RSS FeedBrand Management Law
First posted on Commercial Law International on April 26, 2010.
So what is brand management law?
The best definition that I can give is the law or legal practice that facilitates a company or companies managing their band or brands. Yes, I know, I know the definition is a bit circular but hey what do you expect, I am a lawyer after all.
Then what is brand management?
Brand management according to BusinessDictionary.com is: the process of maintaining, improving, and upholding a brand so that the name is associated with positive results…Brand management is built on a marketing foundation, but focuses directly on the brand and how that brand can remain favorable to customers.
Brand management law (BML) is thus defined as the legal facilitation of the above process. It is a multi-disciplinary practice area and brings together many differing areas of law (Intellectual property (IP), litigation, contracts, tax, etc) but more importantly by its very nature also encompasses the non-legal (marketing, public relations, consumer care, business sensibility/sensitivity, etc).
BML is not just a simple matter of commercial awareness or knowing your clients business – both of which are important very important aspects of this area of law, however BML goes beyond either of them. That is to say it is not just a matter of discerning what the client’s interests are, then moving to put in place the requisite legal instruments that establish some right “to” or “in” and then defending said right or rights. Take for example a client that has expended millions on research and development, this client clearly has an interest in seeing a return on this expenditure, a lawyer would move to protect the client’s work product by intellectual propertizing it as much as possible (e.g. registering patents and trademarks), the lawyer would then act as a kind of sentinel, safeguarding the client’s IP through the threat (real or potential) of legal action.
BML is this but much more. Its is practice area that requires a lawyer to be able to keep the legal and non-legal in sync – always remembering that it is the brand that matters.
This practice area requires from a lawyer certain degree of intellectual flexibility. From the nature of our profession lawyers are problem solvers – some might beg to differ – to be more specific we are legal problem solvers. To put it succinctly we will find the legal solution to your business problem. And here lays the problem for many a lawyer when it comes to BML.
Lawyers are good at finding legal solutions to business problems; well that’s what we were trained to do after all. However, BML requires a lawyer to go beyond this and to realize that some times what is in fact needed is a business solution to a legal problem.
What is the difference between these two approaches, isn’t it just matter of semantics? Well, you will just have to stay tuned.
Two AIG Subsidiaries Agree To Settle Racial Discrimination Case
This is part of the Middle Passage Law Series and is cross posted on Commercial Law International .
American International Group, better know by its acronym AIG, it seems these days can rarely catch a break. It just seems negative news follows negative news for this company. This time the negative news for this too big to fail company – deeply wounded by the global credit crunch and later recession – has two of its units being accused of racial discrimination in their lending practices.
It is important to note that AIG has not been found guilty of anything; in fact it wasn’t even accused of any wrong doing.
WHAT?
I know, I know, it seem like I am saying that AIG is involved yet not involved in this case. And yes that is exactly what I am saying.
All of this may seem totally contradictory but let me assure you it is not. What we have here is a classic illustration of legal reality vs. public perception of a company’s brand. In order to be successful companies have to be mindful of the differences between these two concepts and effectively manage their interrelation.
The Department of Justice (DOJ) allegations were never directed at AIG, the parent company, but were instead directed at two of its subsidiaries –AIG Federal Savings Bank (FSB) and Willmington Finance Incorporated (WFI). Both banks were accused of not sufficiently monitoring the activities of mortgage brokers who sold mortgages that they funded. The brokers were, according to the DOJ, offered African-American borrowers less favorably borrowing terms than similarly financially situated whites. The two have agreed to settle the case with the DOJ and have agreed to pay at least $US6.1 million without admitting liability as part of the terms of settlement.
The case broke no new ground as far as banks in the US being accused of racial against minorities, namely African-American and Latino-Americans, in fact similar settlements or even full blown litigation involving other US banks will surely be making the headlines in the near future. The case however did break new legal ground in that for the first time US authorities held a lender directly responsible for the racial discriminatory acts of brokers. As a consequence, from now on banks will have a positive duty to monitor the activities/policies of brokers that they fund, to the best of their ability, in order to ensure that they are not using race to determine borrowing terms. This duty also of course carries with the co-duty to take positive action whenever a bank believes that a broker is using race.
From a strict legal perspective AIG, the parent, hands remain totally clean is this matter. It is important to reiterate that AIG was never accused of anything; the allegations were solely directed at the two subsidiaries. And no this is not a simple matter of splitting hairs, while related all three companies are separate. The legal concept of the corporate veil - the independent legal identity of companies, even if related – is a fundamental one in corporate law. The corporate veil is best understood as a shield that is used to protect all the right that come with incorporation. This is not to say that it can never be lifted/pierced, for it can, but this is only done in rear and specific instances where for example fraud is alleged or where for some reason the directing/controlling mind of a corporation needs to be identified.
However, these allegations go beyond strictures of the corporate veil and this is where public perception of the brand and effective management of that brand become important. AIG and its army of brand management specialists both know that the general public are often not so discerning as to make the distinction between parent and subsidiary; as far as the public is concerned AIG is AIG. This is the reason I believe that there was such a quick settlement – the last thing AIG, the parent, needs is a protracted legal battle involving accusations of racial discrimination, albeit involving subsidiaries. This would be a public relations nightmare.
L´Oreal Found Guilty Of Racial Discrimination
This is part of the Middle Passage Law Series and is cross posted on Commercial Law International.
Now I know I have not posted a piece in this series in quite some time and for that I apologize – I have no excuse.
