REUTERS | Kacper Pempel

AI revolution changing the landscape for brands

Artificial intelligence (AI) is not new. Cognitive scientist John McCarthy coined the term in his 1955 proposal for the 1956 Dartmouth Artificial Intelligence Conference, which gave birth to the field of AI.

In recent years, however, vast improvements in computing power and heavy investments by giant technology companies have brought about a revolution in AI which is rapidly gaining pace, creating a challenging new landscape for brand owners and the legislation they rely upon for protection.

AI growth and investment to increase in 2018

We are encountering a form of AI on a daily basis, often without even realising. From voice-powered digital personal assistants (Siri, Alexa) and thermostats anticipating our needs using behavioural algorithms (Nest), to entertainment companies analysing our choices through predictive technology to suggest films we might like (Netflix) and voice-activated virtual baristas anticipating our choice of beverage (My Starbucks) – AI is affecting how we live, work and entertain ourselves.

This is only set to increase. The UK Government’s 2017 Autumn budget included a £20 million investment pledge for businesses working in AI, and a Deloitte survey has reported that 85% of businesses plan to invest in this space by 2020. Amazon even ran a session at the January 2018 Consumer Electronics Show in Las Vegas entitled “Amazon’s Quest for Alexa to be Everywhere“.

Data mining enables a focus on personalised service

Admittedly, the above examples aren’t the type of “true” AI that can learn on its own, and get smarter and more aware. The humanoid AI of Ex Machina is still some way off. For now. The AI we see today is really AI in its infancy, in the form of advanced machine-learning software with behavioural algorithms that adapt to our likes and dislikes.

That is in no way to understate its impact. Today’s AI makes accurate and targeted digital advertising a reality. Data mining allows brands to get to know their customers better, so they can provide a much more personalised service than would ever be possible through human capabilities alone.

This is transforming the way in which we consume goods and services, and inevitably the way in which we interact with brands.

The five brand experiences: sense, feel, think, act, relate

A Columbia University research paper entitled “Brand Experience: What Is It? How Is It Measured? Does It Affect Loyalty?” describes five dimensions of brand experience, suggesting it is the intensity of each that determines a customer’s preference for one brand over the other:

  • Sense – the sensory or aesthetic qualities of the brand
  • Feel – the moods or emotions induced by the brand
  • Think – the intellectual stimulation induced by the brand
  • Act – the behavioural reactions encouraged by the brand
  • Relate –the social context of the brand

The traditional self-service shopping method – in-store or online – involves customers browsing, perusing competing products and reacting to the branding of each, and experiencing some or all of these five dimensions before making a purchase. In contrast, the predictive retail enabled by AI shifts the control over the product selection process from the customer to the software, at times removing human involvement (and with it, the above five dimensions) entirely.

Predictive retail reduces human involvement

Take Amazon Echo’s smart speaker, for example. Echo connects to the virtual personal assistant program, Alexa, which can be summoned with just a word to order any Prime-eligible product directly from Amazon. The customer can tell Alexa to search for a generic product (say, kitchen cleaner), and Alexa will suggest “Amazon Choice” products that meet this description (say, Flash Kitchen Cleaner).

Alexa takes the place of the customer as the one analysing the market and all of the branding information presented to it.

Even if Alexa suggests a number of “Amazon Choices” for the customer to ultimately choose between, it is Alexa who has narrowed down that selection.

Given that we have not (yet) reached “true” AI – and so Alexa is not able to sense, feel, think, act or relate – on what basis is Alexa choosing the brands for the customer? Does Alexa even consider the brands, or are the selections based purely on strict algorithm parameters relating to price, availability and speed of delivery? In which case, what role, if any, do trade marks (so brand names, logos, advertising slogans and overall look and feel) have in the selection process? And how else can brands communicate with consumers?

Average consumer and likelihood of confusion

When considering whether two trade marks are similar and likely to be confused, trade mark registries and courts compare marks from the perspective of the “average consumer” of the relevant goods or services for which the marks have been registered or applied for. The average consumer is deemed to be reasonably well informed and reasonably circumspect and observant, but rarely has the chance to make direct comparisons between marks and must instead rely upon imperfect recollection of the relevant marks, and their level of attention varies according to the category of goods or services in question.

It is not yet clear whether the same characteristics will be attributed to the average consumer where AI is the customer. As a computer program, AI is presumably capable of perfect recollection, which must make it unlikely to experience confusion between brands. Without a memory, or the ability to think as humans do, AI will be unable to associate trade marks, or even consider their reputation. AI is also unlikely to vary its level of attention depending upon the type of product in issue.

This, in turn, raises questions about AI’s ability to be held liable for secondary trade mark infringement if its algorithm suggests a product that infringes a registered trade mark.

Without any substantive case law on the interplay between AI and trade mark law, we can only guess how the courts might approach these issues – which may depend upon the parameters of the algorithm upon which the AI is based, and/or the prior knowledge of the AI owner.

Brands must innovate to communicate with customers

The Echo was Amazon’s best-selling product during the 2017 Christmas period, putting Alexa in more homes than ever before. As others race to catch up (Google Home, Apple HomePod, Microsoft Cortana), it is clear that the future is screenless, and so brands need to find a way to turn the challenge of voice technology into a marketing tool.

With reliance on traditional advertising no longer an option, and a ban on third-party advertising from Amazon’s Skills capability unless the brand also streams content, brands are under pressure to entice those sense, feel, think, act and relate dimensions through innovative means. The brands that have identified new experiences that they can provide their customers – be it entertainment, content, or a transaction – are the brands that are so far succeeding in this new space:

  • Campbell’s Kitchen provides step-by-step recipes that can be read out loud as users cook
  • Tide answers questions on how to get stains out of an item of clothing, and provides other tips and tricks, whilst users sort their washing; and
  • My Starbucks’ virtual barista enables customers to order and pay for their beverage, and select a Starbucks store for collection.

Adaptation key to remaining relevant in the digital marketplace

When South African-American entrepreneur Elon Musk launched Neuralinks, he warned  that “we are going to have the choice of either being left behind and being effectively useless…or eventually figuring out some way to be symbiotic and merge with AI”.

Whilst this warning was within the context of Musk’s new venture to merge the human brain with AI (yes, really) it resonates with the issues faced by brands today, which need to adapt and react in real-time to emerging customer behaviour in order to remain relevant in the digital marketplace. Musk’s choices also apply to trade mark law, or at least our interpretation of it – as the role of AI challenges the main concepts upon which the protection of brands has been based to date.

Practical Law content

For more Practical Law content on AI, see the following practice notes, with more to follow in the coming months:

Jennifer Phillips

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