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Android KitKat and the Benefits of Co-Branding

Thursday, 14 November 2013

The recent release of Android’s latest Operating System created much hype for its surprise branding if not for its technological wizardry. While the name Android KitKat was along the lines of previous releases which have all been named after confectionery or desserts, this release was the first to see a partnership with another global brand.

The union sheds light on a marketing practice that generates interesting strategic and legal issues. Businesses contemplating such an arrangement must assess the goals of co-branding partnerships along with the possible risks that they can create before committing themselves.

The Goals of Co-branding Deals

It is notable that neither party in the Android KitKat deal exchanged money as part of the arrangement, which suggests the value of such an agreement is to some extent intangible.

Indeed, such a strategy aims to be mutually beneficial to the parties by enabling the each of the brands to be associated with the more positive aspects of the other. This can help improve consumer awareness, improve promotional efficiencies (by capitalizing on the new partnership), and drive sales.

Clearly such benefits were expected in the Google-Nestle approach. Nestle now plans to deliver more than 50 million chocolate bars featuring the Android mascot in 19 different markets.

The Android KitKat deal offers some insight into the potential benefits of these arrangements but businesses should also remain conscious of the potential downsides.

The Risks of Co-branding Deals

There can be risks to co-branding partnerships, both operational and legal.

If future reputational issues emerge in one party, it may effect the second party’s brand equity too. For example, if Android’s new operating system were to become particularly vulnerable to malware, KitKat’s brand equity could also be damaged. Even Patrice Bula, Nestle’s Marketing chief, has accepted there were possible ‘pitfalls in the deal’. However, such risk may appear somewhat tempered given that the two companies operate in different markets. KitKat is a well known confectionery label, Google is associated with technology. There is little overlap between the two industries. Such a commercial divide creates a separation in the consumers mind too, minimising collateral damage to the secondary party.

The considerable legal legwork needed to create the Google-Nestle partnership indicates the degree of risk entailed in tie-ups across commercial sectors. Both Nestlé and Google have several commercial trademarks registered under EU law to prevent the misuse of their intellectual property. Such protections exist precisely because value built up using time and resources can sustain damage from misuse.

Although co-branding initiatives are not a misuse of intellectual property, if they go wrong, similar issues may result such as ‘brand dilution’. For example, with co-branding initiatives consumers may become confused and identify more than a single source of origin to a particular registered trademark. Under European Law, separation of goods or services is crucial in avoiding the infringement of another’s intellectual property rights; where this occurs due to infringement it could be a cause for action under Art. 8(5) of the Commercial Trade Mark Regulations.

For more information about co-branding or protecting your intellectual property rights, please contact James Crichton via e-mail or by telephone on 0207 611 4848.