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Ian Grey: the value of intellectual property | Analysis

February 12, 2014 1 Comment » Print Print

The packaging industry is built around innovation, creative design and branding, all of which results in the creation of a substantial amount of intellectual property

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Photo of Ian Grey web 300x180 Despite this, intellectual property rights can still be confusing to many in this field and often get overlooked. However, intellectual property can generate a significant commercial advantage for a company if effectively managed, without becoming an unrealistic burden in terms of cost or time.

The legal protection afforded by intellectual property rights takes a number of different forms. In some cases, rights arise automatically on the creation of a work without any need for registration, such as copyright or unregistered design right. In other cases rights arise only as a result of registration, such as patents or registered designs. Both unregistered and registered rights may co-exist in different aspects of a product, such as in its appearance and in the way in which it works.

Whilst unregistered rights can be beneficial and cost nothing to obtain, placing reliance solely on such rights can be risky, as it is often difficult to prove that infringement has occurred. Although there are costs associated with obtaining a registered right, a registration does afford its owner a much greater extent of protection as there is no need to prove that copying has taken place.

Early decision

For a valid registration, an application should be filed prior to any public disclosure of the product in question. Therefore, a decision on whether or not to seek protection must be made at a relatively early stage in the development of any new packaging or machine, process or design, and the cost of obtaining such protection factored into the overall budget allocated to the project.

A patent can be used to seek protection for any new technical aspects of a pack, such as how it opens or closes, the way in which it seals or the way in which product is dispensed from the pack. The way in which the contents are accessed or held in place inside the pack and/or the machinery and process used to manufacture or fill the pack may also be protectable via a patent. It is also apparent that the number of patents being filed that relate to more environmentally friendly packaging technology is on the increase, as various issues, such as maintaining the same level of protection for products with less packaging material, are addressed. Improvements relating to the recycleability of existing packaging and energy saving manufacturing techniques are also being patented to a much greater extent.

A well drafted patent specification seeks protection for the underlying concept of an invention with the aim of obtaining the broadest possible scope of protection. The goal is to try and ensure that a competitor cannot copy the overall concept and so achieve the same benefit, but avoid infringement by making some relatively minor alterations to the product or process. As it is not possible to obtain a valid patent covering something that is already known, a balance must be struck between defining the invention as broadly as possible in order to cover all the modifications that a competitor may try and make in order to circumvent the patent, whilst at the same time defining the invention in sufficiently narrow terms to avoid covering something that has already been done before.

Protection

As protection extends to the overall concept of how a product works irrespective of its appearance, the protection afforded by a patent can be quite broad. A patent also confers on its owner the exclusive right to exploit the invention by making, using or selling it for a period of up to 20 years and can be used to prevent competitors from commercialising a patented invention without authorisation from its owner, thereby reducing competition and enabling the patent owner to establish itself as a market leader for that product. This enables a patent owner to make a return on the investment they have committed to the development of the product covered by the patent.

Whilst patents are concerned with the protection of inventions, the term ‘invention’ can be misleading as it can imply that a product for which protection is sought must be entirely new and groundbreaking. However, the widely held belief that a product must fall into the ‘eureka’ type category of inventions in order for it to be patentable couldn’t be further from the truth.

On the contrary, a patent can be obtained for relatively small modifications or improvements to existing products or processes, especially if that modification or improvement provides an advantage over what has been done previously. As a general rule of thumb, if a company considers that a competitor may want to copy their new product or process in order to gain a commercial advantage as a result of doing so, then it is likely that a patent should be sought, if only to establish a deterrent against such copying.

There is a widely held opinion that it is not worth obtaining patent protection because of the high enforcement cost. Whilst the cost of patent ligitation can inevitably be substantial, only a very small minority of patents are ever litigated and it should always be remembered that competitors are often deterred from copying due to the existence of a patent application and the uncertainty that it creates about whether they may infringe.

In addition, enforcement should not be the only consideration when deciding whether or not to seek patent protection, as patent ownership also provides an opportunity to seek revenue from licensing or by sale of rights covered by a patent. A patent can also be used as a negotiating tool when a company is seeking to acquire the right to use a patent belonging to a competitor or to demonstrate a high level of knowledge and expertise within a company and so increase its market value. The acquisition of venture capital or access to finance may also be made easier in the presence of a patent portfolio.

It should also be remembered that there is now a further incentive to obtain patent protection for new products or processes, as patent ownership may provide a company with an opportunity to claim the potentially valuable reduction in corporation tax under the UK government’s ‘patent box’ tax initiative. The potential tax savings available under this scheme could easily outweigh the costs associated with obtaining the patent over the longer term, especially for more profitable products.

In addition to filing patent applications, there is a vast amount of valuable information available in the published patent applications filed by others that are often neglected. Not only can a review of the patent activity of a competitor reveal some useful insights as to what they are working on and provide an incentive for further improvements to existing technology, the results of a patent search can help focus design and development efforts to ensure that time is not being spent ‘inventing’ new packaging or machinery that has already been developed by someone else, as well as to identify any ‘problem’ patents at an early stage and which might be infringed as a result of bringing a new product to market.

Whilst a patent can be used to protect the workings of a new pack or packaging machinery, its appearance might be protectable through trade mark or design registration. A trade mark is a distinctive sign which indicates that goods or services belong to a particular company or business.  Typically trade marks are words such as “Mars” or “Tesco”.  However, shapes, sounds and even colours can act as trade marks.

Trade marks

Preventing competitors from selling so called ‘look-alike’ or ‘copycat’ products is notoriously difficult.  In the absence of registered rights, the law of passing off can sometimes be used but passing off is difficult and expensive to prove. However, trade mark registration of aspects of the packaging, such as designs, colour schemes and shapes can help enormously.  Although it may not always be possible to use trade mark registration to protect the shape of a pack, it is always worth considering as a granted right can last at least as long as the packaging is in use and can be very powerful.

A registered Community design may also be used to protect the shape and appearance of a product in a cost-effective and uniform manner throughout the whole of the European Community and affords its owner an exclusive right that can be enforced against others making, using or otherwise dealing in products that incorporate the design anywhere in the European Community. As the definition of a registrable Community design is very broad, there are few designs that are excluded from registration.

In addition to seeking protection for the overall shape of packaging, its get-up, graphic symbols and typographic typefaces are also protectable, so there is considerable overlap with the protection available via a registered trade mark. Once filed, an application for a registered Community design can be registered within a matter of weeks or even days, and the existence of a registration can be advertised on the product or packaging covered by the registration so that others are aware of the existence of such rights. This can act as a significant deterrent against copying.

Without doubt, an understanding of intellectual property and its traditional function of deterring or preventing competitors from copying products, trade marks or designs is important. However, an appreciation of the commercial advantages inherent in intellectual property ownership, as well as the potential tax benefits, should not be ignored.

Ian Grey is a Chartered and European Patent Attorney at the Patent and Trade Mark firm Venner Shipley LLP.