A surge in foreign trademarks means your fruit is about to get a lot more tasty.
Alex Rosenberg: So more trademarks in countries that aren't the US is going to equal more
delicious fruit. Yes, your fruit will get a lot more delicious
as foreign trademarks increase. Let's get to it.
Welcome to The Knock-On Effect. This is where we start with the thing you know and end up
in a strange place. I'm Justine Underhill, and joining us today we have our guest here
who defies all labels, Alex Rosenberg. Hi.
And we have in person a very special guest, the professor himself, Roger Hirst.
Roger Hirst: Good to be here again. All right, now, actually both of you will
be taking on the role of guesser this week. So I'd like you to try your hand at seeing
how we get from trademarks to tasty produce. Shall I have a go?
Yeah, I think so, professor. So trademarks on-- there's going to be trademarks
on a certain style of fruit, so bananas that are bent in a certain way.
OK. And they're going to say, you can't have that
sort of bent or that sort of round. So people have to come up with different varietals of
bananas and apples that are off trademark, which allows people to say, I've got 20 different
types of apples and four different types of bananas. So variety goes up, and flavors will
go up because of that. OK, Alex, you have a--
I'm going to guess that-- you know, sometimes you see these fruit combinations, like you
get the pluots or the, you know, lobstercados, or something like that, which is lobster and
avocado grown out of the ground. What?
I made that up. But you see different combinations. And so perhaps you'll get to trademark
those combinations, and we'll get to have a plethora of--
Lobstercados. Sure.
OK, well, that is far off. You are a little bit closer. We'll see where this goes.
OK. You guys can get your grades at the very end.
OK, so we're going to start-- we say we start with the thing you know, but this is a little
bit of a thing you might not know, which is trademarks, but specifically in China, our
favorite place. Your favorite place. My favorite place.
OK, so, basically, what's been going on is China's been having a huge push to trademark,
specifically, the US patent and Trademark Office has been flooded in the past few years
with Chinese applications, which is kind of something that you wouldn't expect.
So the Chinese companies looking to get US trademarks for stuff.
Yes, yes. So applications from China have grown more than 12-fold since 2013. 1 in every
9 trademark applications in the US is from a Chinese applicants, which actually came
as a surprise to people in the patent office. They didn't know what was going on until they
discovered that Chinese governments, municipalities, have actually been paying their citizens to
trademark things in the US and trademark things abroad. So this has been a big push by the
Chinese government. So in Shenzhen specifically, they pay citizens as much as $800 per registered
trademark. So are there just like Chinese people inventing
random stuff? Things-- I mean, some of it's-- they're trademarking
things that probably shouldn't be trademarked. But this is sort of part of a
bigger push in China. So they're not trying to clog up all the lawyers
in the US to get them out of the way, because that's whats' going to happen.
There are some-- there have been some, if you want to go with nefarious reasons, people
think they're doing it. That is one-- Not one here.
That is one of the theories that is out there on the internet. But, actually, so it's not
just doing foreign trademarks. It's also trademarking within China itself. So trademark applications
surged in 2017 by 55% from the year before, and the year before was already a record.
So it's sort of like we're seeing record after record after record.
And China has now 14.9 million active registrations overall. Guess how many the US has? So they
have-- Active trademark registrations? Yes, in China.
Right. So-- How many does the US--
Well, I'm going to go for 2 million. Very good, you got it.
Oh, huh. So but I mean--
The reason he's the professor. Right.
But that's a huge difference that we're seeing. OK, so now we have this little--
So there are more-- there are many, many more trademark registrations in China than the
US? Yes, and so this is part of a shifting tide
that we're seeing. This is all within the past few years. And China is starting effectively
from 0. Yes.
Whereas the US has already built up a massive inventory of trademarks.
Exactly. So it's just adding and adding with one starting
effect. Exactly. And so this is sort of a big trend
that we're starting to see. So now we have this
trend, we're going to put it to the side, put it in the oven, and we'll come back to
it later. So now we're going to shift our gaze to a completely separate topic.
