Coca-Cola IP Assets

by Heydarov

Coca-Cola

Hidayat Heydarov

Prepared for Knowledge Management

Overview

Name:

The Coca-Cola Company

Object of Protection:

The Words and Logo, shapes of bottles, recipe

Organization Type:

Manufacturer

Instrument of Protection:

Trademarks, Trade Secret, Patent, Copyright

Industry:

non-alcoholic beverage concentrates and syrups

Focus:

Commercialization, Branding

Country/Territory:

Worldwide (Headquarter in U.S.)

Global Issues:

Health effects

Background

Coca-Cola Company is found in Atlanta, Georgia by pharmacist John Pemberton in 1886 as a non-alcohol `French wine Coca` which was his first beverage. Coca-Cola at first it was sold as a medicament saying it cures many diseases. Then it was famous as a soft drink that has distinctive taste and was sold at soda fountains. Dr.Pemberton’s partner Frank Robinson was the person who gave the name `Coca Cola` to this drink, as well as designed the trademarked script that is still used. In 1899 three entrepreneurs modeled bottling system and gained exclusive rights to bottle and sell the Coca-Cola products.

After having unique bottles, company started to advertise the product which now having one of the best marketing strategy. Starting with coupons to get free samples it continued with advertising in newspaper, distributing promotional goods having Coca-Cola script on them, and now it has a lot of various promotion ideas.

Actual production and distribution of Coca-Cola is made by franchises. The Coca-Cola Company produces syrup and then distributes it to independent bottlers in all over the world. Then, those bottling companies mix this syrup with filtered water, sweetens, and carbonate it before putting it in cans and bottles. After this process they send it to retailers, vending machines, etc.

 

Invention

Dr. Pemberton created Coca-Cola as a Coca Wine which is alcoholic beverage. In 1885 he registered his first product `French Coca Wine`. However, in 1886 because of prohibition legislations he converted this product into non-alcohol beverage. Then he used it as a medicament, because patients did not like cough medicines and he made this sweet syrup which has caffeine inside. Later on he mixed it with water to make it as refreshing drink.

At earlier times it was sold as a patent medicine for 5 cents per glass of Coke.  After giving it then name Coca-Cola they made the first advertising in Atlanta Journal, it attracted many people and with some other marketing activities during the first year they were selling nine drinks per day.

Dr.Pemberton did not realize the potential of his invention and two years before death he sold all the shares of company and Mr. Candler bought all of it. By 1892 Mr.Candler with some other partners formed corporation named The Coca-Cola Company.

 
R&D, Commercialization, Branding

Coca-Cola has been overcoming all the obstacles that ever changing market is making, due to the fact that it has an ability to systematically innovate new products and deliver it with right marketing strategy. For example they saw that market is changing very fast and decided to move from single core product to a total beverage company.

In 1999 The Coca-Cola Company acquired Schweppes brand and it helped them to complement the product range and to enhance the growth through new product development. Coca-Cola’s new product development is so simple; it innovates the solution for what customer needs, so the main role is customers’ in research and development. During 1950-60s Fanta, Sprite, Fresca, in 1980s Diet Coke, Cherry Coke and others joined to brand Coca-Cola.

Branding is the process of creating a unique name, image for product in customers’ mind, mostly through advertising campaigns. By having distinctive brand image, company can be identified and differentiated by customer easily. So, it’s simply the company’s promise to customer.

Starting from the 19th century Coca-Cola uses ads that reflects customers’ needs. That’s why people buy it very often. First slogan of Cola was ` delicious and refreshing soda drink`, and then adding some symbols as fun and enjoyment, finally what we get today from Cola ads is `being with beloved ones`, `being happy, smiling`. With such advertisings image of Cola has been unconsciously installed in our mind. The tie between Cola and its customers was so tight that customer were making individual ads.

Then in 1985 Coca-Cola announced that it reformulated the recipe of Cola. That was the biggest mistake they’ve ever made. After it, their competitor Pepsi said that Cola wants to be like Pepsi drinks, and on another side most of the customers were fond of classic Cola.

Being partner and/or sponsor to major events also helped Cola to be more famous. Being Olympic partner since 1928, partner of FIFA since 1974, sponsoring James Bond 007 movie are good enough to show how much attention the company gives to external image.

Coca-Cola word is the 2nd most understandable word after `okay` and it is one of the most admired and best-known trademarks in the world. In 1910s, other beverages manufacturers started to imitate Coca-Cola and made products that has similar names. That’s why Coca-Cola designed its distinctive shaped bottle that is only belongs to Coca-Cola.

Although before this brand believed in affordability, availability, and acceptability, now it believes in price value, preference, and pervasive penetration. What changed the beliefs of this brand are customers. Brand loyalty is the instrument that always keeps the brand image of Coca Cola up. The goal is that customer can reach the within a pace.  Other companies see competitive framework as a soda or beverages market, however Coca Cola defines it as a `share of human liquid consumption`. This makes powerful image among competitors.

 

Patents

Patent is a right granted by government or governmental organizations to customer which is limited. By the time inventor acquires patent from government, that person has the sole right to produce, sell, license that patented invention for a period after which the invention can be used by everybody.

Coca-Cola makes a lot of inventions to support its business like many other companies. Many of these inventions are patented. As the market share of Coke increased, competitors started to make imitative products of Coke. Although company was reminding customers in their advertising campaigns not to buy those fake products, it was not creating high marginal success.

As a consequence in 1915 The Root Glass Company won the contest Coca-Cola has started for a bottle designing that would be recognized by everyone, even by the touch. In 1923 `hobble skirt` contour bottle got the first design patent for the bottle manufacturer.

