Loreal 2011 Annual Report Download - page 21

19REGISTRATION DOCUMENT − L’ORÉAL 2011
Presentation oftheGroup
1
Risk factors
Acquisitions that have been decided by the Board of Directors
are regularly monitored by the Board of Directors which is
informed of the conditions of integration and the performances
achieved.
1.8.1.8. Information systems
The day-to-day management of activities which notably
include purchasing, production and distribution, invoicing,
reporting and consolidation operations as well as exchanges
of internal data and access to internal information relies on
the proper functioning of all the technical infrastructures and
IT applications. The risk of a malfunction or breakdown in these
systems for exogenous or endogenous reasons cannot be
precluded.
In order to minimise the impact that this type of occurrence
could have, the Information Systems Department has introduced
strict rules with regard to data back-ups, protection and access
to confidential data and security with regard to both computer
hardware and software applications. In addition, in order to
adapt to the evolution of new communication methods, L’Oréal
has introduced a policy on acceptable use of Information and
Communication Technologies and a charter of good practice
of use of social media. These measures are described in the
paragraph2.5.2 .4 . on page61 ,
Control activities – The measures
recommended by the Group
.
1.8.1.9. Risks related to Human Resources
management
One of the keys to the success of L’Oréal lies in the talent of
its staff. Should L’Oréal not succeed in identifying, attracting,
keeping and training competent employees, the development
of its activities and its results could be affected.
The Group therefore develops a motivating, engaging
professional environment, and encourages the attachment to
its values, including those put forward by the Ethics Charter.
L’Oréal’s Human Resources policy is moreover described in
the paragraph2.5.2.1.
T he Internal Control organisation and
environment
on page59 and in the paragraph6.1.1. The L'Oréal
Group's Human Re sources policy
on page180.
1.8.2. Legal risks
1.8.2.1. Intellectual property:
trademarksandmodels
L’Oréal is the owner of the major intangible assets on behalf
of the Group’s companies, to which it grants licences in
exchange for the payment of royalties. Thus, L’Oréal is the owner
of most of its brands, which are a strategic asset for the Group,
in particular themajor international brands described in the
paragraph1.3.2.2. Branches and Divisions on page6 , with the
exception of a few brands for which L’Oréal has obtained a
license and most of which are currently used by L’Oréal Luxury ,
primarily the Giorgio Armani, Yves Saint Laurent, Ralph Lauren,
Cacharel, Viktor & Rolf and Diesel brands.
The trademark name, the products themselves and the models
may be infringed or counterfeited by economic players wishing
to illegally and illegitimately claim the benefits of their reputation.
Special care is given to the protection of the trademarks and
models belonging to L’Oréal, and is entrusted to a special section
of the Group’s Legal Department, which has responsibility for
registering trademarks in all countries. This department also
keeps a close watch on the market and launches the necessary
action against infringers and counterfeiters.
The L’Oréal Group is also an active member of the organisations
who have set themselves the task of combating counterfeiting
and promoting good commercial practice. This is the case, in
particular, of the French Manufacturers’ association (namely
“Union des Fabricants”), the International Chamber of
Commerce and Business Europe.
Before any trademark and model registration, prior rights
searches are conducted.
In light of the large number of countries in which the products
are sold and the multiple potential prior rights that may exist in
each of these countries, we cannot rule out the possibility that
third parties may claim prior rights with regard to certain L’Oréal
trademarks and models.
This is a potential risk which has to be cited in order to be
exhaustive even though the likelihood of its occurrence is low
due to the care taken when conducting prior rights searches.
1.8.2.2. Industrial property: patents
Research and innovation are the historic pillars of L’Oréal’s
development. The dedication of L’Oréal’s research teams has
made it one of the leading industrial patent filers in its field for
many years.
In order to protect the Group against the risk of another
company claiming one of its molecules, a production process
or packaging, L’Oréal has set up a specific structure, the
International Industrial Property Department as part of the
Research and Innovation Division; this department is responsible
for filing the Group’s patents, exploiting them and defending
them on a worldwide basis.
1.8.2.3. Changes in the regulations
L’Oréal is subject to the laws which apply to all companies
and strives to adopt an attitude beyond reproach. L’Oréal asks
its subsidiaries to comply with the regulations of the countries
in which the Company operates. Being an active member of
professional associations in the countries where its industry
is represented, L’Oréal plays an active role in the ongoing
dialogue with the national or regional authorities in charge of
the specific regulations governing the products in its industrial
sector in order to prevent or accompany any risks that may
result from changes in regulations.
The European REACH regulations (Registration, Evaluation and
Authorisation of Chemicals) that came into force in June2007
are aimed at increasing human and environmental safety of
chemicals by requiring all user companies to prove that they