OK. I'm going to show you three separate ads in
a row, and I want you guys to guess what they're for, OK? Here we go.
AD: Camping or exploring, spending time off the grid, hanging with friends and family
is always time well spent. Hope springs eternal, a new energy awakens.
OK, those ads were all for the same thing. So you want to take a guess as to what they
were for? Again, they were short clips of the full ad so you don't have all context.
But take a guess. An aloe vera-style health drink? OK, well--
That's good. So it's a new energy awakens. It's going out enjoying-- and I saw they were
drinking something. Yeah, I'm going to go. I'm going to go-- well, so I have to go different
than you. I'm going to go, um, something you inhale that just gives you a burst of energy.
OK, so it sounds like something new and exciting, right? And I'll give you the product or the
brand names for these-- what they were selling. They were selling Sweet Tango, Jazz, and Pink
Lady. Do you guys have any idea now? Well, I do know the Pink Lady is an apple.
Oh, OK, you got it, yes.
Jazz. Well, jazz is—
Jazz is an apple. It's a form of music.
No.
It is. It was my first—
Very popular here in the United States, Roger.
I'd say, but I think it's going to be my first ever male perfume.
It's an apple. OK, no, no, no. So those three are all apples, and, actually, apple ads are
becoming a huge thing right now. And it seems like it's like a fresh new thing that they're
selling, which in some way-- So that guy-- that last guy was dancing around
in the library about an apple? For pink lady apples. He had pink socks on.
he. Took a bite of an apple, and it made him dance like that. But, anyway, so it's kind
of funny because a few weeks ago, we talked about supermarkets.
Yeah. And shelving, and how certain brands have
to pay to get their items in a supermarket shelf or, like, you know, prominently displayed.
And we had talked about whether or not there were specifically like produce that had brands.
And none of my research had showed anything about produce having brands.
So it was kind of interesting that now that I dug into this topic, this is actually a
rapidly growing field, pun intended. I did get that
You got it? OK. So you-- so do you just have apples normally?
Well, that's what I thought. I thought they were just apples. I thought apples were apples
were apples. Granny Smith.
Macintosh.
Golden Delicious.
There's so many different. There's millions.
But when you think of the classic apple, what do you think of?
Granny Smith.
OK. I think a Mcintosh, yeah, or Red Delicious.
Thank you.
Golden Delicious.
No Red Delicious. Red Delicious is better.
So, actually, we have some of that. Oh, hey!
Hey, look at that! Apples!
Look at those. So this is important because we cut these
slices a little bit ago. Red Delicious.
And you're going to have to-- you'll taste-- save some of these slices.
Seriously? Yeah, they're a little brown, but that's a
important part of the story. And I'll get you--
Ah! Should I start dancing around the room? This is not much-- I mean, just before I came
here, I was pruning my orchard of about six different types of apple tree.
Oh!
So this is like—
So you're familiar with these apples?
Lots of different types, yes.
Yes, well, OK, so we'll get your tasting notes in a second. So I want you to hold on and
think about them while I tell you a little bit about
the history of the apple. OK, so these Red Delicious apples, these are apples of gas
stations, of untouched cafeteria trays. These are--
Mhm. Looks like an apple you might give your a professor. Yes.
Like a cricket ball. Exactly like that. There's a long-- there's
a long history to that, actually. But, actually, this is the most popular, or was the most
popular, apple in the United States. And why was that? In the 1940s, this really took hold
specifically because it has a uniform shape and size. It doesn't bruise easily.
A very distinctive shape, by the way. Very distinctive. Yeah, it's like this is
an apple. Like a pepper.
This is what an apple should look like. It's more like an apple.
But it also turns red before it's ripe, so that means it can be stored longer. It can
be put on shelves. It can be all around great for producers of the apple.
So can we just stay on that point? It turns red before it's ripened.
Yeah.
Why is that helpful to grocery stores? Well, because that means it can be picked
earlier, and it can actually be stored longer and still look good. They have very tough
skins as well. And so that means that hides any sort of nicks or anything else that happens
as well. There are a bunch of things to this that just-- it looks very pretty.
Yes.
