A not-for-profit approach to brand valuation

For more than 25 years, the Forest Stewardship Council (FSC) has been promoting the responsible management of the world’s forests as the original pioneers of forest certification. Thanks to its standard-setting and certification services, FSC labels can be found on millions of products around the world ranging from toilet roll to milk cartons. As a result, trademarks, service marks and certification marks are all key components of the organisation’s IP protection strategy.

Overseeing this until August 2021 was Ugreson Maistry, trademark and IP counsel at FSC Global Development GmbH, whose role revolved around three core pillars: registration work, licensing and enforcement. The fourth, he said, if there was a fourth, would be IP management. This included brand valuation.

Here, we present a section of our conversation from earlier in the year, when Maistry was still fully embedded in the organisation.

“I think it’s important for trademark and IP counsel to keep an overview on all general IP issues and not just focus on infringements, prosecution or IP contracts as the case may be,” Maistry muses. “Of course, certain projects take up more time than others, but FSC values its trademark and IP counsel who control the full lifecycle management of the trademark. For NGOs it may be even more advantageous to have such a hands-on approach where they don’t necessarily have a dedicated team only dealing with one aspect of a trademark.”

Registration

In addition to its checkmark-and-tree certification mark, the organisation has a number of brand marks, including FORESTS FOR ALL FOREVER. “Prosecution is the bread and butter of our business – the foundation for everything and an area where I think we’ve excelled in recent years,” Maistry states. “We are always working on and finetuning our global applications and prosecution strategy.”

With trademarks in 125 countries, this is a truly global task. Thankfully, the IP team includes two former trademark examiners, but the obstacles that they encounter vary widely depending on the country in question.

Eastern European matters tend to be the trickiest. “Trademark law does not always provide us with the best solutions for these courts to enforce marks,” Maistry reflects. “If you don’t have tools like removing or cancelling a mark on the register on the basis of a bad-faith registration, then you have to be aware not to pump costs into trying to preserve your trademark applications against somebody who has an earlier prior right but a bad-faith one.”

Where new prosecution needs arise, the organisation will consider expanding its network. “Often, when we are planning a new filing and developing a new strategy, we will call upon contacts that we may have met in person a year previously,” he reveals. “So we are always on the lookout but not necessarily soliciting.”

The covid-19 pandemic may have put a stop to in-person meet-ups, but it has not prevented Maistry from making new connections. “I have certainly continued to network during this time, and I have made some good contacts,” he says.

In fact, there are a lot of perks to a virtual meeting. “It’s always lovely to be at a networking event in person, but it does limit how often you can attend a conference,” he considers. “I’m not going to be able to attend one conference a quarter – maybe two a year if I’m lucky, or more if I’m speaking. I’ve found that the online option is nice. You can multitask your work to an extent.”

Licensing

In the specialised industry of forestry, the FSC name is extremely well known. Outside these circles, recognition relies on two distinct forms of licensing agreement. One deals with certification for the manufacturer, the other is a more traditional marketing licence for the promotion of FSC-certified products (ie, a trademark service), dealing with retailers and other organisations selling certified products.

Overseeing this activity is no small task. FSC has 45,000 certification licensees and over 1,300 marketing licences for organisations promoting finished and labelled FSC products – including more than half of the world’s top 20 retailers.

Thankfully, the market is largely self-regulating. An FSC licence provides a market advantage, therefore, licensees have every incentive to use it to their advantage over a non-licensed company. “Some of our strongest police officers are our FSC licensees who help actively police the market for us,” Maistry points out. “For example, an FSC licensee may see someone else who is using the trademark but doesn’t have a licence code and then report it to us.”

Enforcement

Indeed, it would be impossible for Maistry’s team – which comprises only four full-time staff and a temporary employee – to monitor everything themselves. “It’s too time-consuming and laborious to implement processes for everything, but for certain key strategic supply chains and markets we do and will continue to enforce aggressively”.

