Posted: June 17th, 2012
By Lindsey Chessum *
A Name Fit for a King
Associate picking a company name with choosing a baby name but with a couple differences. First, the name has to be approved by opinionated extended family members (board of directors), then by half of the people you invite to your baby shower (shareholders). Second, you have to think ahead so that later in your baby’s life the name will fit a prospective career. So when it comes to protecting a company name with a trademark, the preparation justifies protection in the short run while the development of goodwill justifies continued protection in the long run.
Strategy When Picking a Name
Mondelez, meaning “delicious world” from the Latin words “delez” and “monde,” is the name chosen by Kraft to embody the international snacks spin-off set for sometime later this year. The disapproval of the last couple of weeks is embodied in headlines such as Mondewhaaaat? or Mondelez? Puh-leeze! Advertisers and consultants condemn the name as lacking creativity and being a meaningless word to millions unfamiliar with the Romance languages. Some criticisms sarcastically suggest that Mondelez be presented with a pronunciation guide and a definition.
For all the criticism, 90% of Kraft’s shareholders approved the name during a June vote, and if critics consider it a flop, it is not for lack of effort by Kraft. The name was the product of a company wide competition involving a “mood video” and resulting in over 1,700 submissions. Results were reviewed by a branding firm before the final selection, and then the name was tested in twenty different languages. Only then did Kraft announce Mondelez as the new name.
Defensive Action after Picking a Name
As with most new companies, Kraft filed for a trademark on “mondelez” nearly simultaneously with the public announcement. A trademark will protect consumers from fakes and frauds and will protect Mondelez from unscrupulous persons looking to capitalize on the company’s success. A party with a trademark can bring suit and can prevent the inflow of foreign goods into the US that violate the trademark.
Trademark registration is fairly simple and can be done online at uspto.gov. There a company can check for previous trademark registrations, as well as submit their own. An application for registration must include the name or mark and an explanation of commercial use or intent to use. Generally, an attorney only becomes necessary when the process increases in complexity, like when there are similar submissions or concurrent submissions.
The government’s site warns that processing may take a year to several years to evaluate the request. The intent is to provide ample time to distinguish opportunists from genuine submissions. In the case of larger companies such as Kraft, opportunists might submit a request in hopes of receiving a payout from Mondelez to rescind their submission. The same is true of domain names. Kraft should take the initiative if they have not already to acquire the domain name mondelez.com for the spin-off before an opportunist does.
Offensive Action from Company Division
The origin of Mondelez resides in Philip Morris, Inc., the largest tobacco company in the United States. Philip Morris, Inc., entered the food industry when it acquired General Food, Inc., in 1985, and Kraft in 1988. Since then Philip Morris renamed itself Altria Group, creating a parent company under which Philip Morris and Kraft are subsidiaries. Then in 2007, Philip Morris International was created from a spin-off of Philip Morris to separate the US based company from the venture into undeveloped countries. There is some irony that Philip Morris, maker of cigarettes, becomes distinguishable from Kraft, promoted as the health and wellness leader of food products.
The spin-off of Mondelez from Kraft is similarly motivated by the previous spin-off, distancing the snack food venture from the grocery store brand. This is a simple business move that will provide them with flexibility and will give investors a variety of investments choices. Kraft, retaining Maxwell Coffee and Macaroni & Cheese, will be the US grocery brand while Mondelez, taking Cadbury, Trident, Nabisco, Tang, Oreos, and Ritz, will be the international brand. For Mondelez, marketing will cater to an international audience, as the name reflects, and capital will be structured for expansion. Thus, Kraft traded under KFT, becomes a long-term stock while Mondelez, traded under MDLZ, becomes a riskier investment and dividend stock.
In terms of every day shopping, the difference will be hardly detectable. The same products will be lining the shelves, and Mondelez will only be a change in the small print on the package.
* Lindsey Chessum is a second year law student at Wake Forest University School of Law. She has a Bachelor’s in Economics & Business and Philosophy from Westmont College and spent nearly two years in the stock market industry prior to law school. Upon graduation in 2014, Ms. Chessum plans to return to California to practice business law.