Role of Intellectual Property

In an increasingly competitive marketplace, innovation is key to a business’s ability to develop and maintain an advantage.  The food industry is no exception, with innovation in the form of new ingredients, improved production processes and apparatus, new or improved recipes, new product development, packaging, labelling and branding.  Maximising the competitive advantage offered by this innovation requires an effective intellectual property protection and management strategy.

In the food industry, as with most other industries, no one facet of a business, such as R & D, manufacturing, sales and distribution or marketing, on its own is sufficient for the business to succeed and thrive. There needs to be a common theme binding the components together. Whilst market success is clearly the common goal, a principal functional theme should also be identifying and protecting intellectual property.  There are a variety of intellectual property rights available to protect food innovations, including patents, trade marks, industrial designs, copyright and plant breeders’ rights.  In some cases trade secrets may also be applicable, however, these have associated risks. Intellectual property can also be used to proactively restrict competition, keeping competitors clear of a market niche. 

Intellectual Property as a Commercial Tool

For intellectual property to be an effective commercial tool it needs to be effectively managed. You need to know what you have that is worth protecting and why it needs to be protected. A useful question to consider is whether you fully understand your intellectual property position and know how to use it strategically to grow your business. 

We pose here some of the issues which should be considered from the intellectual property perspective. To market a food product, for example, many questions need to be considered, such as: What is the intended market? How is it to be packaged? Is there a specialised brand or trade mark? Is there patentable innovation? In terms of branding, is the brand or trade mark local or international? If international and the branding is translated into a local language, are there any cultural sensitivities? A critical factor often overlooked is do you have freedom to manufacture, use or sell the product? That is, do you infringe any third party patents, trade marks or designs? Furthermore, is the intellectual property protection you have carved out sufficient to keep competitors well clear?

The key is to be aware of intellectual property rights and their potential to assist in market exclusivity or competitive advantage whilst managing the associated risks as far as your business is concerned. The various risks associated with launching a new product, such as regulatory hurdles, legal and financial risks if the supply chains, licences and approvals are not in place, brand dilution and potentially reputational risks if the product is not readily adopted by the marketplace, are generally well managed by the industry. What may be overlooked is managing the intellectual property. 

A Culture of Intellectual Property Recognition

It is important to have a culture of recognising your intellectual property and harvesting it. Whether it be branding, patentable technology, design of packaging, a trade mark or overall business appearance, once you are aware of the intellectual property you possess, you can ensure it is aligned with your business needs and goals. For example, you may ask if a new product is part of your core technology or core product line for the business, or is this an experiment in ‘branching out’. This can determine a level of risk from the business perspective. It is then necessary that you ensure that you have freedom to use the intellectual property you have developed. Freedom to operate is determined by undertaking searching of patent office databases in your markets of interest, using an independent searching company or through your intellectual property advisors. Due diligence is the key. Be aware of the intellectual property pitfalls that you might encounter or that you can put up as barriers to entry to competitors. Get advice, and think strategically on how best to utilise the available intellectual property systems available, whether they be registrable or non-registrable rights.

The Next Steps

Once you have identified what intellectual property you have, and that they align to your business goals, then the various components of the intellectual property can be ranked in order of importance in terms of giving your business the most competitive advantage. If you have protectable intellectual property, it also needs to be of a type that enables you to detect potential infringers or copiers in the marketplace. For example, if you obtain a patent for packing machinery or for a production process, you need to consider if unauthorised copying could be readily identified from a competitor’s product or entry into the market.

As your business grows, you can then begin to develop strategies to build a stronger and more expansive intellectual property portfolio so that ultimately, you have a strong wall surrounding your product lines and business interests. The aim should be to generate a “picket fence” around a market niche to create impediments to third party market entry or to at least restrict competition.

It is important to ensure that as a proprietor, you have clear title to any intellectual property. You may need to have a designer or formulator, for example, execute an assignment, or ensure your employee contracts specifically obligate employees to assign their rights to the business for any innovation.

Time to Act: Create, Protect, Exploit

Intellectual property is an important consideration in product development and gaining a competitive edge in a dynamic and fast moving marketplace. It is a legal means to help you ensure the reputation of a new product or of your business or brand is not diminished through market failure, and to give your business a competitive edge.

From a practical perspective, whether your business is new, an SME or well established, the adage-create, protect and exploit-in relation to intellectual property can give your business a welcomed competitive space. Businesses need to consider intellectual property as a metric of financial and cultural performance. It can also be used as a tool to benchmark your competitors, such as tracking new product entries into the market place, monitoring innovation in manufacturing or food technology and assessing consumer acceptance. Businesses have many potential encumbrances. However, forward thinking business owners will ensure, with proper management, that intellectual property can be used to enhance business development rather than hinder it. It is never too late to implement intellectual property strategies but in a dynamic business world and changing economic circumstances, the time to act is now!

First published in the 2015 October/November edition of Food Australia.