Case Study 11-Rising Above the Competition & Thriving on IP Protection

1. ADAMSON UNIVERSITY
CE 308-INTELLECTUAL PROPERTY
Case Study 11-Rising Above the Competition & Thriving on IP Protection
PRESENTED BY:
GAFFUD, Jholorie Mae F.
MAGSINO, Joyce Bernadette F.
MELOCOTONES, Jasper Dave B.
TUMLOS, Sherlyn B.
PRESENTED TO:
TOMAS U. GANIRON, JR. PhD

2. Nature’s Legacy Eximport, Inc.
• Country / Territory:Philippines
• IP right(s):Industrial Designs, Patents,
Trademarks, Utility Models
• Date of publication:August 2, 2010
• Last update:September 16, 2015
• Founders:Pedro and Catherine Delantar

3. BACKGROUND
• In 1993, the husband and wife team of Pedro and
Catherine Delantar were engaged in
manufacturing hand carved natural stone
products in Cebu province, Philippines.

4. BACKGROUND
• Their products featured intricate designs inspired
by ancient Greek art and were mostly made with
Mactan stone, an indigenous, off-white fossilized
stone with a rough texture that is found on the
island of Mactan off the coast of Cebu

5. BACKGROUND
• The Delantars wanted to expand their production
capacity, but the tedious nature and inconsistent
quality of hand carving made mass production
nearly impossible until they succeeded in
creating a cast stone product that simulated the
look and feel of Mactan and its associated
manufacturing process.

6. BACKGROUND
• In 1996, they formed Nature’s Legacy Eximport,
Inc. (Nature’s Legacy) with two partners. Nature’s
Legacy is now a leading manufacturer of high-
end home furnishings and accessories,
architectural components, and garden articles
made from cast stone and cast wood (from agri-
forest waste) that are exported to Europe, the
United States, the Middle East, and Asia.

7. BACKGROUND
• Nature’s Legacy values innovation and originality
as forces that attract buyers and have allowed it
to rise above the competition. With its innovative
products and creative designs continually
gaining support in the export market, the
company continues exploiting intellectual
property (IP) as a business strategy.

8. RESEARCH AND DEVELOPMENT
• Nature’s Legacy’s first research and development (R&D)
goal was to come up with a cast stone product that
simulated Mactan stone but could be easily mass
produced. The company first researched using a
traditional cast stone process (mixing sand, cement and
water to create a stone substitute), but this method
yielded products that were heavy, not durable and did
not retain the look and feel of Mactan stone. The
company also realized that this traditional method did not
give it an edge in the market because its competitors
were already offering the same thing. Nature’s Legacy
had to create a new product and process to be
competitive.

9. Several important criteria were identified as crucial to the
product’s success. The simulated cast stone had to be:
• light, which would mean greater flexibility in producing
items of larger size;
• durable, which would protect it from unwanted and
costly breakages during transport;
• made with easy-to-cast materials, which would put
Nature’s Legacy in a better position to produce new
designs and more functional products;
• capable of mass production, which would ensure timely
delivery of orders;
• cost effective, which would increase profitability; and
• in line with the first five criteria without compromising the
consistency, quality, appearance and other unique
characteristics of natural Mactan stone.

10. Continually searching
for ways to make
better products, in
2002 Nature’s Legacy
conceptualized a new
innovation that
recycles the Earth’s
natural agro-forest
waste (dead bark,
shrubs, fallen twigs and
leaves) to produce a
diverse line of hand
crafted home
furnishing products.

11. After two years of R&D, Nature’s
Legacy developed an odorless, water-
based binder to create a versatile and
flexible material made from recycled
agro-forest waste. Using this innovation,
Nature’s Legacy launched its
Naturecast™ line of biodegradable,
sustainable and environmentally
friendly products in 2003 at the Messe
Frankfurt Ambiente in Germany,
Europe’s premiere home goods
exhibition. Naturecast™ has extremely
diverse applications, ranging from
home and garden products to
architectural components. The
development of Naturecast™ led to
the creation of a similar innovation for
marble.

