MARKETING AND THE LAW

A Corplaw7
7 Commentary

by Barry J. Lipson

What do "Coca-Cola," "Polaroid" and "Scoop-D-Doo" have in common?

At first glance, very little!

Coca-Cola is a world famous carbonated beverage, "invented" in 1886. Polaroid was

the first popular instant camera, appearing shortly after World War II, and only relatively
recently displaced by Digital Photography. Scoop-D-Doo, on the other hand, is not a
product at all, but a little known and relatively low profile service. According to its
advertising, Scoop-D-Doo "pick(s) up where your dog leaves off," and then, as an added
bonus, "visually inspect(s) the dog droppings for PARASITES and IRREGULARITIES
which may indicate illness."

But when introduced, each one of these, in its own way, was a new marketing concept,
the implementation and success of which could or did greatly benefit from the aid of
creative legal strategy.

Thus, for example, if the originator of Coca-Cola had decided to patent its formula,
assuming the formula was patentable, he and his successors would have enjoyed only a
17-year monopoly and then the formula for Coca-Cola would have been in the public
domain, available to and usable by anyone. By keeping the formula a "trade secret,"
Coca-Cola has retained exclusive use of its formula for well over 100 years.

Interestingly, this formula has been changed at least twice. First, in the early part of the
Twentieth Century, to remove the cocaine from the formulation in response to the
enactment of federal food and drug legislation; and then within the last two decades to
imitate "Pepsi" more closely. The negative consumer reaction to this latter change gave
re-birth to "Classic Coke."

On the other hand, if Polaroid had not followed the patent route, Polaroid would not
have been able to obtain a federal court order requiring Kodak to abandon the instant
photography business, and to do so at great expense to Kodak. Moreover, by pursuing an
active and vigorous improvement patent program, Polaroid was able to bar Kodak from
this market niche nearly four decades after it had introduced instant photography and long
after the initial instant photography patent had expired. It was only the advent of a totally
new technology, also now protected by patent, Digital Photography, which brought about
the demise of Polaroid Instant Photography.

Alas, the business of Scoop-D-Doo would not appear to be protectable by either patent
or trade secret, barring development of a revolutionary pick up, inspection and/or disposal
system or process, as the mere description of this service in sales brochures and
advertisements reveals how it is done.

Furthermore, the manner or process for

performing this service would appear to be clearly in the public domain.

How then can the originators of Scoop-D-Doo, or other new product or service
concepts, carve special niches for themselves in the marketplace, and what is the role of
the lawyer in this process?

While you, as the "marketeer," provide the initial "spark" of creativity in developing the
product or service concept, the knowledgeable lawyer, if he is willing and encouraged to
take on the role of a creative legal counselor, can help you fan this spark into a brilliant
commercial success.

First, in delineating a market niche, creative legal counseling can help you determine if
there are any regulatory restrictions, legal requirements, product liability considerations,
or other "special circumstances" to entering this market niche, and he can aid in
presenting the product or service in the best "light" to do so.
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The originator of the "Pet Rock" would probably have little difficulty here, besides
truth in advertising. The originator of a new soft drink, food, medicine, chemical,
pesticide or electronic device, however, would have to satisfy local, state and federal
health, safety, environmental and hazardous substance requirements, as well as insurance
considerations. For example, did you know that cake flour is an explosive substance?

Next, creative counseling can help you explore the options available in fashioning and
strengthening the appropriate market niche. For example:
a) Does the product or service have unique qualities that would be difficult to
duplicate, or can it be especially designed so as to thwart analysis, reverse
engineering and/or "Chinese copying"? If so, then the trade secret route should
be considered.
b) Does the product, or the process of manufacturing the product or performing
the service, have elements that, if properly described and claimed, would be
patentable? If so, then the patent route should be considered.
c) Are a) and b) both true? Then a balancing must be made. On the one hand,
the potential unlimited life of a trade secret must be balanced against the
likelihood that someone else will be able to penetrate the cloak of secrecy, or
"discover" or "invent" the secret independently. On the other hand, the absolute
monopoly granted by a patent, which is limited in time to 17 years, must be
balanced against the likelihood that the patent can be designed around once the
technology is disclosed in the Patent Grant. Also to be considered are which
method is likeliest to provide the longest period of exclusivity, and whether it is
likely that a series of meaningful Improvement Patents will be obtainable to
extend the period of exclusivity.
d) Are neither a) or b) true or desirable? Then other means must be explored
and, depending on the product or service involved, the opportunities for creative
legal counseling here may be limitless. Thus, the creative legal counselor might
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explore bonding by an insurance company of, and/or "para-veterinary" training

for, the Scoop-D-Doo "Scoopers"; lobbying for the adoption and enforcement of
pet droppings removal and/or examination ordinances; and/or lobbying for the
licensing of persons performing such services.

