Dr Pepper Snapple Group

1 Dr Pepper Snapple Group

Dr Pepper Snapple Group (hereinafter DPS) is one of North America’s leading refreshment beverage companies (DPS). The company markets more than fifty brands of juices, teas, mixers, waters, carbonated soft drinks and other premium beverages. Among the brands operated by the company are: Dr Pepper, 7 Up, Clamato, Canada Dry, ReaLemon, Schweppes, Snapple, Venom Energy, Orangina, Sun Drop, Sunkist Soda and many others (DPS). DPS is a stand-alone and publicly-traded company. The company operates 21 manufacturing centers and more than 200 distribution centers (DPS). DPS employs approximately 19, 000 people across North America. DPS operates not only in the United States but also in Canada and Latin America (DPS). In the United States, the company primarily distributes soft drinks and non-carbonated beverages. In Mexico and the Caribbean DPS distributes the carbonated mineral water, bottled water and vegetable juice categories. In Canada the company operates such brands as Mott's Apple Juice, Mott's Clamato, Canada Dry, Dr Pepper, Crush, Mott's Fruitsations, Schweppes, Orangina, Mott's Garden Cocktail, and Mr & Mrs T mixers and some others. The company’s headquarters is located in Plano, Texas. The company’s mission is to become the best beverage business in America (DPS). In order to complete its mission DPS focuses on building and enhancing leading brands, pursuing profitable channels, categories and packages, fostering its route to market, improving operating efficiency, leveraging its integrated business model (DPS). The company manufactures and sells beverage concentrates in the United States and Canada. Then beverage concentrates are delivered to third party bottlers who combine them with carbonated, water, sweeteners and other ingredients, package it in containers, glass bottles, aluminium cans and sell it as finished beverages to retailers (DPS). Overall, one may observe that company’s operation is concentrated on brands and manufacturing of beverages

2 concentrates. Such activity is subject to various laws and regulations. As far as brands are concerned, the company is subject to intellectual property laws including the Lanham Act. Beverage concentrates production is subject to the Federal Food, Drug, and Cosmetic Act, state consumer protection laws and state warning and labelling laws. All new initiatives regarding introduction of new brands and production of new beverage concentrate require compliance with aforementioned laws and regulations. This paper represents an attempt to determine laws applicable DPS operation. In particular the paper discusses intellectual property laws, food laws, consumer protection and labeling laws. The paper also makes recommendation as to how to prevent lawsuits against the company.

Part I: Intellectual property laws

DPS possesses intellectual property which is important to its business. In particular the company possesses copyrights, patents, trademarks, ingredient formulas, and business processes. DPS license some of its trademarks to third parties (DPS). At the same time, DPS also licenses certain trademarks from third parties (DPS). All these transactions are subject to the Lanham Act. In particular, the Lanham Act offers protection to trademarks. The Lanham Act protects four types of marks: trademarks, service marks, certification marks, and collective marks. Trademark is defined as any word, name, symbol, device, or combination thereof which used by producers and suppliers to identify their products and to distinguish them from those ones manufactured by competitors. An example of trademark is Dr Pepper: this mark identifies certain beverage distinguishes it from other similar beverages made by competitors. The Lanham Act provides that trademarks can be registered on the principal register (15 USC § 1052). If DPS wishes to register a new trademark it should file an application and a verified statement in the Patent and Trademark Office and pay a prescribed

3 fee (see 15 USC § 1051 (a) (1)). The application should include the following information: applicant’s domicile and citizenship, the date of the first use of the mark by the applicant, the date of the first use of the mark by the applicant in commerce, the goods in connection with which the mark is used and a drawing of the mark (see15 USC § 1051 (a) (2)). Verification statement should specify that: (1) DPS to be the owner of the mark sought to be registered; (2) facts recited in the application are accurate; (3) the mark is used in commerce; (4) to the best DPS ’s knowledge no other person has the right to use such mark in commerce either in the identical form thereof or in such near resemblance thereto as to be likely (see 15 USC § 1051 a (3)). When a trademark is registered, the trademark’s DPS will receive a certificate of registration issued by the United States Patent and Trademark Office (15 USC § 1057 (a)). Such a certificate constitutes a prima facie evidence of the validity of the registered mark and of the registration of the mark, of the owner’s ownership of the mark, and of the owner’s exclusive right to use the registered mark in commerce on or in connection with the goods or services specified in the certificate, subject to any conditions or limitations stated in the certificate (15 USC § 1057 (b)). In general each registration is valid for ten years (15 USC § 1058 (a)). Each registration may be renewed for periods of 10 years at the end of each successive 10-year period following the date of registration upon payment of the prescribed fee and the filing of a written application (15 USC § 1059 (a)). Thus, one may observe that since DPS operates so many brands which are trademarks, it should maintain monitoring of registration time periods in order to avoid invalidation of its trademarks because of expiration dates. Registered trademarks are usually published in the Official Gazette of the Patent and Trademark Office (15 USC § 1062 (a)). Earlier in this paper it has been already mentioned that DPS possess not only trademarks, but also ingredient formulas and business processes. In order to protect these assets DPS should comply with the requirements of the US Patent Act. According to this act