But what's the one thing I haven't mentioned?
The taste.
Ha ha, very good. OK, so I'll get your tasting notes. What did you-- what did you taste?
Mainly water, a little bit-- sort of, it was quite a mild flavor. It's almost like a cardboard
kind of a flavor. It also kind of turned-- I cut this-- I mean,
we cut this just recently, and it turned brown. It's kind of gross. OK, so common complaints,
mealy, mushy. Yes.
Yeah.
RH:Yeah, it gets stuck in the teeth.
No flavor. So why did that happen? It's not crisp.
It's not crisp. So in the 1960s and '70s, an apple was just an apple. If you were--
if my apples tasted worse than your apples, it didn't really matter because they would
all get mixed up together. It was a simpler time.
It was a simpler time when apples are apples. It didn't matter because—
When men were men and apples were apples. Exactly. I'm so glad you're on the same page.
So growers were incentivized to cut costs, and it didn't really matter what happened
to the inside of the apple as long as they could sell it. And so that meant that they
basically bred them for their beauty over taste, because also when you're in the grocery
store, guess what? You can't really tell. How are you going to judge an apple? Like,
oh, this looks like a good color. It's nice and firm. So they bred them to be something
that would be sold, but then they could cost elsewhere.
Didn't anyone caught on non-Pavlovian style after about four or five attempts of eating
these and go-- I've been saying it. Apples don't have the best reputation. And
I think it's because of Red Delicious. Like, if you offered someone-- an apple is to me
like a very low-tier fruit. It's like-- no one's like apple, love apples, unless they're
from like Upstate New York and they have delicious apples, you know what I mean?
Well, what's been a big thing, or what this led to, these disgusting apples, I feel bad
calling them disgusting. I know.
But these apples-- Don't worry.
--led to the great Red Delicious bailout of 2000.
Oh, I want to hear about this. OK, so basically what happened was in 2000,
Congress approved, and President Clinton signed the biggest bailout in apple history.
This is like his last act in office right before he pardoned Blagojevich?
Well, he snuck it in while the dotcom crash was going on. They just snuck it in there,
didn't they?
So, basically, what happened is we have a quote from a New York Times article from the
day. So quote, "'Nobody should feel sorry for us. We did this to ourselves,' said Doyle
Fleming, a lifelong apple farmer. 'For almost 50 years, we've been cramming down the consumer's
throat a red apple with even thicker skin, sometimes mushy, sometimes very good if done
right, but a product that was bred for color and size and not for taste.'"
I love this Doyle guy.
Yeah. Well, and so this is sort of what happened. And so there was a lot of controversy over
this bill because, like, why are we bailing out apple farmers that are making disgusting
apples? Right.
But it's really key because at the exact same time that all this was going on, this apple
crisis was brewing, something very key happened, which was that Congress broadened legislation
allowing universities to patent and commercialize inventions, OK? And that specifically gave
way to our next apple, the Honeycrisp. Oh! I love Honeycrisp.
This is America's favorite apple in some ways. And even the way you responded to it is how
many people respond to the Honeycrisp. So this is actually I have here—
All right. Take your own?
I'll take my own. Thank you.
Thank I have an apple patent here. So this is what
an apple patent looks like. Mmm. Crunchy.
Yeah.
Juicy.
Yeah.
Cleans the teeth.
But it's acidic. It has an acid, sugar, gorgeous. So this is a patented apple. This is one of
the first patented apples created by researchers at the University of Minnesota. Actually,
I will say, Honeycrisp sales are twice the size of other apples, which is partly what
makes them so yummy, and juicy, and delicious. These apples garner maybe twice the price
as a regular apple. Yeah.
I mean, this is truly a first-name brand designer apple. And I have a quote here from the man
who invented the Honeycrisp, David Bedford. He is the man who is responsible for it.
Good job, David. He told Esquire Magazine, quote "I have absolutely
never seen this price phenomenon with another apple. He said, there are varieties that have
garnered a 10% premium to standard pricing, and that's usually because they have a promotional
campaign behind them." So with the patenting system, the university
earned $1.30 for every tree that was sold. And, eventually, the patent brought in about
$6 million, I think. What do you think it means that the bottom
is pubescent?
