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Strategic Management in Nestle Pakistan

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					Paula Nelson General Counsel - Intellectual Property
IP Management @ Nestlé
WIPO 22nd September 2005
       IP Management @ Nestlé


    Nestlé in the Global Food Market
    • Nestlé Sales (2004)
      CHF 86.8 billion          2%              98%

      USD 69.9 billion

    • Food is a (3.5 trillion)
      USD 3,500,000,000,000
      global industry
      Nestlé
      Others
2                                    Finance & Control
                                   IP Management @ Nestlé

The World's Leading Food Company
                                                   The USD >10 billion Food Companies in FY 2004

                              70'000


                              60'000


                              50'000
    Food Sales (in mio USD)




                              40'000


                              30'000


                              20'000


                              10'000


                                  0
                                       Nestlé   Kraft Foods   PepsiCo   Unilever   Coca-Cola   Mars   Danone   ConAgra    Cadbury    General   Sara Lee
                                                                                                                         Schweppes    Mills



3   •Only Food (incl. petfood) & Beverages (excl. alcohol)
                                                                                                                                        Finance & Control
         IP Management @ Nestlé


              Nestlé in Figures 2004
    •   Worldwide Sales:          CHF 86,769 mio
    •   EBITA:                    CHF 10,970 mio
    •   Net Profit:               CHF 6,717 mio
    •   Factories:                500
    •   Employees:                Around 247,000
    •   Organic Growth:           4.5 %
    •   R&D Expenditures (F&B):   CHF     658.5 mio

4                                           Finance & Control
       IP Management @ Nestlé


Our Line of Products
•   Soluble Coffee
•   Infant Nutrition
•   Confectionery
•   Dairy
•   Chocolate Milk Beverages
•   Bottled Water
•   PetCare
•   Ice Cream (co-leader with Unilever)
5                                         Finance & Control
      IP Management @ Nestlé


    6 worldwide strategic corporate
                brands




6                              Finance & Control
       IP Management @ Nestlé


      Organization in Three Zones
                                Europe




                                   AOA

    Americas




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            IP Management @ Nestlé


Nestlé R&D
An interactive Network covering four Continents
    Nestlé Research Center (NRC)
    Lausanne (CH),Tours (FR),

    9 Product Technology Centers
    (PTCs): Konolfingen, Orbe (CH),
    Beauvais, Lisieux,
    Nestlé Waters (FR), New Milford,
    St Louis (US), York (GB), Singen (D)
    7 Research and Development
    Centers: Amiens (FR), Marysville,
    Solon (US), Shanghai (CN),
    Singapore(SG), Sderot (IL), Casa Buitoni (I)



8                                                  Finance & Control
      Nestlé and IP Management @ Nestlé




    The Group Intellectual Property
    Department Manages IP Rights
             Worldwide



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       IP Management @ Nestlé


     A genuinely global function
       • In 2002 the team which had been split
         between the Centre and the NOCs was
         reorganised as a Corporate/Centre service
         in keeping with the Nestlé Licensing
         System
       • Advisers serving the SBUs are located with
         their SBU and advisers serving an NOC or
         group of NOCs are located in the markets
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      IP Management @ Nestlé


     Organisational Intellectual Property Department

                                                                                      MACHINERY               CEREALS
                                                                                     & PACKAGING

                                                                                     1 IP Advise r           2 IP Advisers
                                                                                                                                                                     2 IP
                                                                                                                                COFFE E &
                                                                      WATERS                                                                                      Researchers
                                                                                                                               BEVERAGES
                    4 RIPA's AMS
                                                                    2 IP Advisers     IP Support              IP Support       2 IP Advisers




                                                                     IP Support                                                 IP Support

                                                   PETCARE
                                                                                                                                                CHOCOLATE &
                                                   (St. Louis)
                                                                                                                                               CONFECTIONERY

                                                  2 IP Advisers                                                                                 2 IP Advisers
                                                                                                                                                                                4 IP Counsels



                                                   IP Support                                  General Counsel                                    IP Support
                                                                                             Intellectual Property
         6 RIPA's EUR
                                                                                             Head of Trademarks
                                                 NUTRITION                                    Head of Patents                                        DAIRY


                                                2 IP Advisers                                                                                     2 IP Advisers
                                                                                                                                                                                    IP Support



                                                 IP Support                                                                                        IP S upport



                                                                 NESPRESSO                                                           FOO D


                                                                 2 IP Advisers                                                    2 IP Advisers

                    6 RIPA's AOA
                                                                                                                  FOOD
                                                                                    ICE CREAM                   SERVICES                                          Adminis trative
                                                                  IP Support                                                       IP Support                       Assistants
                                                                                    2 IP Advise rs            2 IP Advis ers




