LOREAL_Registration_Document_2017

2 Corporate governance *

RISK FACTORS AND CONTROL ENVIRONMENT

Legal risks 2.8.5.3.2.

LEGAL RISKS \ INTELLECTUAL PROPERTY: TRADEMARKS, DESIGNS & MODELS, DOMAIN NAMES Risk identification Risk management

Special care is given to the protection of the 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. The L’Oréal Group is also an active member of organisations which have set themselves the goal of combating counterfeiting and promoting good commercial practices. This is the case of the French Manufacturers’ association ( Union des Fabricants ), the Association des Praticiens du Droit des Marques et des Modèles (APRAM) and the Association Information et Management (AIM).

The trademarks, designs & models and domain names, and particularly the major international brands listed in the Operational Divisions section (see paragraph 1.4.2.), are strategic intangible assets of the Group, primarily owned by L’Oréal which licences them to Group companies against royalties. A few brands, primarily marketed by L’Oréal Luxe, including Giorgio Armani, Yves Saint Laurent, Ralph Lauren, Cacharel, Viktor&Rolf and Diesel, have been licensed to the Group. In light of the large number of countries in which its products are sold and the multiple potential prior rights that may exist in each of these countries, it is impossible to rule out the possibility that third parties may initiate legal action to contest the registration and or use of L’Oréal intellectual property rights. This potential risk has to be mentioned in order to provide a comprehensive account of risk. However, the likelihood of it occurring is low due to the care taken upstream to secure launches. The trademarks, packaging and the products themselves may be counterfeited by third parties wanting to illegally claim the benefits of their reputation and earn illicit profits from the work and investments of the Group.

LEGAL RISKS \ INDUSTRIAL PROPERTY: PATENTS Risk identification

Risk management

In order to protect the Group against the risk of appropriation of a molecule, a production process or packaging 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. It is responsible for filing the Group’s patents, their use and their defence on a worldwide basis. It also carries out studies on the free use of Group products with regard to third-party patents. However, it cannot be ruled out that third parties may infringe patents held by the Group, contest their validity or attempt to enforce their own industrial property rights on L’Oréal.

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 now. The technologies developed are licensed to Group companies against royalties. In addition to protecting the inventions of the Group, the goal is to check the free use of a technology prior to the launch of products and services, in a highly competitive environment in which multiple patents are filed by many different players.

REGISTRATION DOCUMENT / L'ORÉAL 2017

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