Intellectual Property Basics for the Food Industry
Summary: This article serves as an ‘IP check list’ for food sector business – providing detail on common forms of IP protection that can be used as a basis for building a strong commercial strategy.
Key Takeaways: The food sector is highly competitive and fast moving. The rate of change of consumer preference should not, however, diminish the importance of IP protection for food businesses. In contrast, it is clear that some of the world’s most recognised food businesses strategically leverage IP protection to ensure market exclusivity and dominance. For smaller businesses, understanding and developing an IP strategy can be useful as risk minimisation tool for building the foundations to increase scale.
Businesses in the food sector typically focus on brand distinction as the sole means for obtaining a competitive edge in the marketplace. Unfortunately, brand distinction does not always equate to a freedom to operate in a legal sense. In fact, many food sector businesses fail to consider the importance of legal protection and clearance for brands, until too late when serious costs may be incurred in product recalls and/or legal proceedings.
Trade marks are a cornerstone of any business’ brand position, and are one form of intellectual property (IP) that can be afforded legal protection. Beyond brand considerations, other forms of IP protection are typically underutilised by food sector businesses. Developing a comprehensive IP strategy can be key to minimising operating risk, ensuring a financial return on investment, and ultimately maintaining a competitive edge against competitors.
Trade Marks
A trade mark is a sign that identifies and distinguishes a business’ product and/or services from those offered by competitors. A brand can be more than a trade mark. A brand can define a corporate image, quality or promise. In this context, a registered trade mark can help protect brand image.
A trade mark can be a word (e.g. ‘COKE’), phrase (e.g. ‘Life tastes better with KFC’), a logo which contains graphical elements (e.g. the McDondald’s ‘M’), or combinations of these elements. Shapes, sounds, smells, and moving images can now also be protected.
Trade mark registration provides the right to use the trade mark, stop others from using an identical or similar mark, and the right to license or sell the trade mark. Provided renewal fees are paid (typically every 10 years), trade mark protection can be indefinite. Importantly, to protect a trade mark, a business must register that trade mark in each country in which the business operates.
Food sector businesses that adopt a trade mark position first, while considering trade mark registrability and pre-existing third party rights as an afterthought, ultimately risk being blocked in their ability to use the mark. This can ultimately mean wasted marketing investment, costly product recalls as well as liability in trade mark infringement proceedings. Worse still is that trade mark laws in some jurisdictions (e.g. China) can inadvertently promote misappropriation of an unregistered trade mark, where the rightful ownership can be costly to regain.
Therefore, before committing the adoption of a specific trade mark, it is critical to have some understanding of the freedom to register and use a trade mark in a given market. Having some certainty of risk upfront can be beneficial later once momentum and scale increase.
Patents
A patent is a legally enforceable right that protects how something works. For instance, some new generation plant-based meat alternatives, and processes for their production, are protected by patents (e.g. Impossible Foods).
To achieve patent protection, certain threshold tests must be met. The invention (i.e. the product and/or process) must at least be new and inventive. Keeping an invention secret before a patent application is filed is critical to ensuring that the invention meets this ‘newness’ requirement. Patent protection is also predicated on fully describing how the product/process works.
Like trade mark protection, patent protection must be sought on a country by country basis. Standard patent protection can provide up to 20 years of protection. Some countries offer second tier patent protection that is useful in protecting incremental improvements in technology, but the protection period is typically shorter (~10 years).
Patent protection provides the right to stop others from exploiting the patented invention (where ‘exploit’ includes manufacturing, using and/or selling). If a product or process can be easily reverse engineered, having exclusivity in the market to exploit that product/process can be instrumental to building and maintaining a competitive edge.
Patent protection also provides the opportunity to license the patented technology to someone else on agreed terms, thereby providing a revenue stream.
While patenting can be costly, the value realised from a well-executed patent strategy can provide a significant return on investment. However, understanding the need to patent is an important consideration. If an invention can be maintained as a trade secret, protection of that secret as confidential information may be more appropriate (see below).
Designs
A design registration protects the visual appearance of a product including shape, configuration, pattern and ornamentation. The owner of a registration is afforded the power to stop others making the design, or designs similar thereto. A design may be 2D or 3D, and can be both functional and aesthetic.
In the food sector, designs protection for food products and packaging tend to be underutilised. Where thresholds for standard patent protection are too high, designs protection can provide useful fall-back position. On the other hand, combining both designs and patent protection can provide a formidable defensive position against infringement.
Like patents, the validity of a design is dependent on keeping the design a secret until protection is sought. Designs protection must also be sought on a country by country basis.
Lastly, in a business setting, ownership of a design by the business is not always automatic. If a business owner or an employee did not create the design, it is important to ensure that the business contractually acquires the rights in the design.
Copyright
Copyright protection gives the creator of an original work the exclusive right to reproduce and/or commercialise the work, and be recognised as its creator. An original work includes literary and artistic works, as well as computer software code, sound and video recordings. However, copyright does not protect a mere listing of ingredients or contents.
Copyright protection in a majority of countries occurs automatically upon the creation of the work, and lasts for the life of the author plus up to 70 years.
Given that it is common for food businesses to engage third parties in various aspects of product design and marketing, it is relevant to ensure that copyright ownership vests in the business. So, if the business uses a contractor to create content (e.g. in a website, software, a trade mark logo, or product/packaging design), using contracts to gain copyright ownership is key.
Trade Secrets
Trade secrets are confidential information that can be commercially and economically useful, and provide a business with a competitive edge. For instance, think of KFC’s secret original recipe mix of ’11 herbs and spices’.
Trade secrets do not require any registration, and are typically protected by contractual arrangement – there is no expiration period provided that the information can be kept confidential (although an obligation to maintain confidential information can apply without a contract). Accordingly, non-disclosure agreements are one tool useful for maintaining confidential information when dealing with third parties.
Importantly, trade secret protection does not protect against a third party independently developing the same product/process. In developing a strong IP strategy, food sector businesses need to consider what to protect as a trade secret, and what to protect using other IP protection regimes. While KFC has successfully used trade secrets protection to its advantage, it has also utilised patents (e.g. to protect methods of producing fried chicken under pressure).