Brand protection is a must for companies making business in Eastern Europe

For risk management professionals brand and trade mark protection is a comparatively new service. For years (at least in the CIS) this task was a pure example of law advisory services. Attorneys do a great job fighting in Court and protecting interests of their clients, but the Court is not the market and winning in Court doesn’t mean winning the game.

According to statistics published by the Ministry of Internal Affairs of Russian Federation up to 37% of branded fashion clothes sold in Russian Federation during 2010 were fakes. Up to 1/3 of perfumes, food products and hi-tech also brought nothing to their respected brand owners. What should be done to protect your brand, your technology and even your reputation (no doubt, poor quality of fakes has a strong influence on the reputation of the product and the brand itself)?

First of all let me point your attention on main types of brand protection cases.

1. The most popular and widely discussed cases are trademark identity theft and registration of the same logo and name in local jurisdiction where the trademark wasn’t legally protected. In these cases fraudsters simply make their bet and wait for the brand owner to enter the local market. As soon as the brand owner applies to the appropriate authority for trademark registration he is informed that the same logo and name are legally registered by another company. Usually brand owner and fraudster meet each other in Court but in fact the only way to solve the problem is to pay fraudster his price.

2. Fakes. One knows what fakes are: produced locally or abroad with no royalty or QC fakes will be sold under the name of the global brand. In the beginning of 2000 in Russia we had real estate Timeshere, with so-called “representative office of Resort Condominiums International”. Should I mention that the company that operated in Russia wasn’t affiliated with RCI and yet hundreds of civil cases applied by victims of this fraud are still in Court? No doubt – RCI had no chance to enter Russian market because of reputational losses. Brands of services are also a matter of protection.

Just a short note: Sometimes small companies pretend to be commonly known market leaders and as soon as they register their trademarks they start arguing with harmless companies-namesakes insisting that their brand was stolen.

Franchise is also a very vulnerable practice in Russia. Global brands rare meet difficulties, but local providers are worried by theft of trademarks and technologies. The problem is in yet poorly developed legislation for protection of franchisor and his rights.

Anyway even if your logo and trademark was duly registered you should keep the volume of fakes under control and take appropriate steps to secure your interest and brand. Officials won’t care about selling of fake at the market or registering of similar trademarks. Unless you plan developing of your own department of brand protection, outsourcing of this function is a good and profitable idea.