for the next round of innovation.

The report details equity, equity-debt, debt, and sale-leaseback transactions, both private and public, that have helped companies raise capital, based on careful, rigorous analysis and conservative underwriting standards. For example, the author notes that in 2000, there were two public deals using royalty securitization, raising $145 million. In 2007-08, $3.3 billion was raised in 19 deals.

Unlike some of the exotic financial vehicles, however, the financial products discussed in this paper are some of the most basic financing mechanisms in business. The innovation is in recognizing the value of intangible assets for corporate finance. These new financial firms are using traditional financial techniques in new ways to help innovative companies.

As a case study paper, the report does not get heavily into policy recommendations but builds on earlier Athena Alliance papers, notably Intangible Asset Monetization: The Promise and the Reality. The report does discuss that the important step would be developing sound, industry-wide, underwriting standards .... For example, Small Business Administration (SBA) rules permit its loans to be used for acquisition of intangible assets when buying on-going businesses. However, it appears that the rules are unclear on whether those assets can be used as collateral. The paper recommends that SBA work with commercial lenders to develop standards for using intangible assets as collateral".

Ken asks that this paper be given some airing, so that he can receive the benefit of readers' comments. You can email him here.

Bloomberg v The New York Times: Who Will Provide the Contents?

While academics (particularly the U.S. kind) continue to engage in the "high protection/low protection" struggle for the Ivory Tower soul-of-copyright theory, a quite a different struggle is taking place at the level of journalism and the contents they they provide to the public. There, the matter is, quite simply, one of business survival. "Who shall live and who shall die", in the words of the liturgy.

An interesting angle on this struggle was described in the Sunday, November 15 edition of nytimes.com (and summarized on the New York Times podcast--"Weekend Business"). Entitled "At Bloomberg, Modest Strategy to Rule the World", the piece by Stephanie Clifford and Julie Creswell chronicles the efforts of Bloomberg L.P. to become quite simply, in the words of Andrew Lack of the company, to become "the world's most influential news organization."

Heady aspirations indeed. From its beginnings in 1981 through to its place as the leading purveyor of financial information via the eponymous "Bloomberg terminal", this highly profitable company has branched out into tv and radio, and also the print media (as well as seeing its founder--Michael Bloomberg--recently elected for a third term as mayor of New York City). In particular, their recent acquisition of the venerable magazine Business Week signals an intention to expand their audience and readership as well as to try and resuscitate the declining, if still iconic, publication.

I have to admit: I am a podcast addict of Bloomberg programmes; I find the formula of interviews across a wide spectrum of business and related topics to be an attractive way to remain current on significant issues. I also listen to several daily New York Times podcasts. As well, since 1981, I have been a subscriber of Business Week. This means that there is a kind of personal engagement in these contents that drew my special attention to the New York Times piece.

And so the speculation: In light of their efforts, how does Bloomberg stack up with the paragon of old media, the New York Times? Strictly speaking, the two are not precisely rivals, since one could argue that Bloomberg is primarily a business-related enterprise, while the New York Times is a full-content newspaper. That said, a senior Bloomberg official referred to The Economist as the model for a revamped Business Week. If so, the comparison seems more direct and more compelling. So here are my thoughts.

1. The case in favour of Bloomberg seems to be based on the premise that Bloomberg has the crucial advantage--ready cash. While the New York Times, and the print media more generally, struggle cash-wise, Bloomberg seemingly can throw oodles of the stuff at achieving its publishing dreams. One proof of this is reported hiring binge of journalists by Bloomberg, while the New York Times has been reducing its staff.

Will Cash Be King in the World of Journalism?

2. On the other hand, the New York Times is first and foremost a journalistic enterprise, primarily in print form, and more hesitatingly in the online environment. It excels in content, albeit frequently with an noticeable editorial slant. Never a great money-maker even in the best of times, it is struggling to stay afloat in the current economic climate.

3. The upshot is that Bloomberg is betting that being able to make use of the ample cash being thrown off from its content business will provide the basis for establishing an equally dominant position in the world of journalistic contents. That remains to be seen: Money will certainly help, but it is hardly a guarantee of ultimate success. As the phrase goes, "one way to make a small fortune is to spend a large fortune."

