When My Food Bag was recently told to stop saying hello to its customers in its marketing by German multi-national HelloFresh, the issue amused more than just a few people.
How could, the food delivery company asked, one entity stop another from using a common word of welcome? Who, stated founder Cecilia Robinson, would have thought the simple word hello could cause so much trouble.
“What’s not cool,” said the company in a tongue-in-cheek letter back to HelloFresh, “is you fellas trying to stop us saying ‘hello’ to our Fresh Start family. That’s just not the Kiwi way. In fact, we thought you guys must be pulling our leg?! Down here in God’s Own, all of us have the right to say hello, kia ora or g’day. Just ask Winston.”
However, those that dig beneath the surface of a witty press release about trade marks may realise that the issues are not as simple as they first appear. NZ FoodTechnology magazine has asked two experts their opinions.
IP APERITIF, MAIN COURSE AND DESSERT… NOT JUST AFTER-DINNER MINT
Is a commonly used greeting something you can trade mark? The recent spat between My Food Bag and giant German food company HelloFresh over the former’s use of the latter’s name in the sentence “Hello, fresh start the programme” posed just that question, and more.
Stop using the words ‘hello’ and ‘fresh’ next to each other, said the German company. Why should we? said the Kiwi company. The squabble is a salutary reminder that even in the commodity world of food marketing, intellectual property (IP) issues can still bring you grief. IP is a complex area of law which is perilous to navigate on your own.
The New Zealand food and beverage industry is a creative and energetic sector but with one weak spot – the ‘number eight wire’ mentality. We are too ‘kiwi’ for our own good. We think we can ‘do it all’ and ‘she’ll be right’.
Too often we see exciting new F&B businesses which have developed great concepts and successfully ‘wowed’ the market jeopardising their fortune by failing to protect the intangible part of their brain-child. It is often an afterthought. Not enough time and resources are spent on protecting core assets of the business, such as its brand, its reputation and the look of its products. This can have disastrous results; making it too easy and tempting for competitors with deeper pockets to take advantage.
There is a popular conception that it is too expensive to obtain IP protection or to enforce its IP when it is infringed. However, plenty within an F&B business has potential to be protected without incurring significant costs:
• Registering designs and trade marks with the Intellectual Property Office;
• Obtaining advice on how copyright (which cannot be registered in New Zealand) can be leveraged to protect certain aspects of your business;
• Using a well-drafted simple confidentiality agreement to significantly minimise the risk of your recipes, preparation methods or processing of ingredients becoming public knowledge.
These are all steps, to name but a few, which are relatively inexpensive to take and may prove invaluable in future.
Problems often arise when a start-up takes too long to get its IP sorted. You spend a long time and a lot of money perfecting a concept, and realise it has huge potential – it may be too late to patent it or to protect the look of the resulting product with a registered design if it’s already been made public.
You put in solid hours with a great ad agency at significant cost to develop nifty packaging and branding, name and logo…and the public like it – but you haven’t done your homework and your mark is too similar to someone else’s registered trade mark. You are back to square one and potentially liable for trade mark infringement.
The F&B market is intensely competitive in New Zealand and there is a lot on offer (everyone likes to eat). But you have to protect what you create, not just the tangible output of that creation. Long gone are the days of a company’s main assets being its premises or its machinery. What entrepreneurs often fail to realise is that most of the value of their business – what attracts investors in particular – is its IP, and that’s especially true of F&B.
If you don’t protect your IP, others will copy to free-ride and compete; if not from the start, but once they’ve noticed you because you are threatening their market share. That may leave you stranded, despite having a high-quality product.
Another common failing is to do a reasonable job shoring up the IP in New Zealand but not look offshore to do the same. Again, delay this and the risk is high that someone visiting New Zealand will see your product, be highly impressed and quickly replicate it in their home country, locking up the IP there as they do so.
IP rights are territorial. New Zealand may be your starter market and it may be a good one, where you have success. If the objective is business growth, however, the bigger (much bigger) markets of Australia, the United States and Asia should be on the radar – and work should be done very early on to get IP protection in those markets too. You may have a patent or a trade mark registered in New Zealand, but it may be too late to get the equivalent in the US.