It may seem that I am either picking on L´Oreal, as I have tracked their recent legal battles with eBay on Commercial Law International, either that or I have an obsession with makeup. Let me assure you that neither in the case. With that over, let´s go to the story.
The La Cour de Cassation, the highest court in France, upheld the ruling by the Paris Court of Appeal, finding L´Oreal guilty of racial discrimination. The court also found Adecco, a temp-employment agency, involved through its Districom division, guilty and fined both it and L´Oreal €30,000. The court however, sent back to the Court of Appeal for its reconsideration the €30,000 each in damages payable to SOS Racisme, an anti-racism public interest group that brought the case.
The ruling ends three years of legal wrangling and is no doubt a huge blemish for L´Oreal.
The main issue of fact in the case was BBR. Yes, BBR. What in the world is BBR, you ask?
BBR or blue, blanc, rouge – the colors of the French flag. Now if you were to ask me I would have simply thought that this was a general patriotic gesture, however, it hides a much more sinister meaning. It, as the Times reports is an expression ¨widely recognized in the French recruitment world as code for white French people born to white French parents.¨ This would of course exclude not only the 4 million ethnic minorities current living in France but also any whites not born of pure French stock, including presumably none other than the French President himself Nicolas Sarkozy whose father is Hungarian.
It would seem that word got out that L´Oreal did not want any black, Asian or Arab sales staff to promote Fructis Style, a hair care product made by its Garnier division. Only BBR would do, I guess – because they are worth it – to play on L´Oreal´s because you are worth it ads. But, why?
And this for me is the most troubling aspect of this case. The BBR move by L´Oreal hints at a much larger and disquieting issue in French society. Yes, racism, this is very obvious but much more than that it is brand of racism that operates not just on the fringes of society but at its heart – in the labour and retail markets – while at the same time managing to remain in the shadows .
How is it that this BBR policy that so pervades the French employment and retail markets is only now seeing the light of day?
Like I said, very troubling indeed.
However, a silver lining to all of this is that BBR has now been fully exposed in a court of law. From now on the racial prejudice that operates in the French labour and retail markets can no longer be subject to denials of anecdote or conjecture. The court record stands as an official record by the state that BBR does exist and is a proven fact.
As for L´Oreal, this cannot be good for its brand management. For a company that so fiercely defends its brands, just take a look at its battles with eBay, this was not only a poorly conceived recruitment drive but also incorrectly defended case – this is not to be read as a dig at L´Oreal´s lawyers, not at all, I am sure they represented their client the best way they could, however, I am unreservedly criticizing L´Oreal.
L´Oreal forgot that it´s all about the brand. What they sell is much more than simply a product, it is a lifestyle, it is instant gratification, it is control and it is improved self-confidence through a line of beauty products designed for one thing – to improve the true beauty that is you. Nothing can be allowed tarnish the brand less they lose sales and market share.
If this is the basic market reality of the L´Oreal brand, and for that matter any brand, why would you maintain the spectacle of a public trial for three years with a case that even if it comes out in your favor could still blemish the brand?
There is no doubt that L´Oreal´s PR team is hard at work trying to figure out how to either make this go away or finding an angle on how to spin this. A word to the wise, L´Oreal, you have already been found guilty, it would be an exercise in futility to deny any part of this. In fact such a denial, in whole or in part, direct or indirect, could result in a backlash against the brand. It would be better to fully accept culpability, say sorry and take positive and no doubt public steps in order to combat BBR or other forms of discrimination. That my friend is your angle.
Shell & The Elephant In The Room
First posted on Commercial Law International on June 9, 2009.
By Charles Wanguhu
A report by the Economist Intelligence Unit indicates that protecting a firm’s reputation is the most important and difficult task facing corporations. With the development of global media and communication channels, managing reputational damage is seen as crucial with events undertaken in even the remotest areas affecting the international brand of a corporation.
For Shell the stark reality of reputational damage is all too clear. After years and years of denial and expressing its innocence of the Ogoni affair (it still maintains its innocence), Shell has decided to settle a case brought against it out of court for a sum of 15.5 Million US $. The lawsuit had accused the company of colluding with Nigeria’s former military regime over the execution of Ken Saro-Wiwa and other peaceful anti-oil protesters.
Like Nike before it Shell remains in many minds as the poster child of a lack of corporate responsibility especially in big multinationals. The Saro Wiwa case is largely sited not only in commercial classrooms but across NGO conferences worldwide. Multinationals are viewed as bulldozing their way with the help of corrupt and dictatorial regimes to fulfill their interests with complete disregard to vulnerable communities.
The perception of Shell as the irresponsible corporate persists despite the fact that it has invested millions in engaging communities in areas that it works in and has increasingly taken on human rights in its business models and stakeholder engagement strategies.
In response to the case filed Malcolm Brinded, Shell’s executive director for exploration and production, was quoted,
“While we were prepared to go to court to clear our name, we believe the right way forward is to focus on the future for Ogoni people, which is important for peace and stability in the region.”
The settlement could be seen as a magnanimous move by Shell in some quarters with some already hailing the move as groundbreaking in terms of holding corporations accountable. However when looked at broadly the settlement will be seen as a coup for Shells PR team: instead of having weeks, months or even years of a contested trial where Shells actions or lack of thereof would be once again stirred up in everyone’s mind globally, a quick settlement offers a quick escape route.
All in all $15.5Million may well be considered a bargain when factoring in legal costs, reputation risks and lost revenue. There could well have been some champagne popped at Shell HQs but am sure downstairs in the legal department the wait is on with baited breath to see whether the floodgates have been open.
