Wednesday, 21 December 2011

Frankie's v Woolies: Good old fashioned media

pic: facebook
Frankie's story

Goes like this: Frankie's and Woolies meet to discuss a distribution arrangement for their successful Frankie's range of products. After being "declined" by Woolies, Frankie's notice the launch of Woolies' own range of beverages sharing similarities in the retro packaging, range of flavours, descriptions and tag lines. They launch an immediate media attack and an ASA complaint against Woolies. Click here and here for more background information and thanks to Jeremy Speres for the link.

Unlawful - does it matter?

As interesting as the legal aspects are (and they are - you can indulge in the poll alongside if you like) the greater force at play here must be the media. For that reason and for the time being, we'll let the adjudicators and the lawyers (and you, if you wish) settle out the finer aspects of whether this is passing off, unlawful competition, misuse of advertising goodwill and/or breach of confidence by Woolies or defamation by Frankie's (you will note that the youtube video has been removed from the Timeslive site). This post will concentrate on reputation management, media and their place in IP disputes.

Frankie's did not need to go to Hollywood, they simply went to the press. And, in just a few days, social media has done the rest in creating what is no doubt a big headache for Woolies. Consumers appear to be up in arms regardless of whether Woolies are legally in the clear, and there are greater risks if they are found to be in breach of the law. Woolies, though, have handled this type of situation effectively in the past (see here for example) but this seems a steeper challenge to overcome and turn to its advantage?

Zuckerberg has heard this before

There is an irony and lesson that Facebook, itself the subject of a idea theft dispute, has been used as a platform to garner a petition and aire public views (see link above) as it illustrates just how common these types of allegations (theft of an idea shared with a possible business partner) are and also the viral effect of social media . Whether by design, intuition or luck, Frankie's reaction has enabled them to very quickly exploit several advantages open to a popular home grown niche brand and in doing so they have won further publicity (eg #frankies was apparently trending on Twitter). Before social media existed this would not have been possible or, at least not possible at the lightning speed at which it has occurred.

The relationship between media and IP is also illustrated in ambush marketing disputes where an arrest (which, by nature, attracts media attention) has been made, bringing into question the effectiveness of an arrest to curb ambush marketing (which feeds off media attention). It can have quite the opposite result.

It is palpably clear that anyone involved in IP litigation is required, now more than ever before, to be aware of the media (and in particular, social media) as an influencer in the resolution of a dispute. The Coca-Cola Company's handling of an "infringing fan site" is an example of such sensitivity and anyone who has had their cease and desist letter posted on a site for ridicule will also know only too well. Even, a run-of-the-mill trade mark opposition may require PR input before, during and after the decision as Virgin Enterprises found out.

Here's a thought

Social media is also not just open to the small guy. A colleague, Craig Shapiro, recently mooted the idea of using it as a tool to positively influence known infringers - what are the possiblities of a brand using its followers to help others respect their trade mark rights by spurring support and ostracising an infringer. Clearly cheaper than litigating, educational and properly done could deepen brand loyalty.


Millicent Ligare said...

You refer to Woolies' approach in the YuppiChef affair nearly two years ago. This seemed to have been a lesson in effective reputation management, so successful that cynics might have been tempted to suspect that the whole affair had been engineered.

However it also brings to mind the origin of the Woolworths brands. I note the surprise that visitors from the UK to Nairobi express, first when they see Woolworths stores, and second when they compare the image. The Woolworth's stores in the UK were very much in the tradition of the original 'five and dime' stores of F.W. Woolworth in the USA, from whence they sprang.

It would seem that, although Frank Wooolworth opened his first store in the USA in 1879, it was not until the 1920s that two Australians decided to register the name 'Wallworths'. However it came about exactly, they ended up by cheekily registering 'Woolworths'.

From there we return to South Africa and the 1931 opening of the unrelated Woolworths by the Sonnenbergs - supposedly to be modelled on Woolworths Australia.

So is imitation in Woolies' corporate genes?

Darren said...

Milicent, thank you for your views and facts which are very interesting. Woolworths, of course, is now much more a Marks and Spencer type store in Africa and is probably thankful it did not suffer the same fate as Woolworths in the UK!

To comment on your question, I think imitation is in most businesses' genes. Take for example the current Apple, Samsung and Google wars, all because of imitation - the sincerest form of flattery, the essence of competition and a continual check on the scope of IP rights.

But there is both a legal and moral question that pervades the current dispute and which is to some extent stoked by the information in your comment.

Would the strong public reaction be the same if the Frankie's was Walmart or if the public realised that their reasonably priced Woolies/Edgars/Truworths etc dress was actually inspired by the latest designs from Europe. There was not this type of public outcry when Pepkor (another large local company) used similar branding to Adidas, just recently.

It remains too that companies in RSA (and in vast majority of countries) can generally (subject to exceptions like well known marks) adopt the names of overseas companies that are not using/registering their trade marks in that country. It is/was not uncommon too for countries to adopt place names of others (like Margate, Ramsgate, (new) York etc).

But, distributors like Woolies have to be careful because their large and successful distribution networks can make it very difficult for local brands (like Frankie's) to succeed if they compete with their own lines (even with a private label arrangement with the brand owner). On the other hand, they can (and often do) make local brands successful by they offering them their distribution chain (ultimately supported by the consumer).

The consumer here is outraged because they support Woolies' distribution chain and brand which they perceive as morally upstanding. These consumers are also, perhaps even bigger, supporters of an entrepreneur who has taken risks to develop their own brand in a fiercely competitive beverage market and where the boundary line (morally, even if not legally) appears to have been crossed.

Jeremy Speres said...

Adv Alasdair Sholto-Douglas SC has very kindly pointed out that this case reminds one of the interesting dispute between one of my personal favourites, Cape Town Indian restaurant Bukhara, and Tiger Brands (t/a Colman Foods), where he successfully acted for the Applicant (Bukhara).

Briefly, Bukhara had assisted Colman in developing certain cook-in sauces, but Colman later terminated the relationship and proceeded to use similarly tasting sauces.

In that matter there was (wisely on the part of Bukhara) a confidentiality agreement in place and the case largely turned on the similarity of Colman's recipes to those of Bukhara which were covered by the confidentiality agreement.

Judge Knoll ultimately found in Bukhara's favour.

Unfortunately the judgement doesn't appear to have been reported, but there is an Afrikaans news report available here:

Google translate will provide one with a barely comprehensible translation here:

Adv Sholto-Douglas kindly has sent me the Applicant's Heads of Argument, uploaded here:

In the Frankies matter there doesn't appear to have been any sort of agreement in place upon which Frankies could rely.

Given that the get-up of Frankies' products could hardly be considered confidential, this raises the tough question as to how Frankies could have pre-emptively protected themselves, especially seeing that very often when a smaller producer approaches a larger distributor for a listing, the larger producer has all the bargaining power.