INTA Brand Authenticity Conference (Report 3): Building brand value via ethical and sustainable credentials

After the first and second report from INTA's

Brand Authenticity Conference, Alex Woolgar (Allen & Overy) is back with further updates from the 2-day Berlin event.
Here’s what Alex reports:

“Day 2 of INTA’s Brands Authenticity conference in Berlin resumed the morning with a keynote address from Aiko Bode, Group Chief Sustainability Officer of Fenix Outdoor, which owns a number of outdoor/adventure brands, including FJÄLLRÄVEN. The company has adopted the so-called “Fenix Way”, by which it seeks to entrench sustainability as a central element of the company’s identity, not least because the company’s business depends on the continued attractiveness and availability of the natural environment. Fenix has signed up voluntarily to the UN Global Compact, Fair Labor Association and the Sustainable Apparel Coalition, and abides by the “Management Compass” principles (being Nature, Economy, Society and Wellbeing). Much like Pacari Chocolate yesterday, the standards provided by these organisations give Fenix clear sustainability goals, and their certification marks allow Fenix to communicate its values to consumers. Aiko noted that now all publicly-listed companies with turnover of €40 million or greater and/or 500 or more staff are required to report annually on certain non-financial performance measures. Aiko provided evidence to suggest that more sustainable companies outperform less sustainable ones, and argued that sustainability is no longer nice to have; it is a must have, and it is coming whatever happens, so companies should get ahead of the prevailing trend.

To tie these themes to substantive law, Marion Heathcote of Davies Collison Cave led a session on certification marks. Marion is an IP lawyer during the week, and an organic farmer at the weekends. Marion recounted how she developed a relationship of mutual trust in supplying Mat Lindsay, chef of Ester (one of Australia’s top restaurants). This relationship began by virtue of the strength of Marion’s farm’s brand image (i.e. the business trade mark) and the reassurance of its certifications, namely the Australian organic and AIEA marks.

Giulia Di Tommaso of Elipe provided a sustainability practitioner’s viewpoint, explaining that certification marks support mainly voluntary sustainability standards (VSS). VSS and their associated marks are of growing importance. For example, the Ecolabel Index indicates that there are currently around 465 different ecological certifications worldwide. Giulia suggested that growth in VSS is being driven by brand owners’ desire for protection and recognition of their CSR efforts, consumer demand, the structure of food markets and role of retailers as gatekeepers (e.g. Marks & Spencer has developed its “Plan A” standards), market reaction to the competitive advantage gained by early-adopters, the responsible development of the global south, and government intervention. Giulia believes that VSS incentivise a “race to the top”, essentially by enabling brands to shout about their virtues to consumers. From an institutional design perspective, Giulia suggested that VSS require (i) rigorous standards, which are developed collaboratively; (ii) a clear system of verification; (iii) transparency; (iv) a complaint mechanism; and (v) appropriate sanctions. These practical considerations in many ways mirror the requirements for registration of certification marks in the EU.

David Stone of Allen & Overy LLP gave an overview of the introduction (from 1 October this year) of EU-wide certification marks, some 6 years after the Max Planck Study first recommended this step. Certification marks have been available at a national level in some member states (e.g. the UK, Germany) for a while, but the lack of EU-wide marks has led to inconsistent certification regimes/standards, and geographical gaps in certification. The greatest challenges in achieving registration are likely to lie in defining sufficiently clearly what is being certified and the standards for this, establishing a testing/monitoring regime for compliance with the relevant standards, and developing sanctions for non-compliance. Giulia speculated, for example, that it would be difficult to certify aspects of a responsible supply chain, such as respect for human rights. Alexander von Mühlendahl of Bardehle Pagenberg (and former OHIM/EUIPO Vice-President) reported that 48 applications for certification marks are currently pending before the EUIPO (none have yet been approved), although most, if not all, are marks which are already registered elsewhere (e.g. TUF marks from Germany). David does not expect there to be a huge rush to file newly-developed marks, because certification marks have two key limitations: (i) the proprietor of the mark is not itself able to use the mark in relation to the goods/services for which it is registered; and (ii) indications of geographical origin (GIs) are expressly carved out from the EU certification marks regime. There was some debate regarding what constitutes “use” in this context. In practice, the proprietor of a collective mark cannot use the mark for its own goods/services, but instead licenses the mark to certified third party traders – this might not constitute use in accordance with the origin function. The panel also considered alternative structures for achieving certification – collective marks (which are collectively owned by members of an association, and not a certifying organisation), GIs, or registering a traditional mark and licensing its use to third parties. It will not be possible for one party to register both a collective and a traditional mark for the same subject matter, because of the restriction on use of a collective mark by its proprietor, and the requirement for the applicant to have a bona fide intention to use at the time of filing.

