1995 KFY ARFA ; LEGAL AFFAIRS
1. SMOKr,*G V,71) H17ALTH ISSURS
Smoldng and heJth relate~d issues have a serious
potential impact on BATCO
and its g70Up companies. These issues may give
rise to product liability
claims from smckers, personal injury claims from
non-smokers in reladon to
environmental tobacco smoke, and legal challenges
to normal commercial
practices such as advertising.
Attacks cri the industry by anti-smoking groups,
health auEhorifies and the
media cordnue o show a trend worldwide of
proposals for new legislation
affecting the marketing and sale of tobacco
products. Legal Department will
contnue to work close!v with Corporate Affairs,
Smoking Issues and R&D
departments in resisting unwelcome leaislative
proposals.
BATCo's s-,rateT,,. for hvdllang smoking and
health issues is to take pro-active
steps ill Or-_;-~7 to -,-0[eC: the OtOUP'S
-,~OSi6On. These include:-
%4-1;:ness licentificazion work 61143wsvit3,
~, ~ ~ "'L ~::_. e - C1.1k 14 If -_ _t
documentz--.ion of relevant * s including public
awareness of the
claimed risks of smoking i;P2~sl
individual markets,
preparaticn of position paPC7S on areas of
particular interest (Pr
sens~tivit:. as identi---ed bv the Key Issues
Council set up by BAT
IncLstries. -,-d
the intro,~-=ion and implementation of a practical
and consistent
records rrziageme7~-, policy,
reS&UCh '-L07k COr.3:SZn( With t~e Company's legal
obligations, and
liai;on %4;:-1 national manufac%:r-inz
associations in individual markets
ard disc---ssions with Governments on legislative
proposals and
voluntan :,-des of practice.
In additicn, BATCo's poi::,. will con-inje to be
strenuously to defend product
liabilirv and ETS -!--:ims bmuzht wai:-,st the
Company.
U. INTELLEM'AL PROPERn'
A. Backzrou%
It is esse7-.~ -.! ,h-,-. -,-e Gfo,_:7 s :-cpertv
(in particular its trademark
portficiie', z-_,ui:.` -f pr:,%,::~_` in orCz!.-
presme and enhance tl~,e gcclwill
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attaching to the Group's brands and to deveicp
competitive advantages in our
business
Trademarks
There will condnue to be a number of developments,
both legal and commercial,
which affect BATCo's traditional perception and
use of trademarks. These 3re-
a.) the creation of a single unified market in the
EU based an the removal of
national barriers to the free movernent of goods.
This approach is aiso
influenc~rg other economic groupings such as the
Andean Pact and
Mercosur At present the leval consequences
resulting from
de,.e!opmencs, in the EU are,
i. It is not normally possible for a trademark
owner to prevent
branded products sold in one EU country from being
exported to
cther countries wi-hin the EU
A trademark ci,ner c3n:7ot impose restrictions on
its licensees or
distributors in the EU vhich prohl;.,ii them Rom
selling in -he EU
outside specified ccuntries
iii. H3=onisalion of uademark laws in the EU may
cause some
complex problerns for the BAT Group due to the
loniz history of
split ot~,nership of some important marks.
b) the de%elopments in the concept of trademark
use, i.e. under most
national trademark systerns some use of a
trademark is required to justify
its re-naininiz on the Re2ister if the
reaistration is attacked by a
competizor. Mere token sales may not be sufficient
for this purpose and
"cenume commercial use" rnax be necessar.
C) the ~rcreasinsz ranrze arl- ex:ent of
ad,errising bans on tobacco p,-oduc:s
is like!,- to encour:iize the ~.;3e of -rademarks
on non-tobacco prcducts.
d) the zro,-T~, oftrade in ccuntzi-f-,is and look
ailkes.
