2022 Universal Registration Document

Chapter 3 : Risk factors and risk management

Legal and regulatory risks/Risk of non-conformity Modérée
  L’Oréal has no knowledge of any governmental procedures, legal or arbitration proceedings, which are pending or threatened, that may have, or have had over the last 12 months, material effects on the financial position or profitability of the Company and/or the Group, other than those described in note 12.2. “Contingent liabilities and significant ongoing disputes” of the notes to the Consolidated Financial Statements. The main legal risks are reported to the General Management and presented to the Audit Committee.
Legal and regulatory risks/Intellectual property: trademarks, designs & models, domain names, patents Limitée
Risk identification Risk management

The brands, particularly the 36 major international brands, designs, models, domain names and patents filed are strategic intangible assets for the Group.

Given the image and reputation of the Group around the world and given the large number of patents (561 in 2022) and trademarks filed by L’Oréal, third parties could:

  • dispute the validity of L’Oréal’s intellectual property rights, or attempt to enforce their intellectual property rights against the products marketed by L’Oréal; or
  • infringe on L’Oréal’s intellectual property rights, reproduce or imitate the Group’s packaging and products in order to benefit illegitimately from the name or associated technologies and thus illegally draw a profit from the efforts and investments made by the Group.

Given the competitive context in which a growing number of patents and trademarks are filed, and in which some intellectual property rights result from acquisitions or are developed by third parties (“open development”), the free use of a technology or full availability of a brand before any launch cannot, therefore, be completely secured by L’Oréal.

Special care is given to the protection of trademarks, designs, models and domain names belonging to the Group. This responsibility is entrusted to a special unit of the Legal Department. The department ensures the worldwide protection, management and defence of intellectual property rights via searches for prior rights, monitoring of registration and renewal procedures, the implementation of monitoring services and the initiation of appropriate legal action against counterfeiters.

In order to protect the Group against the risk of appropriation of a molecule, a formula, packaging, an application system or an application by another company, L’Oréal has set up the International Industrial Property Department, a specific structure which is part of the Research and Innovation Department.

This Department is responsible for filing the Group’s patents, their use and defence on a worldwide basis. It also conducts studies on the free use of Group products with regard to third-party patents and monitors the legality of competitors’ products with regard to the Group’s patents.

The Group is also an active member of organisations which have set themselves the goal of combating counterfeiting and promoting best commercial practices. This is the case of the UNIFAB (Union des Fabricants), the APRAM (Association des Praticiens du Droit des Marques et des Modèles) and the AIM.
Legal and regulatory risks/Product claims Limitée
Risk identification Risk management
In its communications, L’Oréal highlights the innovative nature, quality and performance of its products. These communications may be challenged by authorities, organisations or consumers, despite every care used to guarantee their accuracy and fairness. Such actions could affect sales or, more generally, the Group’s financial position, particularly if claims are made or products recalled. The Worldwide Regulatory & Claims Department controls the conformity of product communications before they are introduced on the market. The Group’s Code of Ethics sets out the fundamental principles of responsible communication and L’Oréal has made a commitment to implement the International Chamber of Commerce Consolidated Code of Advertising and Marketing Communication Practice and the Cosmetics Europe Charter and Guiding Principles on responsible advertising and marketing communication to which the key global cosmetics industry players in Europe adhere. The Group’s principles for“responsible product advertising” are described in a summary brochure disseminated worldwide in order to raise employee awareness about compliance with ethical principles, specific legal and regulatory requirements, and operational processes for the prior control of product communications.