4. As for the New York Times, quality content may or may not be enough to succeed commercially in an increasingly online world, where "free" is the reader's expectation, if not the norm. The ability of the New York Times to monetize its content in a world where advertising plays a smaller and smaller role can only be described as challenging.

5. And so a thought: If Bloomberg has the cash, but uncertain capabilities in contents, while the New York Times is exactly in the opposite position, why not have Bloomberg simply acquire the New York Times? This is what another media giant-Rupert Murdoch--has done with his purchase of the Wall Street Journal. "Nonsense", you might say, and that is fair enough. But if so, what alternative suggestions do you have for Bloomberg and the New York Times? After all, quality journalism that is commercially robust is in everyone's interest.

But how much does piracy really cost?

Last Monday Intellectual Property Watch posted this item on a subject very close to my heart. Penned by Catherine Saez, "Panel Calls For Disclosure Of Industry Methodology Assessing Losses To Piracy" raises the issue of greater transparency in the evaluation of piracy and assessments of broader social implications -- decades after industry victim self-assessments of loss were first offered as arguments for tougher laws and more cogent means of enforcing them. According to Ms Seaz's report:

"Co-organised by the International Centre for Trade and Sustainable Development (ICTSD) and the Social Science Research Council (SSRC), the event presented the findings of recent research on piracy and IP enforcement in developing countries. The event was held during the 2-4 November World Intellectual Property Organization (WIPO) Advisory Committee on Enforcement.

SSRC presented a research project focused on copyright piracy involving 25 researchers in seven countries and aimed at providing empirical research on piracy.

Industry research has “owned” the debate for a number of years, said Joe Karaganis, program director for media and democracy at SSRC. In the field of copyright, research is difficult and requires a global network, which is accessible by the copyright industry.

The research project seeks to bring the developing country perspective into a serious debate on developed country losses, primarily losses in the United States due to piracy outside the US.

Karaganis noted that piracy also has obvious social benefits, which explains its persistence. In developing countries, piracy is often the primary means to access media goods.

SSRC has concerns about the integrity of industry research, said Karaganis, although there are genuine and valuable research projects in the industry. There is a need for industry research to be documented, to know the inputs used by industry and its methodology, he said, as more transparency in the process would add credibility to the results. SSRC recommended that WIPO put pressure on industry to display their research methodology. ...

In organising this event, ICTSD said it considered Recommendation 45 of the WIPO Development Agenda, which calls for members “to approach intellectual property enforcement in the context of broader societal interests and especially development oriented concerns,” in accordance with Article 7 of the World Trade Organization Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement".

IP Finance will be watching this debate closely, since this author feels that transparency is valuable on both sides. If, for example, the figures are clearly demonstrated to relate to loss of sale of legitimate product at the factory gate, at wholesale level or at retail prices, the sums are very different. Likewise there are issues of potential double-accounting when the same counterfeit item incorporates a multiplicity of IP rights. It is also helpful to look at the loss to the revenues and the damage caused to the fabric of society by the importation, purchase and consumption of counterfeit goods. The cost-benefit analysis is quite different in respect of different types of goods: fake fashionwear is one thing, useless HIV medicines are another.

Carrefour, Brands and the Russian Market;

I can think of no greater branding challenge than seeking to establish a transnational presence in the retail chain space. Even the 800lb gorilla --Wal-Mart--has not succeeded in establishing a dominant position in each of the national markets which it has sought to enter. The reason is not difficult to fathom. When compared with the difficulties in marketing a single branded product in a new jurisdiction, the requirements for successfully establishing a large-scale retail service brand in a new country are exponentially greater.

Thousands of products of inventory, ranging from perishable food to home furnishings, have to be purchased and made available to customers, real estate sites need to be carefully selected, pricing has to walk a tightrope between being competitive and being profitable, cultural differences have to be addressed, and managerial and on-the-floor service has to be constantly maintained. It is often a wonder that large retail chains can succeed at all across diverse regional settings.

That said, I was struck (even thunderstruck) by the announcement in mid-October that the giant French-based retailer Carrefour here was pulling out the Russian market. Just to keep the size of the company in perspective, it is the second largest retailer in the world (behind Wal-Mart) and racked up sales of nearly $36 billion dollars for Q3 2009. Nor do they shy away from adventurous markets. Nearly half a decade ago, my daughter found herself temporarily working at a Carrefour store in far Western China.