In addition, as previously discussed, to practically aiding in the delineating, fashioning

and strengthening of appropriate market niches, and in choosing between available
options, creative legal counseling can also be important in helping to differentiate your
product or service from those of current or potential competitors.

This can be

accomplished through aiding in building good will, and in formulating, legally clearing
and, as possible, obtaining legal protection for imaginative programs relating to
trademarks, warranties, promotions, pricing, servicing, quality, packaging, unique features,
etc.

For example, the proper adoption, promotion and utilization of trademarks may well
prove to be crucial. The good will so built up during the introductory "sweetheart" period
of exclusivity in a well promoted and established trademark, may make consumers
reluctant to give up the "known" qualities of the no familiar trademarked product of
service, for the "unknown" qualities of the competing newcomer imitations.

Indeed, good legal strategy may even enable you to put Humpty Dumpty back together
again. Thus, while "Bayer" lost its exclusive rights to the trademark "Aspirin" when,
through poor legal planning, it let it become the generic name for the product, Bayer then
unscrambled the omelet by revamping its strategy and vigorously promoting the quality of
its aspirin under the trademark "Bayer." Today, many consumers emotionally believe that
"Bayer" Aspirin works better than other aspirins, despite the fact that it is, and by law must
be, chemically the same as all other aspirins.

However, if only the generic name of the product or service has been promoted (or the
trademark improperly promoted), consumers may not care whether the screws and bolts
they get came from you or from USS, 84 Lumber or Little Joe, Inc. As a consumer, which
would you ask for, Acetaminophen Tablets?, McNeil Acetaminophen Tablets?, or
"Tylenol"? Believe it or not, they would all be the same, McNeil being Johnson &
Johnson's Tylenol manufacturing company, and acetaminophen being the generic name for
this product.

Then too, the creative legal counselor can again prove essential by advising on, and
objectively "previewing," your advertising and promotional materials. By so doing, such
legal counsel can help assure that these materials lawfully demonstrate to your customers,
in an informative and persuasive, yet truthful and non-deceptive manner, that your product
or service fills a current need or a new found or generated desire.

Thus, a corporate lawyer for his over-the-counter (OTC) products client both coined
and registered catchy trademarks. Then too, the same lawyer saved this client from the
legal liability associated with the empirical claim Catchyi Headache Powder dissolves
faster than Aspirin Tablets, which claim was contrary to the scientific findings at that time
that there was no measurable difference. While empirical claims such as Catchy
avoids the added discomfort of swallowing tablets, might well have been just as strong
and avoid such problems.

Moreover, creative legal counselor can also prove invaluable in helping you do your
due diligence. Would you believe this seasoned manufacturer and marketeer of OTC
products had acquired Catchy without doing its due diligence to determine that this
product was primarily sold through Mom & Pop Stores, firing forthwith Catchys sales
force, and tasking its existing Drug Store and Super Market oriented sales force with
marketing this folksy product through these newfangled outlets? Needless to say disaster
followed!
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Such legal counsel can also prove essential by aiding you in choosing the right
distribution methods, in molding them to your particular needs, and in making sure they
comply with legal and business requirements. For example, do you want to distribute your
product or market your service directly or through wholesalers? Do you want agents,
distributors or franchisees? Do you want to sell on consignment, or through the Internet,
e-bay auctions, retail stores, mail order catalogs, advertisements, TV sales shows, 900 or
800 numbers, or telephone, door-to-door solicitations, etc? If you sell through stores, do
you want to use chains, department stores, discount stores, catalog houses, specialty
shoppes, supermarkets, mom and pop stores, or single product shops? Do you want
exclusive or non-exclusive representatives or outlets?

Do you want to pay salaries,

commissions, bonuses, incentives or a combination of these? Etc., etc., etc.?

Each of these strategies give rise to significant legal considerations. More importantly,
each in its own way may also contain valuable opportunities for the application of creative
legal counseling in the marketing of your product or service.

Therefore, it is clear that what Coca-Cola, Polaroid, Scoop-D-Doo, and all other
marketing enterprises, should all have in common, is a good working "partnership"
between the marketeer and creative legal counsel.
Please address your comments, questions and suggestions for future Corplaw7
Commentaries columns on marketing and business law subjects to Barry J. Lipson,
Esquire, at bjlipson@gmail.com.
Copyright8
8 1993-2010 by Barry J. Lipson

Catchy nom de plume for a real product.