2 Cov,richt
Copy6ght is incortant to BATCo :r protecting trand
image for its products in
the market pla-! Parzzicu!ar bene,-:ts aForded to
BATCo by co-,-.-.'izhr include
the fiollo,vinz -
a) Cop~rwit autcrna:1cally %esis in the author and
does not need to be
regisw~d on am re2iSter in order to be enforced.
It can therefore be
used azainst an inr-n.nizer imr-edi3tely %xithcut
incurring the lenphv delavs
often 35sociatej traJe7ark- infring-ment
proceedings To ' ~:reser.-e
our copvriglms tt is tmpcr-zar~t ,~at al! origin3i
drawings and art-ork for
paz:ls an_` 2de7,~ -,z are s,~zne,~. dated and
safely stored and that
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the Group should ha,,e water-tight contracts %Ith
its designers and
agencies vesting the o%%nership ofcopyright in
BATCo or tl~e relevant
group company.
b) Copyright can provide a right ofaction where
BATCci is unable to obtain
trademark protection for any reason e.g. because
of non-use.
c) A breach ofcopyright can ha%e a very beneficial
psychological effiect on a
judsze dealinia with a traderrark infrinizerient
when he sees a complicated
design copied do,~n to the las: jetail
d) Copyright may cover the total design of a pack
or label whereas a
re-zistered trademark izeneraily only protec.,s a
-art ofthe product eel-up.
3. Patems
Pace,)Z5 are important to BATCo in protecting its
new technologry Some of the
developments mentioned albo,,e in relation to
trademarks apply equally to the
exploitation of patents e S patent protection
cannot be used to exclude parallel
imports within the EC and in some countries if a
patent Is not used, it may be
vulnerable to the issue of a cc-r-pulsory licence
to third parties Including
competitors
B. Future Polic...
BATCo will continue to reizis-ter the Group's
trademarks in all territories deemed
appropniate to each mark. ~ew registration
policies based on priority brands and
territories will be developed and aizreed with
BATMark Limited. the new central
trademark m3nagement compary to be set up by BAT
Industries on I May 1995.
BAP,fark. %,hich is to be ~ase6 at Wokine. will be
responsible -or t'-e protection
cf:he Group's intemaftral tradernarks on a global
basis on BATCo's behalf It
is essential that BATMark- s~culd receive as much
information as possible about
tlhe use or proposed use oft, aderrarks throughout
the world and that marketing
departments. both at an intemat!3nal and a local
level. communicate their
priorities sc, that BATMark- knc,.,- v.-hat
trademarks and terTitories are seen as
Important for future br2nd deve!cprnent 1. -
In t~-e light of this information.
BAT'Nfark can make Judgement; and recommendations
ab:)ul the Group's
trademark portflolio. including :~e opportunity to
d:spense with trademarks that
are no longer ofinterest
BATNiark ,III continue to ~a,e a key input wit",
regard to new procedures
are about to be introduced for controlling and
approving brand launches
and hrand modifications in BkTCj's end markets
Responsibility for operating
these procedures will be %%i:h the RBU's but
BAT1,11ark will ensure the legal
Intterit, of brand use inc'u,'riz t,3de-n1rk
veri:~catlon an~ protection and
appropriate licences (see Hf
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A B.-\T Mark will keep under review the c:!erafion
:;' r~ose agreements -.o which
BATCo is a party and which have the eXec-. of
d-zing Eurepear rra.-"-es for
partic,ilar brands in order to identify potential
le-zal threats to i-s rnarkets and
poiential marketing opporiunities aff:~rded by
Creation of the Single
Eirope2n Market.