Against that backdrop, the compressed rise and apparent fall of Carrefour in Russia is noteworthy. As reported on the nytimes.com website on October 17, in an article entitled "French Retailer to Close its Russian Stores" under the by-line of Matthew Saltmarsh and Andrew Kramer, Carrefour opened its first hypermarket in Moscow in June 2009. A second store was opened on September 10, 2009, in a city called Krasnodar. The announcement of that opening, as reported on carrefour.com, was careful to add that it was being done "in line with the agreement concluded with the Administration of the Krasnodar region."

And yet, slightly more than one month later, the company announced (albeit apparently "buried ... in a trading update") that the closure was taking place because of an "absence of sufficient organic growth prospects and acquisition opportunities in the short and medium term that would have allowed Carrefour to attain a position of leadership." This is quite remarkable. We are not talking about closing a 180 square meter corner grocery, but rather two facilities, each of which was over 86,000 square feet. Moreover, we are not talking about a gradual phase-out of the facilities, but rather what appears an exodus of Biblical proportions. If there is any recent precedent for a retail pull-back of this size and alacrity from a entire national jurisdiction, I am not aware of it.

Coming and Going in Russia

Oversaturation of the Moscow market, limited growth possibilities elsewhere in the country, a difficult consumer ethos, a deteriorating economic environment, endemic red-tape and even corruption (recall the role of the Administration of the Krasnodar region in the opening of the second Carrefour megastore) all seem to have played a part. Still, these factors did not suddenly come together like a perfect storm only between June and October of this year. If these were factors contributing to the debacle, surely they must have been present, in whole or in part, before the summer 2009. If so, it sure sounds like someone was asleep at the wheel at company headquarters.

And now for the branding question: will the apparently ignominious withdrawal from Russia affect the transnational value of the Carrefour brand? I suspect that the answer is no. Mega-retailing is far more local than international. Still, this is a double-edged sword.

On the one hand, there is likely little added value to the Carrefour name per se when the company seeks to enter a new market. True, the size and recognition of the chain may ease the initial entry into a jurisdiction, but ultimate commercial success, and the resulting goodwill in the brand, must be earned. This seems quite different from the introduction of, for example, a MacDonald's chain into a new country, where the transnational goodwill preceding entry will likely be of assistance.

On the other hand, a local failure will not materially affect the overall value and goodwill of the brand. What happened in Russia will not likely cause an impairment of the Carrefour brand in France--the markets are separate and distinct . Despite globalization, digitization, and the growth of famous marks, for most brands the territoriality notion of trade marks is not merely of legal significance, but of commercial import as well.

IP Australia's IP tax advice

IP Australia's IP Toolbox offers a really useful page full of information concerning the tax implications for various IP regimes. Apart from breaking down current tax breaks and liabilities by (i) type of intellectual property right or product and (ii) species of tax, it also supplies information as to local variations in taxes across the different states. Considering that there are three sets of variables at play here, this page may just come in handy to anyone considering how, or where, to start an IP-based business in Australia.

"Let's rumble ..." but how much is it worth?

From Lee Curtis (Harrison Goddard Foote) comes this link to a trade mark which is reputed to have netted its owner Michael Buffer $400 million: the catchphrase slogan "Let's get ready to rumble". The phrase is apparently used at the beginning of boxing and wrestling matches. The same catchphrase is registered in the United Kingdom, for services in Class 35 (Advertising and promotion) and Class 41 (Cultural activities; radio, television, film, music, video and theatre entertainment services; master of ceremonies services; acting and voice-over services) in the name of Ready to Rumble, Inc.

IP Finance wonders whether this trade mark is quite such a valuable business asset in Europe. In particular, is the use of the same phrase by another person when announcing the commencement of a boxing match a 'trade mark use' which can even constitute an infringement? Would the consumer even consider that the phrase, though associated with Buffer, had the quality of a trade mark? Does it truly cause the consumer to believe that a service is being supplied by someone other than the trade mark owner? What if the voice-over had the voice of a woman, a child or a person with a national or regional accent that was manifestly not that of Buffer himself?

The Vegemite/iSnack Trade Mark Saga Down Under: Fiasco or Triumph?

