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Brand restrictions in the food and beverage industry are spreading, including in Latin America and potentially beyond. Rory O’Neill reports.
Brand owners in the global food and beverage industry fear a “domino effect” that could lead to an era of heavy-handed brand restrictions.
Speaking at a panel on Brand Restrictions―What Every IP Practitioner Needs to Know and Why It Matters, Abraham Diaz, Partner at Olivares (Mexico), warned that “very famous characters could die” under the sort of regulations being adopted in his home country.
While the session focused mainly on recent fast-moving developments in Latin America, the speakers emphasized that brand restrictions is a global issue that has serious ramifications for brand owners and consumers. And its potential spread across industries and across regions is troubling.
The session, moderated by Ronald van Tuijl, Intellectual Property Director at JT International S.A. (Switzerland), first looked at the emergence of brand restrictions legislation across Latin America over the past decade.
As Wallis Pons, Partner at AngelesPons (Dominican Republic), explained, the drive to introduce labeling requirements on food and beverages in the region can be traced to a 2014 obesity prevention plan agreed by members of the Pan American Health Organization.
“This directly affects competition—you can’t compete in a market where you can’t differentiate products.” - Wallis Pons, AngelesPons
While brand restrictions were “not part of the plan,” Ms. Pons said, many countries have since adopted labeling requirements, including warning stickers on products high in sugar.
The real concern began with Chile’s so-called Super 8 Law, enacted in 2016, Mr. Diaz said.
While this law initially distinguished between advertising and trademark use on product packaging, the Chilean Ministry of Health’s enforcement guidelines later blurred this distinction and left enforcement up to the discretion of government officials.
Mr. Diaz said this has had a “very serious impact” on brand owners and effectively barred them from using their characters on the packaging of certain products. The Kellogg Company’s (US) Chilean cereal ZUCARITAS brand, for example, no longer features the popular TONY THE TIGER character on the products sold in the country.
“A radical regulation adopted by one single country could result in a fast contagion effect.” - Abraham Diaz, Olivares
Even more concerning to Mr. Diaz, Mexico is now “replacing Chile” as the regional leader on brand restrictions. A proposed amendment to labeling requirements in Mexico would closely mirror Chile’s restrictions, and indeed go even further, he warned.
The law would prohibit brand owners from using animations, athletes, celebrities, and characters on the packaging of any product that carries at least one “warning seal” for its nutritional content.
This illustrates Mr. Diaz’s fear that brand restrictions could become the new norm regionally, or even internationally.
“A radical regulation adopted by one single country could result in a fast contagion effect,” he declared. “The Chilean law has been discussed, analyzed, and used as a standard in the rest of the world.”
This global model is of particular concern to Marlou van de Braak, Global Intellectual Property Director at Heineken International B.V. (Netherlands). “We’re facing more and more regulations coming our way,” she said, including minimum unit pricing, taxes, and having to apply nutritional information on labels and packaging.
Plain packaging would be very bad for the beverage industry, she warned. “Consumers would not be able to differentiate between the products, and brand owners would be deprived of the ability to use and exploit their brands.”
“Brand owners would be deprived of the ability to use and exploit their brands.” - Marlou van de Braak, Heineken International B.V.
At the heart of these challenges is a tension between health concerns—whether over obesity, diabetes, or alcohol consumption—and brand owners’ intellectual property rights.
“The idea is to protect health by imposing brand restrictions, but the question is, can you do that best by imposing brand restrictions?” Ms. Van de Braak asked.
In Ms. Pons’ view, the dangerous implications of brand restrictions have not been fully thought through.
“Trademarks were not designed to advertise. They were designed to differentiate one product from another,” she said. “This directly affects competition—you can’t compete in a market where you can’t differentiate products.”
The risk, she added, is that brand restrictions will simply make it easier for counterfeiters to imitate products, and present trade barriers due to different labeling requirements in different jurisdictions.
There are genuine concerns over health risks related to certain products, the panel agreed. But brand owners everywhere should take note: the freedom to use creative branding to differentiate your product can no longer be taken for granted.
INTA 2020, brand restrictions, food and drink, advertising, trademark use, healthcare, IP rights, products