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Management of Innovation and Intellectual Property IP infringement
• 03 cases of Vietnam IP infringement (general view)
• Group 1
• Thu Trang
• Huu Nghi
• Minh Ky
• Jeremie
• Hanh Dung
BEN TRE COCONUT CANDY
TRUNG NGUYEN COFFEE
VINATABA
• 1985
• Vietnam Tobacco Corporation &
Vinataba Tobacco
• Productivity: over 3mi packs/year
• Market: leading market share
with 43%
• 1996
• Trung Nguyen Coffee
• Business area: instant coffee, cafe shop chain, cafe powder....
• Revenue: over USD 900mi. Profit after tax: about 51 mil
• Over 50 countries in Asia, EU, USA.. over 100000 ton of kernel coffee/year
• More than 1000 coffee shops in local market
• Market Cap: 3000 Billion VND• Strong brand name recognized
locally and strong brand name awareness since 1996
• 1980
• Dong A Ltd. Co & Ben Tre Coconut Candy
• Local and China, Cambodia, EU...
• Dominant in Chinese market (2010: export to China about 8000 tons of Ben Tre coconut candy with revenue VND 100 billion)
BEN TRE COCONUT CANDYTRADEMARK
The innovator: Dong A Co. Ltd.,Productivity: over 900K-1 mil tons/year. 90% of the production is exported to overseas market200 distributors, 3000 employeesReliaxe the revenue go down 50% in 1998
The imitator: Rung Dua Co. Ltd., ChinaProduce counterfeits of Ben Tre coconut candy and has registered exclusive IP in China for 8 months (in 1998). This company would be granted the certificate of exclusive IP for next 3 months
The imitator: Well aware of IP importance. Being competitive on its native land. After lawsuit, it is prohibited to continues to use Ben Tre coconut candy’s counterfeits.
The innovator: Well aware of the importance of IP. However, the company did not know how to register the exclusive IP with IP authorities in China.-Struggle and take legal actions to take back the brand from the IP infringer after 2 years. Following lawsuits.-The trade mark is issued with “Glasses old woman”-The news of being granted trade mark license is broadcasted nationwide in China
The innovator has history in advance was registered their trademark, logo, process and products category with local authorities. It helped the register trade mark license in china to proceed more quickly
The wining of innovation is because it is register before in advance with the local authorities, and VNPO is among worldwide recognized.
BEN TRE COCONUT CANDYCase Analysis: Owner View
• Financial factors:
• Dong A Profit is 50 bil/year (assumption), the least lost is ~ 5 year profit and the great lost is ~ 25 year.
• Non Financial factor
• Strengths for IP claim back- The owner picture in its package positive impact as picture was taken 1982 long time before imitator’s time (*)- Has registered every IP license, patent and trademark in local country easy for cross-checking- Good product quality vs bad quality of imitator
• Weakness for IP claim back- Limited languages- Limited knowledge of China law & regulation- Owner = director is 61 years old
Revenue for China is VN 100 bil. Expect to at least double to 200 bil next year and to 1000 bil in long term (*)
200 Bil or 1000 Bil
The transportation fee for this court (VN-China): 8 months two 2 years, 8 – 12 trips ~ 252 mil (each trip ~ 1000 USD)
252 mil
Law cost (lawyer, the judge…) 100 mil (0.1% vs current revenue)
Total least lost ~262 Bil
The great lost 1262 Bil
Factors Consequence
50 year history Impact all the long time of history and business legend (for their region)
The brand name “Ben Tre” is the province name Impact to the national pride, the province pride and impact to any other goods/services within that region
Being infringed previously in Cambodia in 1980 Being the same in other countries if do not register for IP
Dong A Co. has plan to export to EU, Singapore, USA The oversea market is going to expand, need more of IP protection
Not so specific products (low technology based) Very vulnerable or IP infrequent or new entry especially with strong competitive
BEN TRE COCONUT CANDYDecision Tree
• Option 1: No go to court and pay loyalty fee
• Cons: Strong impacts on financial and non financial (loose market, brand name in big China Market)-slide 4. The loyalty fee is estimated about 20-30% of revenue. (~ ½ year profit)
• Pros: Save time (2 years), money, health (for old owner), and zero risk of court losing. Think of changing market
• Option 2: No go to court . Quit China, Change market into EU, USA, Middle East
• Pros: Save time (2 years), money, health (for old owner), and zero risk of court losing• Cons: modify products to suit other Western market. There is research that EU market doesn’t like “too sweet” candy (*)
• Option 3: Partnership with Imitator
• Cons: share 50% of market value (50 bil ~ 1 year profit; product quality reduce strongly. The possibilities to accept partnership by imitator is low. High possibilities to loose “trade secret” by imitator as China very keen at “ quick learner and copy”
• Pros: : Save time (2 years), and zero risk of court losing., and create close relationship with partner in foreign market
• Option 4: Go to court
• Pros: High chance to win based on slide 4. Protect profit and increase profit. Protect brand name and history. Prevent new entrance. For long term, owner’s brand if being M&A, it still has strong value. And IP is international requirement on business today.
