INTA 2024: ‘Insane’ brand restrictions are ‘dogma not science’

Restrictions on the advertising of baby formula “a clear attack on brands” says INTA panel | Echoes of prohibition with “bandaged solutions to difficult questions” | ‘Pushback’ from the association over a resolution, says Nestlé GC.

It may have taken “fiery” discussions to get there, but the International Trademark Association this year published a resolution on a controversial issue facing brands.

Speaking at the Annual Meeting in Atlanta, Nestlé’s Myrtha Hurtado Rivas said brand restrictions, such as plain packaging introduced on tobacco products, being imposed by “more and more” countries were based on “dogma” rather than science.

Restrictions are being considered for a range of products, including alcoholic beverages, energy, automotive, food and beverages, and infant formula, heard delegates at the seminar on May 21.

“The main issue with brand restrictions is that they don’t necessarily deal with the issue at stake. They may just be tools used by governments, authorities to pursue a target,” said Rivas, general counsel, brands, anti-counterfeiting and licensing at the Swiss company.

These targets can guide people towards more balanced diets or result in a belief “that baby formula is not a good way to nourish your child,” explained Rivas. During the session, she explored the science that disproved the intent of lawmakers; and her fellow panellists' efforts to get INTA’s backing for a resolution on the issue.

‘Bandaged solutions’ to difficult problems

Lorraine Fleck, principal at Fleck Innovation Law in Canada, described brand restrictions as “bandaged solutions to very difficult, hard-to-solve problems”.

“Brand restrictions appear to arise from decision-based evidence making, versus evidence-based decision making—and it really should be the former,” said Fleck, who zeroed in on the law of unintended consequences.

An example frequently returned to was the prohibition of alcohol in the US. This saw a ban on the production, importation, transportation and sale of alcohol from 1920 to 1933.

Fleck, “an unrepentant feminist”, said while the ban’s noble measures aimed to prevent violence against women and alcoholism, it in fact resulted in a new income stream for organised crime, reduced tax revenue and “didn’t address why women and children were being subjected to male violence”.

“There were other factors contributing to the problem that would still exist,[with] alcohol or not,” said Fleck.

The panel’s Thilo Agthe, a partner at Wuersch & Gering, brought the issue to the present day by referring to a pair of separate studies on alcohol advertising from 1995 and 2023. These “showed that advertising restrictions do not have the effect people are going for,” said Agthe.

“Market growth was not found to be significantly driven by advertising. What is driven by advertising is what brands people buy, but the actual demand stays the same.”

The speakers said restrictions on when and where you can advertise alcohol were appearing on an almost “weekly basis”.

The core of the issue is, explained Agthe, that the primary function of a trademark is consumer protection.

“By limiting their use, you are taking away or limiting that function. And this is a problem because trademarks—and this is a proven fact—help consumers to make informed decisions.”

Plain packaging on products also “makes it easier” for counterfeiters to sell fake products. “We know these are problems and they are made worse by brand restrictions on trademarks,” he added.

‘It’s not just tobacco’

The energy industry is also facing similar restrictions. In Fleck’s home country of Canada, proposed legislation aimed at restricting the advertising of fossil fuels for environmental reasons had its first reading in February this year.

The act “arguably captures hybrid vehicles, which are not explicitly excluded from the bill’s scope”, said Fleck.

The bill created other “concerning” issues that threatened a billion-dollar industry with sanctions and fines that “undermined” what it is trying to achieve.

Agthe said a more pernicious example was the debate on restrictions on infant formula. The World Health Organization International Code of Marketing of Breast-Milk Substitutes “more or less prohibits all forms of infant formula promotion”.

Agthe said he would not go into the motivation for it.

“There are people who think that if it’s not breast milk, it’s not allowed to exist. And that is in my mind, ridiculous.”

The code has provisions on the cross-marketing of one product with another. If a company makes multiple products, such as Nestlé, the use of the same trademark on both is prohibited, said Agthe, which amounted to a “clear attack” on branding.

“If your company makes infant formula and other food, even if it’s healthy, like muesli, you can’t have the same branding on both packages. This is insane,” he added.

INTA resolution: ‘There was pushback’

In response, INTA’s Brand Restrictions Committee tabled a resolution that was eventually adopted in April this year.

“The INTA Board seeks to differentiate between advertising and the functional role packaging plays in announcing the brand identity and/or trademark association with a good or service,” said the association at the time.

“The resolution is in response to governmental attempts around the world to regulate advertising by targeting certain goods and services and putting limits on or removing altogether the trademark from the product packaging.”

Getting the association’s board of directors to agree was not straightforward, explained Rivas, despite an “urgent need” because more brand restrictions were appearing in different countries.

“We were in touch with the governments and were explaining to them why we were concerned. Then we were stopped by INTA who told us that we didn’t have a common position on advertising restrictions. And we didn’t have a common position on trademark use per se in advertising,” said Rivas.

INTA’s members from the European Union also found the plan less appealing because, recalled Rivas, there is already jurisprudence on the issue.

“But then we realised that for many other countries that’s not the case so, as a global organisation, we need to find a common way about how we can advocate against brand restrictions.”

Agthe noted that there was a “let’s stay in our lane attitude,” which he admitted was understandable.

“We were getting into subject matters that the association needed to have an opinion on. We basically gave the association the position. And it has been very helpful.”

Although there “was some pushback” Agthe said advocates who pushed for the resolution also received some “really good advice” on how to structure the resolution and explain it to make it “palatable” to the association.

The resolution was eventually published “in record time” said Rivas. “We were proud of that.”

The issue persists in any industry “whose goods are deemed undesirable,” concluded the panellists, who asked attorneys to flag any examples to the INTA committee.

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