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
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 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
N estlé 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

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 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)
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 IP Management @ Nestlé

6 worldwide strategic corporate

brands

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 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)

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 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

Organisation al Intellectual Prop erty Department

MACHINE RY CEREALS
& PACKAGING

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

IP Supp ort IP Support

PETCARE
CHOCOLATE &
(St. Louis)
CONFECTIONERY

2 IP Advisers 2 IP Advisers
4 IP Co unsels

IP Su pport General Cou nsel IP Support

Intellectu al Property
6 RIPA' s EUR
Head o f Trademarks
NUTRITION Head o f Paten ts DAIRY

2 IP Advisers 2 IP Advisers
IP Su pp ort

IP Support IP S uppo rt

NESPRESSO FOO D

2 IP Ad visers 2 IP Advisers

6 RIPA's AOA
FOOD
ICE CREAM SERVICES Adminis trative
IP Suppo rt IP Suppo rt Assistants
2 IP Ad vise rs 2 IP Ad vis ers

IP Support IP Sup port

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 IP Management @ Nestlé

The 16 RIPAs are located in all 5 continents

•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
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 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 Units ('SBU's) and the
340
RIPA's
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 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
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 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

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 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%

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 IP Management @ Nestlé

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