What does that-- oh, is that-- is that-- is that one of the standards?
It says spinach green glossy on top, bottom is pubescent.
Ewww. I don't-- I don't know—
Is this more pubescent than this apple, professor?
Oh, my god. I'm—
I'm not sure I'm in any position to be able to understand that, even if I could.
Let's move on. So the problem is though that patents expire, OK? So this patent actually
expired in 2008, and, basically, right now, anyone can plant this apple tree, the Honeycrisp
tree, which is why you actually might start to hear anecdotes about subpar Honeycrisps
coming to market. Ohh!
Some have actually suggested the eventual decline of the Honeycrisp is inevitable because
there's-- Yeah, the one decline.
Yeah. There's no standards in place.
Right. So what we have going on--
I mean, there's no standards-- so anyone can-- I mean, if I stole this apple, and say, hey,
this is a Honeycrisp. Is that legal? No, no, you couldn't-- you couldn't do that.
What you can do, though, is that if you make a subpar Honeycrisp-- because before with
the patent, the University of Minnesota had more control over who had the licenses and
who could plant the trees. Did David taste every apple himself?
Yeah, and make sure it's on par. So what we have right now, basically, is a race to make
the next Honeycrisp.
Honey Crisp, wow! Interesting. This is where we enter the world of the Zestar,
and the Sweet Tango, and the Envy, and the Rave, and the Kisabel, and the Pink Lady,
and the Jazz, and, actually, a huge number of other apples, all part of something we
call club apples. So you can be part of the club. So club apples are actually varieties
that are not just patented now, but they're also trademarks, and they're controlled in
such a way that only those part of the club, so club farmers, can sell them. And the key
thing here is that the trademark never expires. So where a patent might expire, the trademark
never does. So what's the difference? The patent allows
you to make-- use these genes to make this apple?
Right.
And the trademark is the name of the apple, or--
Yeah, so actually the trademark is specifically the name of the apple. So we have some trademarked
apples here, if you want to try some of these. So we have these Jazz apples that I mentioned.
So could David have trademarked the name Honeycrisp if he really wanted? He could have. He did
not. And so that's why—
Good on David.
Yeah. OK, so this is what?
Go ahead first, yeah. These are Jazz apples.
Jazz. And these Pink Ladies. You can see.
Pink Ladies.
But you know what's funny is that I brought these all in a bag, and I banged them up a
little. That's terrible.
The Pink Ladies got pretty banged up. But it just shows you that it's hard—
Pink Ladies in between those two. Yeah.
It's OK. Well, so, I mean, these are things are being
tweaked. It's actually very expensive-- oh, you're not a fan.
No, I don't like either of these.
Really?
It's just too acidic. It's too bitter.
That leaves a bit of a residue rather than a flavor.
Yeah. Oh, wow!
So you got all that stuff stuck in your teeth.
It's a little mealy, and this one-- this one is a disaster.
Wow! OK, weird.
Worse than the basic, the common basic one.
It's sour. I can se what it's trying to do, but it's not even coming close.
Well, paying to grow these apples is actually very expensive. So it cost $2,000 per acre
in some cases, so just to be part of the club. And that leads to actually more marketing
and promotion. And just so you guys know, the next hot apple to come out, they're are
already articles about it, it's the Cosmic Crisp. So the next celebrity apple is Washington
State's Cosmic Crisp. It's coming up next year, 2019. There's a lot of buzz around it.
And you can even see it has a pretty fancy website.
I think the artwork around that might be the highlight. Yeah, which is kind of crazy.
Is it going to be-- but has there ever been-- here's a question. I hope we're not getting
ahead of ourselves. Is there any apple that sells for as much or is as widely revered
as the Honeycrisp? Is this like the Muhammad Ali of apples?
This is—
And then everyone else is like I can box too. I can also be a famous boxer, but no one's
Muhammad Ali? Right. There has yet to be an apple that I
found that is as expensive as the Honeycrisp. And so that sort of like the holy grail is
trying to manufacturer some of these other apples to make one that can replace the Honeycrisp.