The next session, featuring Claus Eckhartt of Bardehle Pagenberg and Wolfgang Scheunemann of the German CSR-Forum, looked at some issues of policy and practical considerations for collaborations between brands and NGOs. Wolfgang noted that almost all large companies co-operate with charities and/or NGOs in some way. In principle this is a good thing, but it must be done carefully. For example, if a collaboration is unnatural, it may not be sufficiently productive to justify the investment or, worse, the brand owner will face accusations of inauthenticity and/or “greenwashing”. Wolfgang noted that in Germany only 36% trust company CEOs to do what is right, compared to 64% in relation to NGOs – this suggests that companies are likely to come off worse from any poorly-conceived collaboration. Wolfgang explored three different modes of corporate-NGO relationship: (i) pressure (i.e. unilateral criticism of a company by an NGO); (ii) evaluation (an NGO providing consulting services to a company, or vice-versa); or, optimally, (iii) partnership. A partnership might include (in relation to the company’s activities) the development and/or provision of certifications and/or codes of conduct, or support for individual CSR projects, and (in relation to NGO activities) financial sponsorship and/or support for specific initiatives. Wolfgang believes that the key is to focus on credible collaborations. It is important to select an appropriate partner and project, where the potential synergies are clear. Wolfgang advocated long-term (three years or more) partnerships, companies providing more than just money, and detailed and flexible project frameworks and aims, in order to keep both partners engaged and committed.

The morning’s final session, led by Marion Heathcote, covered issues around cultural sustainability (that is, the preservation of valuable knowledge, traditions and ways of life from generation to generation). Massimo Vittori of oriGIn argued that GIs form part of the infrastructure to ensure cultural sustainability: GIs serve to differentiate a particular geographical origin and its quality; turn agricultural products into niche products; protect demand for products of a particular origin; and incentivise intergenerational sharing of local knowledge, practices and traditions. However, traders benefiting from GIs are just as exposed to the risks of not adapting to sustainability challenges: there is the potential of harm to the prestige, attraction and authenticity of a GI otherwise. Massimo noted that GI stakeholders are in a good position, however, because they are used to evolving their practices and standards over time. Kiri Toki of WIPO explained the work of WIPO’s Traditional Knowledge Division, which is tasked with dealing with indigenous rights and how these fit into the global IP system. Kiri detailed the reputational risks for brand owners if traditional cultural expressions (TCEs) are appropriated clumsily: there is a risk of causing offence and/or social media backlash in the case of misappropriation. Where a brand owner is looking to take inspiration from TCEs, WIPO policy is to encourage collaboration between the brand owner and the indigenous community. This is a win-win: brand owners get inspiration and insulate against reputational risks; indigenous communities get economic empowerment and retain cultural ownership and agency. WIPO publishes a number of “best practice” guides in this area, and has also begun matching pro bono lawyers to indigenous communities. Janet M. Fuhrer of Ridout & Maybee amplified some of these themes, and provided legal context. She suggested that a sui generis legal regime is most appropriate to protect indigenous rights and TCEs, although existing IP laws can help to an extent. For example, in Canada it is possible to register certification marks (alongside a “traditional” trade mark if desired). “Official” marks (those registered to denote public bodies) may also assist indigenous groups. Janet counselled that, at the outset, brands should always do their research and consult with those knowledgeable about indigenous rights. Marion also noted that INTA’s Pro Bono Clearinghouse pilot may assist indigenous groups in protecting their rights.“