The second design patent for contour bottle was granted to Coca-Cola Company in 1937 for preventing imitation of the bottles in next 14 years. So with this rights given by patent acquired helped Coca-Cola to make it’s the only distinctive bottle in whole bottling systems.

Another patent awarded to Coca Cola is the exclusive right of produce `barrier coated plastic container`. It’s true that no one in general can have the exclusive right to make plastic container, however Coca-Cola got the patent that it has exclusive right to produce those plastic containers by their own methods described in patent.

 

Trademarks

A Trade-mark is a mark used by individual or company to protect their products from other people’s. Trademark’s protection helps Coca-Cola to stop competitors from producing their goods with the Coca-Cola on it, and compensates if any harm comes to Coca-Cola brand image or sales because of this unjust competition.

After Mr.Pemberton sold the company to Asa Chandler, Mr.Chandler increased the sales and started the corporation with 100000$ initial capital. He then recognized the importance of protecting company from competitors and in 1893 the words and logo `Coca-Cola` has been trademarked by Mr.Chandler. The trademark also includes uniquely designed script of logo. Nowadays Coca-Cola brand name has nearly $80 million value.

Although this action helped company to prevent competitors, it was to some extent. Because other companies were making similar shaped bottles. So because of this bottle problem in 1915 they patented their distinctive body shape of bottle, and in 1977 the bottle design itself was granted a trademark.

As a drink popularity increased, ongoing culture started to affect it. The term `Coke` got to be used more frequently by young people when they refer to product. As a result, in 1945 they got granted a trademark for the word `Coke`.

It is well known that the internal value of Coca-Cola lays on its trademarks and recipe. However patent for the recipe has not changed recently, because they know that after expiration of patent competitors would create nearly the same product.

Coca-Cola Company has very big legal staff to protect the brand image, trademarks, copyright, logos, and all IPs of the company. With this strict legal activities company has been keeping its position since the beginning.

 

Copyright

Copyright is the right to reproduce a work. The owner of the copyright in an original work, performance, or recording has the exclusive right to copy it, to decide how it will be published and distributed, to keep it from being modified against his or her wishes, and to profit from it. The copyright holder also has the right to give others a license to use the work in specific and limited ways.

Coca-Cola has copyright in the bottle design, logo design, advertisings, and generally all the original works they’ve made. For example, the logo design and script design is an original work of Coca Cola Company as an artistic work, namely it is copyrighted. In other words, copying that logo and script is restricted with corporate law.

 

Trade Secret

A piece of information that has value by being not widely known is called Trade Secret. Main feature and requirement of trade secret is that it actually must be secret, no one except people who need this to do their job should know it and company should have much stronger precautions not to let anyone find this secret.

The recipe for making Coca Cola is a trade secret. This formula is extremely valuable for company, due to if any competitor would access to this recipe they would make the exact drinks and Coca-Cola would lose all its value. That’s why it’s only known to some executives and company puts as possibly many as barriers for external forces to access it. In other words, company puts special effort to keep the trade secret of it and creates secrecy value.
Original recipe of Coca-Cola was patented in 1893. Then company changed the formula for making the drinks, however this time they did not patent the formula. The reason is very simple; if they would patent it, everyone would know the formula and when the patent is expired competitors would make the identical product. On the other hand, they could copyright the formula, however the formula would be public again. With copyright the formula would be secured as a literary work, but it does not make the basic idea behind it unique. By keeping the recipe as a trade secret Coca-Cola can protect it and keep it safe to itself permanently.

Trade secret has an advantage as we saw that it protects the value of your company unless you cannot manage to keep it safe. Downside of trade secret is that if the secret is revealed, you cannot do anything to prevent your competitors to use it like the way they prevent them with court and legal processes from using their patented product or trademarks. It is up to Coca-Cola, then, to keep the secret through confidentiality agreements and other contracts from letting it be revealed.

 

Business Results

In 20th and 21st century Coca-Cola probably best exemplifies global marketing. Trademark of Coca-Cola is recognized by more than 90% of the world population and `Coca-Cola` word is the 2nd most understandable word after `OK` word. Not only being directly recognizable, you can find it everywhere from shops to gas stations, from restaurants to vending machines. It’s in the 57th place in Fortune 500 most profitable companies with the profit of 9.019 million dollars.

Coca-Cola’s success is coming from its marketing, innovation, and globalization strategies. Cola is one of the founding fathers of modern marketing. It created brand image in our mind installed via advertising it as much as possible. Now when we buy Coca-Cola it automatically reflects what we think and associate with Coca-Cola. Living for more than 125 years Coca-Cola has seen ever changing market and it did actually adapt all of these changes in market by successful innovation strategies. The best strategy was to acquire more products than only one product which they applied, and now it serves more than 400 beverages in all over the world.
In order to have sustainable competitive advantage companies should protect intangible assets of theirs better than tangible assets. No single law or legal protection can save your assets 100%. That’s mostly based on company to protect them. Coca-Cola is the best example of keeping intellectual properties safe and managing to keep its trade secret.

 

Reference

https://www.worldofcoca-cola.com/coca-cola-facts/coca-cola-history/

http://zvulony.ca/2010/articles/intellectual-property-law/understanding-intellectual-property-law/

http://techpinions.com/the-purpose-of-design-patents/9960

http://alliance.la.asu.edu/model/geoliteracyCD/LessonFiles/Stelten/SteltenCornerStory.pdf

http://www.scribd.com/doc/75785663/Business-Strategy-on-Coca-Cola

http://www.brighthub.com/office/entrepreneurs/articles/64586.aspx

http://www.uspto.gov/about/offices/ous/121205.pdf

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