Maybe your horizons are just these shores and it’s a fair bet that a product protected here will be successful. But not as successful as it might have been. New Zealand as a food-maker and exporter – and as a place – has a very good brand, which is an advantage when chasing overseas markets.
Getting IP protection has a cost, of course, but start-up businesses may be able to source grant assistance from the likes of Callaghan Innovation. The payback is undoubtable: market security and investor interest both require strong IP.
A shield and a weapon
Here’s another Kiwi take on the German company trying to stop My Food Bag using ‘HelloFresh’. They see it as bullying. In fact, companies trying to enforce their IP rights are often seen as bullies. Whilst this specific fight does seem a bit petty (let’s be real here), IP is both a shield and a weapon. There is nothing wrong with defending your IP rights – though Kiwis seem a bit squeamish about it at times. Many (bigger) companies see IP litigation as a way to weaken or eliminate their competitors. You’ve built your business with inspiration, devotion and sacrifice, and ploughed a lot of time and money into it. Why should you let someone else steal your idea and profit from it? Getting IP protection and making it known that you have IP protection will deter most. Enforcing your IP on the rare occasions it proves necessary may save your business.
Early work to cement your IP makes absolute sense and should be central to your overall business strategy. Make it part of the aperitif, the main course and dessert – don’t leave it till you bring out the after-dinner mints.
Sebastien Aymeric is a lawyer and associate with national Intellectual Property specialists James & Wells, specialising in IP commercialisation including copyright, trade marks, patents, confidential information and contract drafting and dispute resolution.
NOTHING IS SIMPLE WHEN IT COMES TO TRADE MARKS
Baldwin’s head of dispute resolution Paul Johns says My Food Bag is not the ‘David’ to HelloFresh’s ‘Goliath.’
The attention of New Zealand media has been caught by the recently publicised response by My Food Bag to allegations about its marketing by multinational company HelloFresh. Although My Food Bag (MFB) has not yet published the actual claims by HelloFresh, the issue appears to be MFB’s promotion of its ‘Fresh Start’ product with the phrase ‘Hello, Fresh Start’.
HelloFresh has a New Zealand trade mark registration for its logo that includes the words HELLOFRESH. MFB is also using a FRESH START logo that has some resemblance to the HelloFresh registered trade mark. MFB has in turn registered a trade mark, although it is a little different to the logo being used.
MFB’s widely published response suggests HelloFresh’s complaint relates only to the use of the word ‘hello’. It is currently impossible to tell whether this is an accurate summary of HelloFresh’s position, but wider legal issues relating to trade marks, copyright and the Fair Trading Act may well exist. The response also implies that MFB is surprised to have been noticed by HelloFresh. In fact, the two companies competed directly in Australia from 2014 to 2016.
It seems to be more common for businesses accused of infringing intellectual property laws to seek and rely on the ‘court of public opinion’ rather than (or perhaps as well as) making a traditional legal response. This is particularly the case where the business in question can portray themselves as a local hero ‘David’ against a foreign ‘Goliath’.
The aim of course is to create a PR downside that might outweigh the legal upside to the claimant enforcing its legal rights. HelloFresh has a business presence in every mainland Australian state. Expansion into New Zealand is an obvious option. MFB itself moved into Australia in 2014, competing directly with HelloFresh, but withdrew from that market in 2016.
As the incumbent New Zealand market leader, MFB has a considerable incentive to hinder HelloFresh from muscling in on its home territory. It claims to be New Zealand’s third largest food retailer behind only the two big supermarket chains. Its annual revenue exceeds $135 million and it has more than 50,000 customers.
Although significantly smaller than HelloFresh, this is quite a big ‘David’. In light of these stakes, it may have been a canny move by MFB to paint HelloFresh as an unreasonable aggressor. HelloFresh does have legitimate intellectual property to protect in New Zealand but may not be as keen to get into business here at a time when its reputation is on the back foot.
On the other hand, those that dig beneath the surface of a witty press release may realise that the issues are not as simple as they first appear. Any business on the receiving end of allegations of infringement of trade marks or other intellectual property should seek expert legal advice.
Seeking to claim the moral high ground or to gain a public relations advantage can be part of an effective response strategy but this ought to be done with careful consideration of the legal and commercial strengths and weaknesses of your position.
Baldwin’s is a leading Australasian intellectual property firm.