While the issue of intellectual property (IP) disputes sounds like a problem of developed countries, but now we have a case of a Bangladeshi brand fighting for its intellectual property rights (IPR) against a Western company.
Cyclo, a Bangladesh brand, is in conflict against Cyclon - a Swiss brand under its parent organization ON AG, a Swiss sportswear brand.
Simco Spinning and Textiles, owner of the Cyclo brand is a pioneer in the circularity industry in Bangladesh and spreading its branches to all parts of the world including the European markets. Simco Spinning and Textiles was founded in 2011 by Mustafain Munir. This recycling company has been selling recycled yarn to the US and Europe in 2013.
“Back in 2010, no one cared about sustainability and environmental impact in Bangladesh, so we began with strategizing how to show the benefits of recycling & how the Bangladeshi economy can benefit from this,” said Munir at the press conference held in Dhaka on Thursday.
Why being made in Bangladesh matters?
In 2014, Simco conceived the brand name “Cyclo” - a brand that is now globally recognized and respected for promoting circularity, particularly focusing on recovering materials (waste) from discarded products, turning them into high-quality fabric that could be integrated into new production processes. “We launched Cyclo as a set of standards to bring awareness to sustainability and serve as a guide of positive change in the garment industry in Bangladesh,” said Munir.
Cyclo's good work was first recognized globally by the international press in 2016. Before that, they started marketing recycled yarn as Cyclo and entered the European global market with garments made out of recycled cotton yarn branded as Cyclo. Having done this, they have built solid goodwill and credibility amongst their international buyers/clients who are manufacturers and use Cyclo's concept and logo in the hangtag in their end product. The buyer/clients also use Cyclo as a marketing tool, recognizing the recycling and sustainability aspect of Cyclo as a selling point; depending on which, the price and value of that piece of clothing increase. This co-branding is a way of legitimizing, and good environmental practices in their products.
“Cyclo's story and operations is a matter of pride, not only as a company but for Bangladesh as a country. This is because we have changed the narrative of Bangladeshi garments industry from poor social practices to responsible and sustainable manufacturing,” said Munir.
Their client base includes the US, UK, Japan, and Europe, amongst others, internationally, as Cyclo is registered in 20 countries as a recycling fabric company.
Intellectual Property
Cyclo’s growth in the international market is now under threat because of ON AG, a new Swiss sportswear company that has grown exponentially. They boast sponsored celebrities.
According to Munir, ON is apparently giving Nike and Adidas a run for their money currently. Their current market cap is over US$20 billion.
Only in 2021, ON AG took what they called their “first steps to circularity” and launched a brand called Cyclon—a concept and name that is extremely phonetically similar to “Cyclo’s”.
Similar yet different, ON's subscription business model claims that any new shoes bought will be recycled from previously bought shoes as well. While ON AG engages in a recycling program, Cyclo engages in circular integration in totality by making the raw materials from finished products and also for finished products.
Since 2021, the Bangladeshi-born Cyclo had already recycled more than 50 million pounds of waste to make garments for exports, while supporting 800 employees family. “They are taking their first steps; on the other hand, this is our livelihood,” Munir commented.
ON AG actively undermines the pioneering company solely based on muscle power and looking down on a company from the developing world.
Dispute
Despite having established and launched their company 7 years after Cyclo, ON AG is aggressively trying to limit Cyclo’s expansion, specifically in the countries where Cyclo and ON both operates, i.e., Japan, the UK, the US, and Europe, some of the biggest international customer markets for Cyclo. This leaves Cyclo in a position where they have to defend themselves despite being pioneers in the field and existing years before ON’s brand Cyclon.
“We’re having to defend ourselves across countries and different jurisdictions,” added Munir. This was an attempt to hinder Cyclo’s international reach and pressure Cyclo to not use their logo on products, which would ultimately affect their clientele overall.
Munir emphasized that while he supported and lauded initiatives that other companies took towards circularity, the similarities between Simco’s brand “Cyclo” and ON’s brand “Cyclon” are too large to ignore.
“I have no problem with a company introducing circularity. I encourage it and applaud it. But their concept towards recycling and circularity coupled with the similarity in the name is too close,” he said.
Traditionally, less economically developed countries (LEDC) have been infamous for intellectual property misuse and trademark infringement. However, in this case, a large western conglomerate knowingly launches a brand almost identically similar to an already established Bangladeshi company.
Intimidation
While ON AG engages in both recycling the products and making the finished products, Cyclo is a company solely focused on recycling raw materials and sustainability. Due to the different approaches to business, their business models are also starkly different, with Cyclo continuing the close-loop model and ON AG’s Cyclon adopting a subscription business model, which is designed to maximize profit.
The dismissive attitude of ON towards Cyclo's previous attempts to come to an agreement through negotiations prompted Munir to say: “Just because we’re at the bottom of the supply chain doesn't mean we don't have rights.”.
This sheds light on western capitalization and their unethical approach to non-compete policies to monopolize whichever sector they enter.
Barrister ABM Hamidul Mishbah, representing Cyclo, said: “Usually MNCs research if there are any other companies operating within a sector before investing, but in this specific case, given the small-scale operation of Cyclo, ON AG intends to push them out of the market without fairly competing.”.
This has also prevented Cyclo from diversifying its business model and entering the front-end production as well. Leveraging their economies of scale and their already established brand, ON AG has been able to disrupt the entire industry without allowing other companies to engage in a similar circularity-based business model.
Munir specified an instance where he cannot pursue a fashion line in collaboration with a student from Germany that previously interned in Dhaka with Cyclo.
This lawsuit limits their exposure and growth and diminishes the credibility they built over a decade.
Munir asserts: “I should be able to enter the front-end market as Cyclo has been in this industry for a while, but we wouldn't be able to do so right now because of the dispute.”.
This dismissive nature of Western capitalist organizations invokes the need for Bangladeshi companies to take a stand against monopolization strategies implemented by MNCs abroad.
ON has delayed good faith negotiations offered by Cyclo. “Their silence towards our good faith negotiation is another indicator of their dismissive tone,” Munir added.