Brand wars

The brawl between Britannia Industries' partners, Groupe Danone of France and Nusli Wadia, has been primarily over control of the Tiger biscuit brand. And the key lesson from this episode is that as Indian companies seek global markets and an international presence, they will have to protect their brands in many markets other than India's.

The Tiger brand was introduced in the Indian marketplace in the last decade, and gained market attention with an aggressive, price-penetrative positioning. Today, with a 38 per cent market share in the growing biscuit market, it is also the biggest brand in the Britannia portfolio""accounting for over 25 per cent of its turnover.

Recognising its strong brand potential, Danone has registered the brand in 74 countries other than India, and this has become a bone of contention. Current reports suggest that a settlement is in sight over a host of intellectual property rights (IPR) and branding issues.

While that will be good news for Britannia, the lessons from this brand duel hold significance for Indian brands and companies from a number of perspectives. As India-developed brands slowly make their mark in the international arena, there could be repetitions of the Tiger episode.

Second, many international companies, based in other countries, develop brands that are specifically designed for the Indian marketplace; but once they taste success in India, they see an advantage in introducing these in some of their other markets.

Brands like Kurkure from Pepsi in India and products from Hindustan Lever and Nokia fall in this category. In all these instances, there is no cause for concern because most of these multinational subsidiaries in India are wholly-owned by their overseas parents""though there might be questions raised about who gets the royalty payment on the use of the brand in other countries.

But there is no shortage of companies like Britannia, which have Indian shareholding""either through diversified holding or because the international parent chose to have a domestic business partner. ITC, for instance, has BAT as its major international shareholder but majority Indian shareholding""and it owns important brands like Wills that transcend single product categories. Will BAT respect ITC's ownership of these brands in other markets as well, or will do a Danone-Tiger on ITC?

The reason why Indian companies need to be vigilant on this emerging issue is that patents and brands have national jurisdiction, and every brand has to be registered separately in every country or market that it is introduced in.

This is despite the existence of the Madrid convention on trademarks and the World Trade Organisation (WTO) agreement on trade-related intellectual property rights (TRIPs), which requires harmonisation of the brand protection laws of member countries so as to make them mutually compatible. But even these protocols do not wholly address the inherent limitation of the territorial application of trademarks and brands.

An exception to this is with regard to the European Union, where a brand can be registered in just one country and can have rights in all the countries in the EU and those that are signatories of the Madrid Protocol.

What this means is that an Indian brand, unless registered separately in different countries, cannot have patent rights outside the home country. In the past, such issues did not capture much attention in Indian boardrooms because there were not too many strong Indian brands and because the global ambitions of these companies were limited. With the change in outlook and market strength, companies have to take a fresh look at the issue.