12. IP MANAGEMENT
• As a company strategy, Nature’s Legacy seeks IP
registrations with the Intellectual Property Office
of the Philippines (IP Philippines) for all its
innovative products, processes and designs.
Realizing that IP protection in the marketplace is
as important as in the production place, as part
of its IP strategy Nature’s Legacy expanded its IP
protection initiatives in 2003 to major export
markets, primarily the United States and Europe.
This strategy has allowed Nature’s Legacy to
exercise better leverage and control against
infringing products, regardless of their origin.

13. IP MANAGEMENT
• Since the Philippines became a member of the
Patent Cooperation Treaty (PCT) system in 2002, it
uses this system as a cost-effective means for filing
its patent applications in major export markets. It
also uses the PCT International Search Report as a
tool to decide whether or not to proceed with the
national phase entry. Through utilizing these tools,
Nature’s Legacy can pursue its PCT applications
selectively and economically in PCT member
countries where its products are marketed.

15. UTILITY MODELS,PATENTS AND TRADEMARKS
• Nature’s Legacy has filed more than four PCT
applications and files for national IP protection for
all of its new inventions and processes. As of 2010,
it filed thirty-five combined utility model and
patent applications with the IP Philippines,
including a patent application for its simulated
stone cast process and a utility model application
for its Naturescast™ innovation.
• In 2004 Nature’s Legacy filed a trademark
registration with IP Philippines for its company
name and in 2006 it filed another national
trademark registration for its Naturescast™ name.

16. IP INFRINGEMENT AND IP ENFORCEMENT
• Nature’s Legacy’s first market success took a
hit in 1999 from competitors copying its
designs. Unscrupulous competitors started
copying Nature’s Legacy’s new products and
selling them at lower prices. Despite the
subsequent loss of sales and revenue of the
first batch of its cast stone products, Nature’s
Legacy kept on inventing and producing
more new products. One way it got around
this initial copying was to reposition itself and
target the high-end home furnishings market.

17. IP INFRINGEMENT AND IP ENFORCEMENT
• In those early days, the company had meager
resources and logistics to enforce its intellectual
property rights (IPRs) and the few warnings it
managed to issue proved to be ineffective.
However, not discouraged by this early
experience, and with a firm belief that patents
and other IPRs only have real value if they can be
enforced, Nature’s Legacy has since followed a
strong policy of protecting its creations and
enforcing its IPRs, vigorously pursuing violators and
allocating a larger budget for IP enforcement.

18. INDUSTRIAL DESIGNS
After suffering IP
infringement related to its
designs, the Delantars
realized that strategic
protection of Nature’s
Legacy’s original designs is
essential to its success and
growth. Nature’s Legacy’s
most important industrial
design was that of its
natural looking stone cast,
for which it applied for
protection in 2000 (granted
in 2002).

19. LICENSING
• Nature’s Legacy offers some of its IPRs for sale or
licensing. A number of local and foreign
companies have shown interest in forging
licensing arrangements with Nature’s Legacy
covering some of its patented products. On this
aspect, as long as its interests are not prejudiced,
Nature’s Legacy continues to pursue an open-
license policy in order to maximize
commercialization. The company is now selling
some of its IPRs and part of the sale proceeds will
be used to fund its activities related to registering
new, and enforcing its remaining, IPRs.

20. BUSINESS RESULTS
• Growing from a small backyard business in 1996 to a
successful manufacturing firm with over 120 employees,
Nature’s Legacy products have continued to expand,
and the company is now exporting its products to
Europe, the United States, the Middle East, and Asia.
Sales have increased from 29 million Philippine pesos (₱)
in 1998 to ₱95 million in 2002, with sales reaching over
₱100 million in 2005. This increase in revenue enabled
Nature’s Legacy to acquire new equipment and
facilities to support the NaturescastTM product line, and
has now become a market leader in high-end
environmentally friendly home furnishings, especially in
export markets.

21. IP-PROPELLED INNOVATION
• Surviving IP infringement through a strategy
anchored on IP-propelled product and
process innovation, Nature’s Legacy has
been able to sustain its competitive edge and
become a market leader in its industry.
Nature’s Legacy believes that its success is an
example of how any company can remain
competitive through innovations protected by
strong IPRs.

