FOOD industry players are well used to achieving compliance with the Food Standards code and other legal requirements. However, the intellectual property rights of competitors are an equally important legal constraint which manufacturers and marketers ignore at their peril.
What are IPRs?
In this article, I am referring mainly to registered intellectual property rights (IPRs).
These are mainly patents (which protect inventive or innovative concepts), designs (which protect the appearance of physical objects) and trade marks (which protect the market ‘symbols’ of a business).
IPRs are a legal creation, like the Food Standards Code, but there are important differences.
An impartial federal government body (IP Australia) grants IPR’s, but their enforcement is in the hands of the IPR owner. This means your competitor will hold the whip hand if you stray on to their territory. If you infringe their rights, even if unintentionally, a court force a stop to the infringing activity and allow them to recover damages and legal costs from you.
In a worst case scenario, the recoverable damages might run to millions of dollars if the infringement has proceeded for some time and represents a substantial volume of product sales.
You might also be forced to dump tonnes of product, packaging and/or raw materials.
You may even be forced to permanently shut down an entire production line, if it can not feasibly be operated in a ‘non-infringing’ manner.
The responsibility for avoiding this kind of trouble rests entirely with the food manufacturers and marketers themselves.
The IPRs held by your competitors are a matter of public record, available from IP Australia. However, many operators get into trouble because they do not make it their business to find out about the IPR landscape before setting out into the marketplace.
Many who do look into these matters may be surprised by what they find.
Aren’t patents hard to get?
Patents tend to be thought of as relating to very ‘high-level’ scientific advancements. However, they are more often used to protect relatively simple technologies for up to twenty years, where these technologies represent a literally new solution to a technical problem, and where that solution would not be obvious to the kind of person who would normally be faced with that problem.
With the introduction of the Innovation Patent system in Australia, it is now also possible to monopolise innovative solutions to technical problems for eight years, provided the solution makes a substantial contribution to the working of the product or process in question. This is, in practice, quite a low standard.
The following kind of developments might be patented, for example: a new shape for a food product or pack which is easier to handle, a newly discovered synergy between a combination of known flavouring ingredients, a new use for a known ingredient; a new sequence of known process steps which produce an improved result; an unexpected or counter-intuitive result from a new formulation; a unique modification to an existing piece of equipment which improves its reliability.
With the rise in prominence of patents relating to business systems and processes, even the way you market your goods, especially on-line, might contravene a patent.
What have designs to do with food?
A design registration allows the design owner to exclude all others from making or marketing an article which looks more or less the same as the registered design for up to ten years.
To get a design registration, it is only required that the design be new, as compared with existing designs for the same article.
This has clear implications for the shape of food items and packages, as well as presentation formats of food items within packaging.
The powers granted to the design owner are similar to those discussed above for patents.
The design need not be elaborate or intricate: some seemingly simple food product shapes are the subject of design monopolies.
If you are accused by a competitor of infringing their design registration, and you are confident that the registered design was not actually new at the time it was registered, perhaps because you yourself marketed a similar product years before, the onus will nevertheless be upon you to prove this by documentary evidence in order to defend the accusation.
Unfortunately, from experience, this is sometimes easier said than done.
I am aware of a case where a food manufacturer wished to match a market leading snack product.
Taking care to do the right thing and avoid trouble, the new product was designed to look somewhat different to the market leader. However, no check was made of the designs register before launch. This was unfortunate, as by coincidence the new product was identical to a registered design held (but not used) by the market leader.
The launch had to be stopped and the product redesigned. Not a happy outcome.
Trade Marks
Trade mark registrations, so far as they relate to brand names and logos, are familiar to the food industry. However, other aspects of product and packaging may be registered as trade marks.
These include colours, shapes, sounds and even scents (theoretically, at least). While it may be difficult to convince IP Australia that a product scent or shape really does act to distinguish a food marketer’s product from their competitors, it is certainly not impossible.
If achieved, a trade mark registration relating to the shape of a product or pack is a very powerful tool in the marketplace, as it may be owned in perpetuity and the proprietor of the registration can exclude their competitors from using similar shapes if a consumer might even be caused to wonder whether the products came from the same source.
With this in mind, it would be prudent for food marketers to consider whether their products might be sailing a little too close to any of the following sample of currently registered trade marks: a coloured four-panelled sleeve which encloses about 70% of a margarine-style tub or box; an ice cream shaped like a cricket ball; a chocolate bar with a triangular profile.
The message is that you need to be diligent in understanding the IPR landscape, preferably by engaging professional help in identifying, understanding and monitoring you competitors IPR’s. This should be done long before committing large resources to new products, processes or marketing plans.
As an added benefit, this activity cannot be underestimated as a valuable source of competitive technical information. I also recommend using available data storage technology to keep long term records of WHAT you have distributed or sold into the public domain, and WHEN this was done.
Even better, become an IPR player yourself. Protect your own new ideas, which have been hard-earned as a result of your investment in research, development and personnel. Build up a portfolio of IPR’s. More than one dispute has been settled by mutually beneficial cross-licensing of IPR’s. However, if you don’t have the chips, you can’t play the game.
**Adam Hyland is a patent and trade mark attorney for Watermark Patent & Trade Mark Attorneys.
For more information, call Adam on (02) 9888 6600 or email: alh@watermark.com.au