“Geographical indications and new trends in brand development enable rights holders to actively engage with consumers with a view to maintaining a positive image of branded goods,” —Alexander Pakharenko, Partner with Pakharenko & Partners IP and Law Firm, says
— What modern global trends in intellectual property development can you outline?
— All around the world greater emphasis is being put on the necessity to build respect for intellectual property (IP) rights and raise awareness among businesses and the public about the importance of protecting these rights. In this regard, various educational and awareness-raising activities come to the fore, held by all organizations related to IP ranging from the World Intellectual Property Organization to national professional associations.
Talking of particular IP objects, I would like to mention that currently the use of geographical indications for identification of products originating from a particular country, region or area is expanding. Such denominations as the Protected Designation of Origin (PDO), the Protected Geographical Indication (PGI) and the Traditional Specialty Guaranteed (TSG) are actively used for agricultural and food products, alcoholic beverages, including wine, craftworks and industrial goods.
— What benefits do manufacturers and consumers gain from registering and using geographical indications?
— On the one hand, many similar products are available on the market nowadays, and geographical indications help producers to successfully sell products and operate in a market environment, and also to set apart his/her products from a great number of other products contrasting them with competitors’ goods. In this case, geographical indications perform three functions simultaneously in relation to a product due to their being directly related to its place of origin, in particular: distinctive (allowing to distinguish a product possessing special features), qualitative (guaranteeing specific features of a product) and informative (providing reliable reference about the place of manufacture of a product).
Furthermore, the most important thing is that the use of geographical indications allows manufacturers to turn a high-quality agricultural or handicraft product made in a traditional way and with minor added value into a unique authentic product perceived by consumers as a high-quality exclusive article which is worth paying a higher price for.
On the other hand, when a product has a good reputation, its copies and fakes will always appear on the market and unfair competition will bloom. The right to use geographical indications puts a manufacturer in a position to prohibit third parties from using geographical indications for those products that do not originate from the specified geographical area or do not meet certain quality standards. In other words, it protects products against misuse and imitation, thereby performing a fourth function, namely protection against infringement of rights.
However, the functions of geographical indications are not limited to the above-mentioned four. Geographical indications help to incentivize the manufacture of agricultural products, promote the development of crafts, artisanship and industry and so are the main factor of progress, development of culture and preservation of traditions. By supporting geographical indications system, a state may develop specific regions producing agricultural, farm and handicraft products; promote local investments and develop new businesses; create new jobs in rural areas with higher incomes. As a result, this will lead to people staying in the countryside and preventing migration of the population from villages to cities, which will help to protect the environment and biodiversity of a region in the long-term prospective.
— You mentioned that a consumer is ready to pay a higher price for something authentic. Does this mean that consumers have shifted from mass products to individual craft in their taste?
— Absolutely correct. The modern digital world has caused the appearance of a new category of consumers, new platforms for interaction between buyers and sellers. The most active buyers today are the “Millennials” (“Generation Y”), namely those born between the early 1980s and early 2000s. This generation of consumers appreciates everything genuine, authentic, and handmade, they want to enjoy the pleasure received from buying goods, feel a personal connection, direct interaction with a manufacturer. Such consumers prefer individuality rather than uniformity and tend to buy products or use the services of local vendors. In addition, they are concerned about a significant difference in the incomes of their fellow nationals and they openly state that the goods produced by multinational brands are not always quality products. Some people believe that attempts to make more profits from exporting goods with a low prime cost have led to the establishment of a market of low-quality mass consumer goods resulting in distortion of the trade balance between countries, which will not be restored until national economies return to the functioning of local production.
— Has the change of consumers’ choice influenced the development of brands in general?
— Of course, taking into account the fact that by 2020 “Generation Y” will represent half of the employed population in the world and will become a predominant group of potential consumers, its opinion cannot be ignored. The values of “Generation Y” have already been reflected in brand development trends, and some of the most significant trends are upcycling (re-use), customized branding and localism.
— What is the point of these trends in brand development?
— Similar to geographical indications, in the case of localism a rights holder takes into account local features and consumers’ willing to support local enterprises with a personalized and individualized approach. If a product has a label stating that it was custom made by a craftsman (handmade) or is locally produced, then consumers perceive it as an indicator of quality and tend to pay a little bit more for such a product.
Upcycling is creating new products (clothing, accessories, furniture, musical instruments, shoes, etc.) based on already used and useless goods. As result of such processing new life is given to used products or their packaging. The idea of re-using old goods is not a new one, however this process has now become widespread due to the use of e-commerce platforms which allow the sale of such upcycled goods to general public. Consumers respond positively to the environmental aspect of this activity, and they value individuality and craftsmanship.
Customized branding means that brand holders modify trademarks in order to reflect a consumer’s personal preferences; however the product itself remains unchanged, such as in the case with custom-made products. The target audience for such goods is not only wealthy people, but also the average consumer. In addition, each consumer may become a brand’s “virtual partner”, a co-author of a corporate style involved in the creation of a product in accordance with his/her needs or requirements. The key words used by those companies introducing customized branding are “personalization”, “identification” and “exchange”. Thus, the rights holders seek to raise the consumer satisfaction level, customer loyalty to the trademark and brand reputation. As a result, company owners receive the desired results and consumers receive a new attitude to the brand due to their personal input.
— Are brand holders willing to support such development trends in their business activity?
— Let’s say that these trends in business development do not prevent rights holders from maintaining the existing, successful business model or developing a new one. Rather, they help rights holders to actively engage with consumers by finding their “keen response” in order to maintain the positive image of brands. Certainly, there are some peculiarities. For example, only the holders of well-known brands can afford customized branding. Still, even they continue using their “original” trademark in its initial form in order to maintain their rights to it, retaining a sufficient number of attributes allowing the origin of a product to be determined and to avoid confusion among consumers and any trademark dilution.