                                                                                     IP Support                 IP Support




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             IP Management @ Nestlé

The 16 RIPAs are located in all 5 continents



                      A




                                                                       •4 in Z-AMS
                                                                       •6 in Z-EUR
     A = IP Adviser Petfood and RIPA Petfood located in St Louis
12   Special arrangements for Israel, South Korea, Japan and Swiss NOC
                                                                       •6 in Z-AOA   Finance & Control
         IP Management @ Nestlé



      The RIPA is the first point of
      contact in the NOC / region
     Gives advice on all IP matters to businesses in the
     region including

      • clearance searches for new trademarks, designs, domain
        names and enquiries regarding patents
      • monitors IP infringements and manages / resolves
        conflicts & litigation
      • ensures that the Nestlé Group IP Policies are applied
      • supports IP issues in local M&A and R&D Activities
13                                                   Finance & Control
     IP Management @ Nestlé


     Mission of the IP Department
     • Our mission is very concise - to generate
       competitive advantage through development
       of Intellectual Property Rights (IPRs)

     • To ensure that IP provides a competitive
       advantage for each of our businesses, we
       apply the WHW Test:

     WHAT can we protect to gain a competitive edge ?
     HOW do we get the best protection ?
     WHERE do we protect ?
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       IP Management @ Nestlé


     Nestlé is a brand driven company
                     ...




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       IP Management @ Nestlé

     Strategic and local brands are
      protected & managed by IPD
                 Brands   Protections
                                        Managed by 16 Regional
     Local                              IP Advisers (RIPA's) for
                            28'000      local Nestlé Operating
                                        Companies

                  6'000
                                        Managed by Center IP
                            75'000      Department in co-
                                        operation with the
                                        Strategic Business
     Strategic    340                   Units ('SBU's) and the
                                        RIPA's
16                                                    Finance & Control
     IP Management @ Nestlé


        Nestlé has a substantial
            patent portfolio
     The Nestlé patent portfolio contains as
     at 18.03.2005:
     • 9'018 granted patents
     • 6'127 pending cases which may result in
       the grant of a patent

     The top 5 patenting territories for
     Nestlé are: USA, Europe, Canada,
     Australia and Mexico
17                                         Finance & Control
            IP Management @ Nestlé

     Nestlé's IPRs are centrally owned &
     licensed to local Nestlé Companies...
        Société des Produits Nestlé S.A. is the registered
         trademark and design owner and Nestec SA is the
         registered patent owner, in both cases acting as
         nominee for Nestlé S.A., who is the beneficial
         owner
         - Central ownership applies to trademarks linked to
           strategic as well as to local brands
        These rights are licensed, together with know-
         how, to the Nestlé Operating Companies who pay
         royalties for their use
18                                                       Finance & Control
          IP Management @ Nestlé



       Proper Defence is fundamental
     We defend our rights against any infringements, e.g.
       imitations including counterfeits
       unauthorised use of patented processes
       internet & domain name misuse
          Cybersquatting
          Examples: maggi.com, rowntrees.com
       Derogatory use of our trademarks
          For instance use of our brands in pornographic sites

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         IP Management @ Nestlé


     ... Infringements are frequent ...
     Example:


                                  Trademark infringement
                                  + Unfair competition




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        IP Management @ Nestlé



     ... in various parts of the world
                     ...




 Example NESTLE PURE LIFE Pakistan/Afghanistan


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       IP Management @ Nestlé


     ... and touch all our products
                 CAFÉ PELÉ soluble coffee




                     before         after
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       IP Management @ Nestlé

     Counterfeits are a serious problem
       and a crime in most countries!
                                Example NESCAFE
                                in Russia

                                Trademark
                                infringement

                                + Unfair competition

                                + Fraudulent act
                                 with penal sanction

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     IP Management @ Nestlé


     NESCAFE PLATINUM in Russia




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      IP Management @ Nestlé


            Counterfeiting is a
           multi-faceted issue ...
     • customer safety
     • brand protection
     • corporate reputation
     • profits (loss of revenue & government
       taxes)
         Counterfeits account for 10% of world trade
         (Source Trademark World 12.2000)
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             IP Management @ Nestlé


     Illustrative split of Nestlé Value
     (as a % of market capitalisation)
                                      Recorded balance sheet
                                              values
                                               42%




Non-recorded values
      58%


26                                          Finance & Control
     IP Management @ Nestlé




27                               Finance & Control
                              Finance & Control

				
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