5 BATCo will not knowingly adopt tradernarks
reg-s-zered by i-,s compe,.-,ors or
seek- to usurp the copyr4ht'or patent niz Ihts of
Its ccrnpetitors. It must however,
take a strong line in situations where
competit.-rs seek to encroach upon
BATCo's r-,2h-,s A tough policy zo-.%ards
in"rgement is of par:icular
imporiance in markets where new pr,-du,-:s setk !o
gain niarke, s.-Ze by
ir.-~!aziriz or 'feedina off established br37.-'
n2mes
6 CoPynghr 3hould be used as a supplemen; to BATCo
s tradernark rights. so as to
.:Aen the scope for retaining BAT's v(:'u-sive
nz~-: to use brand, na:-..es and
la"-e' designs
7 BATCo will continue to seek patent -"--r new
technc!ozy --%~'-;ch it
iri,ents in those countries where the -ec~nciloLr-
mnay be of re~tvanct to its
business ar:i 'future operations or where BATCo
--,~4mes to block -.he .;s-, of the
te:'--nolov,- by its competitors Patent ;::ng is
ese!:*:a1 to prorec, the of
BATCos research However, patent :;:ng tends :o be
more than
tra~enark- 1-C215tration and therefore there is a
req--- r:rrent to be more selective
in he nurnier of international fillnO are mr-e of
any par-zicular patent.
Pa:ents in which BATCci has no immediate inwest
will be offered -., other
companies in the Group. It is essential th:it
there sinculd be regular excharges of
information about the patent filing programmes of
BATCo, and other principal
tcbacco operating companies, namely Brz~~,n &
NVI~Iiarnson. BATCF ar-,' -Zouza
C ri z Ot~er-,Ise, there is a risk of
CL:.-licaticri o~ conflict if patent filing
p. ~S,-ammes re!aring -o the same arra -2-- z-.
ar! pursued in ;sCi2::Cn bv
t~.e ccmpan.es in.Olved
Lt221 Dep2rrienE."Patents Department co,-,:.-:~ to
lialse wr?l [~-e :UD
Deppnmenr in order to prese.-%e the ir:e :~cual
r-r:.:e~-:y rights assccia-e~ with
R&:D acti,-',ies It is particularly impor--int to
ens~;-.- :~:!' the Grou~ s o,-,ersrijp
c;' 1r,erticris. ne,., deveiopments ar,--'
confider:'al information is Troperly
by seeking to secure pater~-. trademark at
an ear!-.- izaae In deafines -Ith outs;de
zzc77c;es or z::l-er third par-ies may
be -,%oi%e~ BATCo in RLK--D ,vcr:,- ~: ;s
~rnpc~:2-.: tL.,3t BATCo cc'~-.:.-.~.-es to
rr.---"-e effori to secure that poss)*71e "t
otvnership ofinicilectual
p,oper-., I-i2htS 31-isinr from such tort,- -.ess
In 5-'.TCO and ccr,"den::2i and
propre-a7. in-ormazion Is properk. .:)ro!e::;!J b,
C Ccm-runizwicri
T"-.e complex Inzemanoril make-up of;'-e BAT Group
7ear's :-a-, it is
to r-.ainia:n adequate 2-i infom. a,[;,-n
ex.."a-lize
or-eratiniz comparles --.7j :~-e B TC;- Legal
De:~Ir:menz -n the
c-;! `2:1~ :t~~! '--1~71zca~ ~'Verl!!rlZ ar~~
[OhaCCO ZC'7-7---7;eS 'in
C-
(--j
INJ
BATCO document for Province of BritiSh Columbia I
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the BAT Irdlustries group on the other hand. This
h-,!os to a,cid additionai
problerris in the protection of the Group's
intellectual prop Eric rights which have
to be vie%%ed on a comprehensive iriernational
basis if they are to be properly
maintained and manazed
M MAJOR CONTP-4CTS
Maicir Corr, acts
It is BATCo s policy that all major contracts (as
defined belox) ertered into bV
the Company and its subsidiaries should be
re-Aewed by approph .azze in-house cr
e-cternai la%-ers. For BATCo and BATUKE major
cortrac.,s, BATCo Le2ai
Deparrmer- Group Trademarks Department should
aJw-ays be consulted. In
addition. -,a)or contracts entered into by
subsidianes in catezcries (1). (9), (10.),
( 1, 3) and ( ~ -) and all trademark licences
should in any event be reviewed by the
BATCo L!zal Deparlment.,BATMark
The cumcz-z of the re~iex is to ensure that all
material risks are :deritified and
appprop,riar! ac-,Jon taken prior to entering into
a contractual commu.,ment so that
BATCo or the relevant subsidiar; does not
unintentionally accept onerous or
unusua! z!:-.racEu31 commitments. U-timate
approval of a ma 'ior contrac'.