22. THRIVING ON IP PROTECTION
Splash Corporation
PRESENTED BY:
GAFFUD, Jholorie Mae F.
MAGSINO, Joyce Bernadette F.
MELOCOTONES, Jasper Dave B.
TUMLOS, Sherlyn B.

23. Splash Corporation
• Country / Territory:Philippines
• IP right(s):Industrial Designs, Patents,
Trademarks, Utility Models
• Date of publication:August 31, 2010
• Last update:September 16, 2015
• Founders:Dr. Rosalinda Ang-Hortaleza &
Dr.RolandoHortaleza

24. BACKGROUND
• After graduating medical school in 1985, newlyweds Dr.
Rolando Hortaleza and Dr. Rosalinda Ang-Hortaleza saw a lot
of potential in a special cuticle remover formula that their
cousin had invented. Not content to let the opportunity pass
them by, they decided to pool together the 12,000 Philippine
Pesos (₱) they received as wedding presents to use as start-up
capital for a small cosmetic repacking business called RBH
Cosmetics. They purchased the cuticle formula from their
cousin for ₱5,000 and spent the rest on necessary inventory and
packaging materials. With the help of a newly hired assistant,
the fledgling company packaged and distributed the special
cuticle remover, ordinary acetone and cold wave lotion to
local beauty parlors.

25. BACKGROUND
• Complemented by the couple’s strong entrepreneurial spirit,
demand for their products grew, and by 1987 they had already
made their first ₱1 million. Their small business eventually
became Splash Corporation (Splash), which is now a multi-
billion peso conglomerate of companies that develops,
manufactures, bottles, packs and markets cosmetic, beauty,
personal care and pharmaceutical products for domestic and
international markets. In 1996 Splash enjoyed revenues of over
₱1 billion and it became one of the top 300 corporations in the
Philippines in 1998. In 2007 it was listed on the Philippines Stock
Exchange. This has firmly established Splash as one of the most
formidable and successful companies in the Philippine personal
care industry.

26. RESEARCH AND DEVELOPMENT
• From the beginning, research and development (R&D) has been
integral to Splash’s success. Splash’s founders believe that product
innovation does not have to consist of radical breakthroughs that
require substantial time and money investments, but can be
pioneering products or incremental product refinements that
consumers value. This philosophy proved successful when Splash’s first
major R&D breakthrough came in 1987, when it developed the
innovative method of selling hairspray in amber bottles which
consumers could then transfer into cheap reusable plastic squeeze-
spray containers. Eliminating the need for expensive imported aerosol
cans, Splash could sell the same hairspray at a fraction of the cost of
their multinational competitors. This simple innovation brought in a
tenfold increase in revenue which Splash put to good use on its next
R&D project

27. IP MANAGEMENT
• The success of Extraderm brought Splash to the
attention of its competitors, and they started
copying many of Splash’s innovations. Two years
after the launch of Extraderm, Splash lost its edge
and position as a market leader as its competitors
started making and selling the same products.
When this copying was taking place, Splash had
yet to secure any intellectual property rights (IPRs)
for its invention or innovative exfoliant formula.
There was little the company could do and its
business lost momentum.

28. IP MANAGEMENT
• Upon realization of the importance of securing IPRs, Splash
wasted no time in developing an IP strategy. Innovation and
product differentiation is vital to Splash’s business strategy, and
therefore so is IP protection. Splash began securing IPRs by
filing patent applications and registering utility models for all of
its major inventions in its domestic and international markets.
The company also maintains a strong brand management
strategy through registering trademarks for its brand names.
Splash believes that brand names are particularly important,
and that the protection of innovation and brands are
inseparable. First, as long as a product does not lose
importance or become obsolete, a brand can exist for a near
indefinite time. Second, easily identifiable trademarks can be
associated with Splash’s reputation for quality, which allows
customers to quickly recognize Splash products and fosters
brand loyalty.