One of these key markets is the online space. The number of online platforms trading in potentially counterfeit goods and products making false claims that they are FSC certified has spiked in recent years. “We have tools to track that through AI on online platforms, including proprietary protection tools,” Maistry says. But online enforcement remains one of the biggest challenges.

“Fake goods trading online is universal now,” he admits. To deal with this, the team tracks traders across platforms by identifying common information such as phone numbers, addresses, contact information and footprints on more than one platform. “This gives us a better layer of understanding of where infringement operations are concentrated and can allow us to strategically execute multijurisdictional cross-border enforcement,” Maistry states.

Partnerships with e-commerce platforms are also vital. Last year, Amazon approached FSC to become a founding partner in its Climate Pledge Friendly programme, which aims to make it easier for customers to shop for sustainable products by attributing the Climate Pledge Friendly label to goods with certain sustainability certifications. “This adds a whole other layer to our level of protection working with e-commerce platforms,” says Maistry. “We’d love to roll out similar collaborations to eBay and Alibaba as well… We’re going to see more and more of a need for controlling the market against infringement on a one-on-one basis between key partners.”

Brand valuation

On top of all of this, Maistry has been turning his attention to a new field of focus. “Brand valuation touches a number of important factors at FSC,” he maintains. Of those under his remit, licensing contracts have been a key motivator in the decision to engage in what is otherwise a woefully unexplored area among many environmental organisations.

“Regionally, there are differences in our licensing prices, naturally,” he says. “Some regions are lower than others, just because there is not such a huge interest, or companies do not value these kinds of transactions in the same way as other more mature territories. All our national offices need to value what the trademark brings to companies and potential partners.”

To demonstrate this, he draws on the example of a hypothetical matchbox. A Bic-branded matchbox may be more powerfully branded than, say, a Tesco-branded matchbox but, he argues, Tesco allied with FSC-certified paper and wood, although cheaper, would create a more valuable product. Therefore, it is essential for FSC to make clear the value that the use of its certified logo brings in this context.

“Working with teams like PwC will help FSC obtain a true value of our IP activities,” argues Maistry. “Trademark valuation is not just a cost analysis of how much you’ve put into your trademarks – how much you’ve spent obtaining or defending your registration. So to understand the difference between trademark value and brand value is very helpful for an organisation to shape its business structures.”

Yet there was some initial confusion as to why Maistry’s team should be involved at all. To begin with, marketing and communications did not understand why brand valuation was a legal concern. As a customer-facing department, marketing generally focuses on the level of brand recognition in the market. “But that’s just part of the picture; it’s not the whole picture,” insists Maistry. “Once we explained to them the other considerations being taken into account, there has been way more acceptance and desire to collaborate on this topic.”

Now, everyone is on the same page and cross-function collaboration is on the up. “We are working much more closely with key units at FSC in this regard, and certainly over the last few years, the importance of the trademark in all FSC activities has risen.”

Having improved IP awareness within the organisation, it is time to take the message to the masses by raising the profile of environmental groups in the brand valuation space. “What is painfully missing from these top lists of brands is environmental brands,” Maistry admits. “We just don’t see them and there’s no impetus for brand ranking lists to think outside the box and ask what are the environmental brands that are making waves in the market? Which environmental labels and brands are collaborating on sustainability issues and how are they using their intellectual property to facilitate and enhance these collaborations? These are the innovations that we would love to see represented more.”

Initiatives such as the Amazon Climate Pledge Friendly programme and those that have seen FSC team up with Pirelli on natural rubber, Diesel on natural textiles in fashion, McDonalds on sustainable packaging and Tetra Pak on milk cartons aim to place the organisation centre stage when it comes to brand valuation. Maistry concludes: “If brand rankings continue to only value and estimate brands according to traditional metrics, then the market has an incomplete understanding of what the truly interesting brands are doing out there and what impacts are being made regarding sustainability.”