4 whoever invents or discovers any new and useful process or composition of matter may obtain a patent (sec 101 of the Patent Act). Business process falls under the notion of a useful process, and formulas falls under the notion of composition of matter. In order to patent its business processes and formulas DPS should apply for a patent to the US Patent and Trademark Office. The application should consist of: (1) specification containing a description of the invention and of the manner and process of making and using it in full, clear and concise terms (sec. 112 of the Patent Act); (2) a drawing necessary for understanding of the subject matter sought to be patented (sec. 113 of the Patent Act); (3) an oath stating that the applicant believes to be the original and first inventor (sec. 115 of the Patent Act). Also the applicant should pay an application fee (sec. 11 of the Patent Act). Upon the examination of the application the Patent and Trademark Office issues a patent or rejects the application. Patents issued by the Patent and Trademark Office gives an inventor the right to right to exclude others from making, using, or selling the invention throughout the United States and, if the invention is a process, of the right to exclude others from using or selling throughout the United States, or importing into the United States, products made by that process for the term of seventeen years (sec. 154 of the Patent Act). For DPS the patent would mean that other companies and persons cannot use the formula patented by DPS.

Part II: Food and consumer protection laws

Since DPS deals with production and distribution of beverages, it should comply with food standards. Some of such standards are provided by the Federal Food, Drug, and Cosmetics Act (FFDCA). This act defines food as articles used for food and drink for man, chewing gum or articles used for components of such articles (sec. 321 (f) of FFDCA). The act authorizes the Secretary of Health to promulgate regulations fixing and establishing for

5 any food, standard of identity and a reasonable standard of quality (sec. 341 of FFDCA). Furthermore, the FFDCA provides for national uniform nutrition labelling. In particular the act prohibits to states to adopt their own nutrition and labelling standards and provides that such standards should be uniform as it is prescribed by the Nutrition Labelling and Education Act of 1990 (NLEA). NLEA gives the Food and Drug Administration the authority to promulgate nutrition labelling requirements. In particular, the Food and Drug Administration requires the food to be accompanied with nutrient declaration which include the information on quantitative amount of a nutrient in a package, on calories, on total fat, on cholesterol, on sodium, on potassium, on carbohydrates and dietary fiber, on protein (21 CFR 101.9). Food should also be accompanied with declaration of vitamins and minerals (21 CFR 101.9). Vitamins and minerals that should be mandatory listed are: Vitamin A, Vitamin C (Ascorbic Acid), Calcium, Iron (21 CFR 101.9(c)(8)). For DPS these requirements mean that it should provide compliance with labelling requirements when it markets its beverages. In a word, each bottle of beverage should reveal information on quantity, calories, sodium, protein and other substances, and also should mandatory list Vitamin A, and Vitamin C if there are any. Consumer protection laws vary from state to state. Since DPS operates all over the United States, it is reasonable to choose any state to observe its consumer protection laws. Here, the author resorts to the California consumer protection laws. Health and Safety Code of California prohibits manufacture, deliver and sell food which is falsely advertised (sec. 110395 of the Code). These prohibitions cover manufacturers, distributors and sellers. The prohibition has an important implication for DPS. Thus, DPS should carefully maintain its advertising campaign so as to avoid accusations of false advertising.

6 Part III Lawsuits

DPS admits that it is a party to various litigation claims and legal proceedings which employment, tort, real estate, commercial and other litigation (DPS). In order to avoid tort litigation DPS should well establish that it does its best to maintain its duty of care. In particular, DPS should illustrate that it takes all practicably possible measures to provide a customer with a safe product. In order to achieve that the company should prove that it has an effective quality management, and that it complies with all relevant federal and state laws and regulations. Such practice would indemnify the company in tort claims, especially when it comes to product liability.

Conclusion

In a word, one may observe that DPS’s operation is subject to many laws and regulations. Since brands constitute an important part of DPS business, it should take a serious consideration of the intellectual property laws which may grant protection to its brands. Such laws include the Lanham Act, and the Patent Act. Furthermore, DPS should comply with various food standards, labelling standards and consumer protection laws. As far as consumer protection laws are concerned, DPS should pay special attention to its advertising practice and avoid any false advertising. Finally in order to prevent itself from tort claims DPS should illustrate that it maintains its duty of care properly.

7 References: Code of Federal Regulations (CFR) Title 21 DPS (n.d.) “Annual Report 2011” Retrieved from http://www.drpeppersnapplegroup.com/annualreport/2011/DPSG%202011%20Annual%20R eport%20for%20Web.pdf Federal Food, Drug, and Cosmetics Act, Pub.L. 75-717, 52 US Stat. 1040 Health and Safety Code of California, Retrieved from http://www.leginfo.ca.gov/cgibin/displaycode?section=hsc&group=110001-111000&file=110390-110420

Lanham Act, Pub.L. 79-489, 60 Stat. 427, 15 U.S.C. ch.22 Patent Act, Retrieved from http://www.law.cornell.edu/patent/patent.overview.html