• Cons: Time consuming (2 years), costly (slide 4) , impact on health (for old owner), Need to pay for IP renew afterwards. However, those cost is around 5 % of revenue and IP expense is among business investment.
• Dong A Profit is 50 bil/year (assumption), the least lost is ~ 5 year profit and the great lost is ~ 25 year.
• Non Financial factor
• Strengths for IP claim back- The owner picture in its package positive impact as picture was taken 1982 long time before imitator’s time (*)- Has registered every IP license, patent and trademark in local country easy for cross-checking- Good product quality vs bad quality of imitator
• Weakness for IP claim back- Limited languages- Limited knowledge of China law & regulation
Conclusion: Go to court is the RIGHT DECISION
BEN TRE COCONUT CANDY
TRUNG NGUYEN COFFEE
• 1996
• Trung Nguyen Coffee
• Business area: instant coffee, cafe shop chain, cafe powder....
• Revenue: over USD 100M.
• Over 50 countries in Asia, EU, USA.. over 100000 ton of kernel coffee/year
• More than 1000 coffee shops in local market
• Market Cap: VND 3000 Billion• Strong brand name recognized
locally and strong brand name awareness since 1996
• 1980
• Dong A Ltd. Co & Ben Tre Coconut Candy
• Local and China, Cambodia, EU...
• Dominant in Chinese market (2010: export to China about 8000 tons of Ben Tre coconut candy with revenue VND 100 billion)
• Market cap: ???
VINATABA
• 1985
• Vietnam Tobacco Corporation &
Vinataba Tobacco
• Productivity: over 3mi packs/year
• Market: leading market share
with 43%
7/2000
10/2000
10/2002
1/2003
Trung Nguyen partner with Rice Field for its USA coffee distribution
- The innovator: Does not pay much attention to the importance of registering IP in USA during the partnership time--> Partner takes this as a chance to earn money from Vietnamese by registering with WIPO Trung Nguyen’s brand name
- The imitator: have a good awareness of VN Co. as well as the importance of registering IP
Rice Field register Trung Nguyen brand name with WIPO
Trung Nguyen won its brandname back after 2 year of lawsuit
Rice Field become Trung Nguyen’sDistributor In USA
TRUNG NGUYEN COFFEEBRAND NAME
TRUNG NGUYEN COFFEECASE ANALYSIS
Financial factor: - USA is biggest exporting market 25% ~ USD 105-250K /year- - The trade name can be sell to each state with price 100K/state for three
year- The fee for trade name registration in US is US$4,500 (Viet Tien preference)- Total loss of Trung Nguyen: USD 5M if not wining tradename back
TRUNG NGUYEN COFFEEDECISION TREE
• Non-Financial factor: • USA market can bring reputation for its business• USA market can raise its products standards• Have very strong tradename and history before such as selling its tradename to Japan and
Singapore in 2001• Being in court, Trung Nguyen products are stopped to enter USA market for 3 years
• Option 1: No go to court and pay loyalty fee
• Cons: Strong impacts on financial and non financial 5M loose (5% revenue). Wining back trade name cost only USD 4500 (0.01% of loosing money) + time. Chance to learn USA trademark registration process and international business practice
• Pros: Save time (2 years), money. Think of changing market and pay loyalty fee. Zero risk of court loosing
• Option 2: Partnership with Imitator
• Cons: loosing 50% of revenue 2.5M which is big amount while the process to take back trade name is easy• Pros: : Save time (2 years), and zero risk of court losing., and create close relationship with partner in foreign market
• Option 3: Go to court
• Pros: High chance to win based on its history. Protect profit and increase profit. Protect brand name and history. Prevent new entrance
• Cons: Time consuming (2 years), costly slightly . Need to pay for IP renew afterwards. However, those cost is around 0.01 % of revenue gaining in USA market
Conclusion: Go to court is the RIGHT DECISION
BEN TRE COCONUT CANDY
TRUNG NGUYEN COFFEE
VINATABA
• 1985
• Vietnam Tobacco Corporation &
Vinataba Tobacco
• 100% state own
• Productivity: over 3mil packs/year
• Market: leading market share
with 70% in-country
• Total revenue: $ 756M
• Total profit: $ 17M
• Export revenue: USD 40M (5%)
• 1996
• Trung Nguyen Coffee
• Business area: instant coffee, cafe shop chain, cafe powder....