Well, now, so what we're seeing, though, is these branded fruits and vegetables becoming
a growing trend. So according to a Nielsen study, branded produce
accounts for 38.5% of produce sales, and that's up 30% from a few years ago from 2012. But
the key thing here, 55% of consumers shop without a brand in mind for produce. And so
Nielsen actually suggested that companies can take advantage of that. And so there is
a market, or a growing market, to brand produce and to capture consumers for a Pink Lady apple.
And that's important because I actually want to take this thing that we've been keeping
in the oven. Oh yes!
Yes, China. Baked apple.
Yes, so, oh, yeah, so our apple pie, China is trademarking things fast. So we have that
here. And a key part of that, which I haven't mentioned yet, is that China also happens
to be the largest apple producer in the world. Oh, I didn't know that.
So China, look at this, China produces more apples by a factor of 10 than the next largest
producer. So the United States produces 4 million. China produces 44 million tons of
apples per year. I didn't realize that.
Isn't it crazy? No, I mean, it's--
Because you think about apples, you think of Johnny Appleseed, you know, American. You
don't-- China's-- actually, China is a big consumer
of apples, specifically, red apples because red is considered a lucky color. Yeah.
So if we combine the fact that we have, on the one hand, the fastest growth in trademarking
in a country, China, combined with the fastest growth and trademark products, specifically
apples, I wouldn't be surprised if we actually start seeing more varieties of new apples
coming down the pike for a more segmented, hopefully tastier, market.
It's pigmented.
I mean, will they traveled from China? Do they--
So there is actually-- there is a growing segment of apples being imported from China.
We do import apples from China. We also do ship apples to China. So they're making different
apples than we're making. Well, here's the thing. I have a suspicion,
not knowing anything about apples beyond what you just told me, that, again, Honey-- they
just got really lucky, and, like, maybe this guy knew some stuff, and he knew this and
that, but they just got lucky, and they created the best apple ever.
And so everyone's like, oh, let's also make our own kind of apples that will also be good.
But maybe this is as good as it gets for apples. And so having new kinds of apples won't necessarily
result in more delicious apples. It maybe will result in more expensive apples.
Ah, we'll just wait till the Cosmic Crisp comes out.
See, I'm not-- I'm not-- I don't have high expectation. I am excited about it.
I think they'll be local producers, you know? You know, I don't know if supermarkets do
the same thing where in some part of Texas, they'll just have this type of apple in that
supermarket. In this part of Oregon, they'll just have that type.
And so you just have the regional brands that go into the stores. So these things nobody
cares about, but these might be only in one corner of the US and those in another.
Yeah, actually, I know, that's a big growing trend is local apples.
And it allows you to get back to thinner skinned apples because they're not having to—
Transport them-- Back to the trucking episode.
Right, where I-- So yeah, truck them across the whole country.
Where I already bruised this apple a little bit, oops, just in the transportation. Anyway,
you guys somewhat a little bit kind of convinced? You convinced a little?
Yeah, a little bit. I mean, I think this-- A little bit, OK.
It's a a little bit, but I think you're going to say local. I'm not going to buy Chinese
apples in the US or in the UK either. What kind of apples do you grow, by the way?
Golden Delicious, Granny Smiths.
I like Granny Smith.
There's crab apples, which are the sort of early, small-- Yeah.
I make jelly out of those. Oh, great! I'm picking up 200 bottles of apple juice
this week, or my wife is, from the apples that we had crushed from our land.
Oh, lovely.
Oh!
And we've got a very, very big cooking apples as well.
Oh, yeah, yeah.
Which, yeah, they're great. So I've got about five or six varieties.
Well, I think that's a nice warm and fuzzy note to end on for this fall theme.
Yeah, very autumnal. Nice job.
Yeah, it's your fall theme knock-on effect. All right, well, that does it for this week's
Knock-On Effect. You can catch us every Thursday at
realvision.com/knockoneffect. And there, you can sign up for your 14-day free trial.
All right, see you guys next week.
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