remains --:', BATCo or local line management, the
purposes of t,-,e review are
to alert rra:7agement to opportunities for
reduciniz risks. to enable management
to neptive prices that recognise specific risk
areas associared vith proposed
contmc.-~.al :erms. and to ensure that BATCo or
the relevant subsidim is
protected -as far as is practicable against the
oczur-ence of unforeseen
circumstances or unscrupulous behaviour by the
other contracting party.
The le2a: re,.iew is intended to be additional to
financial and tax reviews to
v hich a p%~;osed contract %vill also be subject.
Questions of methods 0,-
pa%7re7t. cz-npliance with exchange controls and
currenc-; risks xiii normally ~e
the 7eS-,Onz~`61'- 071-th'! rele% ant F:,-13nce
Director
For -.~e c"th;s poillcy. rra,:cr contracts ShOU!d
be 7-,,zarced 2s including
(1) Cortact agreements placed ~~r acze-,tec' by
BATCc
arc its
(2) Ccr:mz::~ :he .-urchase or le2se c"'land and
buodlngs
(3 ) Ccni-.iz-.s the pu~z:hase of plan: and
machinery %,he~-, n,-,. su'_-.~tz: to BATCo
standard pur.'la-ie !c:--ns and condii-cris
(4) Lea.` and r-irtriais procure.~en( ccr~:racts
here not subiect, tc 13-kTCo's or a
subs,diar:. s ;:andar~' pw-cha5ine terms and
conditions
(5) FMan-'rz az-eerne-:i relat!rz to t~~. p-o6sion
of secu-:tv ci,er B-kTCo's or a
sucsi.c, capitai re1-.-ns,,mz,.:cns, equity and
bond issuef
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November 1999


(6) Ccnir3CtS outside the ncrmal scope of BATCo's
or a subsldiar~'s bus'nrss.
(7) Agency and distribution contracts.
(8). Design. advertising, marketing and
sponsorship agreements.
(9) Ageements for the pro,ision or acquisition
oftcchnical know-how.
10) P_-:nt licences to or From a subsidiary or a
third party.
(I :.) Ccnsu!tancy cDniracts invol%ing access to
commercially sensitive :.-.:'--rmation
an,_4 or the prc--.i.-tion of valuable
intellectual property.
(1 :; Lezf exporl contracts uhic~ van- in any
material respect from BATCo's
es,ablished xuid!lines fcr contracts.
(i') 14!-Z!~S and C
int VeMIL!"! aQreI!menIS.
(I-.) A--c.u1sitions and disposals ofbusinesses
2 Ccrt-2c,,s remstration svs-,t-n
T!-! con:-acts registra%cq. systern se: out in the
BATCo Manual cC Operating
P-~,.-edures ,olume 1. section 9 (1) must be
observed in relation to a!] ma.ior
ccr::,-act5 entered into by BATCo and BATLICE.
3. T-,advriark Licences
T, ficences -,e!a:;nz to the exploitation of the
Group's tradern-arks must
I,e -!n:ered In:o cnl%, in ac,-:,rdance %vith the
BAT Group's establish'id policies.
L -
Gu:,_4arce cn shoL:!d ai~.,-ays be sought from
BATNiark.
9 M , a rc h '. 7-,: ~z
PLC63S :SS
BATCo document for Province of BritiSh Columbia I
November 1999