29. IP MANAGEMENT
• IP protection also gives Splash some breathing
room, as it can avoid destructive price wars that
frequently result from copied products. As a result
of the protection granted by patents, utility
models and trademarks, Splash can focus on
sustaining growth by using its resources for more
innovative R&D, brand building and
modernization, instead of spending most of its
resources on fighting copiers. For Splash, IPRs are
valuable assets that directly translate into
economic value. They protect Splash from its
competitors and enable it to earn enough
revenue to fortify its position in the industry.

30. UTILITY MODELS, PATENTS, TRADEMARKS
AND INDUSTRIAL DESIGNS
• Splash applies for patents, utility models and trademarks
domestically with the Intellectual Property Office of the
Philippines (IP Philippines). The company has nearly three
hundred IP Philippines registrations, which include its
popular Extract, Extraderm, Skin White and Biolink®
products. Splash also has made patent applications with
IP Philippines for its exfoliant formula and antibacterial
baby soap. In addition to the Patent Cooperation Treaty
(PCT) filings for its Extraderm® product, Splash has made
direct applications for patents and trademarks in over
fifteen countries as a pro-active strategy to back up its
globalization plans. Splash has also acquired industrial
design registrations for some of its packaging designs.

31. PARTNERSHIPS
• Splash takes an aggressive approach to
international expansion and is not waiting for
competitors to come to it. Instead, Splash is taking
the competition to them by entering the
international markets of its multinational
competitors. It does this through dealers and
various joint ventures. In 1993, Splash first entered
Asian markets such as Hong Kong, Singapore and
Indonesia through an informal network of
overseas Pilipino workers and dealers.

32. PARTNERSHIPS
• In 1998, Splash created Splash International
Inc. to formally lay the groundwork for selling
its products in international markets. In 2000,
the company established PT Splash Indonesia
as a joint venture with local investors. The
success of PT Splash Indonesia led to similar
joint ventures in other international markets,
such as in countries in Southeast Asia and the
Middle East.

33. BUSINESS RESULTS
• Splash has grown from a small startup with three
employees into a large corporation with over 400
catering to customers all over the world. Splash was the
first Filipino company to successfully compete with large
multinational corporations in the Philippines cosmetics
industry. For five consecutive years starting from 1991,
Splash grew 60% annually, which is a direct result of its IP
protected Extraderm product. By 2002, Splash was
generating an annual revenue of ₱3 billion, and
Euromonitor International (an industry market research
organization) ranked it as number six in the top ten most
successful cosmetic and toiletry companies in the world,
with it being the only Filipino company on the list.

34. BUSINESS RESULTS
• In the same year, Splash’s success enabled it
to open a ₱400 million state-of-the-art
manufacturing complex in Canumay,
Valenzuela City, to meet the company’s
increased capacity requirements. In 2007, the
AC Nielsen Philippine Retail Index Report
showed that with two of its core products,
exfoliants and skin whiteners, Splash enjoyed
an 86% and 41% market share, respectively.
Splash is now one of the largest cosmetic
companies in the Philippines.

35. GLOBAL AWARENESS BUILT BY IP
• Splash has been able to build a brand and
establish loyalty through innovation and
protection of its products and brands with IPR.
This combination has been instrumental to
Splash’s growth, allowing it to differentiate its
products, create entirely new markets,
challenge established foreign competitors
and expand into international markets. Fueled
by continued innovation backed up by IPRs,
Splash has risen to the top of its industry and
created a new global awareness for Filipino

36. SOURCES
• https://www.wipo.int/edocs/mdocs/mdocs/en/wipo_asean
_ip_bkk_06/wipo_asean_ip_bkk_06_draft.pdf
• http://www.pse.com.ph/html/ListedCompanies/listedcomp
anyinfo.jsp?securitySymbol=SPH
• http://www.splash.com.ph
• https://www.wipo.int/edocs/mdocs/mdocs/en/wipo_asean
_ip_bkk_06/wipo_asean_ip_bkk_06_draft.pdf
• http://www.eoyphils.com/finalist.html
• http://www.natureslegacy.com