I have always wondered to what extent there is really no such thing as a good trade mark; at the most, there are bad trade marks that you simply wish to avoid. By this I mean that, as long as a trade mark passes muster legally, such that no one can challenge it as being too descriptive, and no third party can assert rights against the mark: it does not really matter at the end of the day what the precise mark actually is.

I thought about this question in reading an article that appeared on 3 November on nyt.com. Entitled "Vegemite Contest Draws Protests", under the byline of Meraiah Foley, the article describes a chain of events that began in July 2009 in connection with finding a name for a new variety of Australia's most distinctive food product--Vegemite. This product is described by the article as "salty, gooey yeast beloved millions of Australians", akin to that icon of the English breakfast table--Marmite. Akin perhaps, but in the eyes (palate?) of millions of Australians, Marmite is clearly inferior to their beloved Vegemite.

I have to admit--I have never understood the culinary attraction of Marmite, which means that I would probably also find Vegemite difficult to swallow. Perhaps the secret of Vegemite is a mix of culture and timing. As observed in the article, well-known Sydney chef Bill Granger observed that "Australian food was really bad until the 1970s: boiled meat and vegetables without any butter or salt. Vegemite was one of the things that actually had any flavor, and that's why it became so incredibly popular It is one of the only foods that is unique to Australia, and people see it as being quintessentially Australian." Whatever the reason, it seems that Vegemite has itself become an icon of Australian food products.

So what does any of this have to do with trade marks? It seems that the producer of Vegemite, Kraft Foods Australia, sought to launch a new variety of the Marmite product (mixed with cream cheese) by means of a contest to find a name for the gooey delight. To this end, Kraft caused jars and jars of the new product to appear on Australian supermarket shelves, with the words "Name Me" on the label. Weeks passed, and more than 3 million jars were sold (1 jar for nearly each 7th denizen of Australia), the product still remaining nameless. On 26 September, Kraft announced the winner via an expensive ad slot that appeared on the televised finals of the Australian football league--"Vegemite iSnack 2.0".

Now I would have thought that with the naming of the new product, the Vegemite business would return to normal. Au contraire. Anger poured in from all directions, inlcuding Facebook, Twitter, and a dedicated website (called "Names that are better than iSnack 2.0"). One online commentator called for the 27-year old designer who had come with the winning name to be "run naked through the streets of Sydney 'as retribution for his cultural crime' ". Another commentator simply said that the name was "un-Australian".

Kraft's reaction (or retribution) was soon to arrive. Four days later it announced that it was putting the name up for a re-vote. The ultimate winner, selected from an online and telephone poll, was --"Cheesybite." Product with the new name will appear on the shelf in a few months, after all of the jars with the "iSnack 2.0" name are sold.

Where Did You Hide the Cheesybite?

A public relations and marketing disaster for Kraft, no? Well, it it is not clear. As for the impact on Kraft's bottom line, the results were in fact spectacularly good. Sales for the "iSnack 2.0"-branded product rose 47% during the first two weeks of sales, while the sales of the original Vegemite product remained unaffected. In other words, Kraft actually increased sales for the Vegemite line. As well, the fact that the product had reached approximately 15% of all Australian households was a marketing achievement that brand managers usually only dream about.

There are those, especially with a conspiratorial bent, who seem convinced that Kraft planned the entire operation as a way of getting the consumers' attention amidst a cluttered and competitive supermarket environment. I rather doubt that, although Kraft's rapid response to the public outcry and subsequent revetting of the name must be applauded as an especially market-savvy move.Getting back to the question I raised at the beginning of this blog post--is there such a thing as a bad trade mark? I guess the answer, based on the Vegemite 'iSnack 2.0" experience, is both "yes" and "no."

On the one hand, the original mark per se seems to have been a bad marketing ploy, taking Australian culture and sensibilities into account. On the other hand, the trade mark issue was quickly resolved, the issue quickly disappeared, and Kraft does not seem to have suffered any harm to its business. So does, or does the mark, not matter? For the last word, I bring the words of Professor of Marketing, Paul Harrison, from Deakin University in Melbourne: "If people like the taste of it, they'll keep buying it--if they don't, they won't. Ultimately, you don't want people thinking too much about your brand, you want people to become habitual about it."