• Revenue: over USD 900mi. Profit after tax: about 51 mil
• Over 50 countries in Asia, EU, USA.. over 100000 ton of kernel coffee/year
• More than 1000 coffee shops in local market
• Market Cap: 3000 Billion VND• Strong brand name recognized
locally and strong brand name awareness since 1996
• 1980
• Dong A Ltd. Co & Ben Tre Coconut Candy
• Local and China, Cambodia, EU...
• Dominant in Chinese market (2010: export to China about 8000 tons of Ben Tre coconut candy with revenue VND 100 billion)
• Market cap: ???
VINATABATRADEMARK
• Vinataba trade name registered in VN 1990.
•2001 being infringed of the cigarette category 34 in 13 countries namely Cambodia, China
• Lose VND 1 B to pay license for the imitator in year 2002
• Win trademark in Cambodia after 2 year painful lawsuit. The rest is in progressing.
• Interview of lawyer: The root cause: Lack of knowledge, not proactive.
•The IP related law: National Treatment from Paris IP Convention: applicant files IP in a foreign
country member of the Union, the application receives the same treatment as if it came from a
national of this foreign country.
•Putra Satbat Industry
Indonesia
•Private company
•Deeply aware of IP, infrequent
Vinataba trademark in purpose
•Abuse of Vinataba knowledge
shortage to own the original
trademark
VINATABACASE ANALYSIS
Financial factor: - Vinataba: lost 13 countries with its registered tradename by Putra Satbat Industry estimate to loose 50 % of it revenue ~ $ 20M - Estimated the tradename registered cost per country is $ 4500 (preference from -
Trung Nguyen case), the total cost of 13 countries is $ 58 500 ~ 0,03% profit. - Total loss: $ 27M
Non financial factor:Time consuming is 3-5 years.Vinataba trade name knowledge is not strong and not proactive
VINATABADECISION TREE
• Option 1: No go to court and pay loyalty fee
• Cons: Strong impacts on financial 20M loose (5% revenue). Wining back trade name cost only USD 4500/country (0.00001% of loosing money) + time. Chance to learn international trademark registration process and international business practice . Chance to lead as strong state company in VN
• Pros: Save time (3-5 years. Think of changing market and pay loyalty fee. Zero risk of court loosing
• Option 2: Partnership with Imitator
• Cons: loosing 50% of revenue: 10M which is big amount (60% of profit)• Pros: : Save time (3--5years), and zero risk of court losing., and create close relationship with partner in foreign
market
• Option 3: Go to court
• Pros: High chance to win based on its history. Protect profit and increase profit (5% increase). Protect brand name and history. Prevent new entrance
• Cons: Time consuming 3-5 years), costly slightly . Need to pay for IP renew afterwards. However, those cost is high as 0,03% profit
Conclusion: Go to court is the RIGHT DECISION IF TIME is less consuming and COST can be reduce. Choosing the country of potential market and effectively trade name
registration process to claim its trade name back
KEY TAKE AWAY
- Should be proactive to study thoroughly the Law on Intellectual Property Protection in order to protect the company from the brand violation or abuse of the imitator/ competitors.
- Should be well aware of importance of protecting the company's intangible assets as the loss of them could lead to a significant decrease in sales and profit
- Carefully in partnering with distributor or business partner. Do due diligence before and after partnering.
- Protec your own brand name in advance to have strong foundation and history
-