Companies heavily tout their patented ingredients, but just how valuable are patents? And more to the point—can they stand up to scrutiny? Shane Starling investigates.
Are patents worth the paper they are printed on? In two words: it depends. Sometimes the 17-year promise (in most jurisdictions, 20 years for US utility patents) of commercial exclusivity is indeed valuable. Patents can enhance a product's profit-making prospects considerably and thereby ensure it has a chance of recouping monies invested to develop it to its end-point of genuine 'uniqueness.'
In other instances, the funds forked out to gain a patent (which can amount to hundreds of thousands of dollars) may have been better spent on making the label look prettier or the product harder to mimic even without a patent. Coca-Cola, for instance, has never had a patent.
So what determines a good patent from a bad one? First, there are different kinds of patents. Patents awarded to functional foods and nutraceuticals products typically come in two forms: those that recognise the molecular composition of a product and those that recognise the application of a product. In either case, the strength of the patent is generally determined by the strength of the science behind it. No surprises there. Genuine novelty in this business does not often come without copious hours in the lab and extensive research on a potential USP substance.
More surprising is the number of patents granted to products or processes for which the science is threadbare at best, or patent application claims simply go unverified by the patent office, whether backed by scientific data or not.
To Anthony Almada, founder and chief scientific officer of California-based industry research consultancy IMAGINutrition, the patenting system is being undervalued by the granting of so many patents with holes in them.
"There are solid patents, but there are too many patents issued in the functional foods and nutraceuticals area that do not have 'proof of concept' evidence," Almada says. "They simply don't have the necessary data, and yet the patent office seems quite willing to issue patents to these kinds of applications. It's abominable. For this reason the idea that 'patent equals potent' is very far from the truth."
Almada highlights one patent granted to a US company for a product containing antioxidant fractions. In the patent application, the company provided no data, not even animal studies. "Patents like this are so weak [that] consumers could challenge their validity in court and render them invalid," he says.
"Most companies in this industry do not challenge patents," Almada notes. "Mostly they infringe them, and the patent holder doesn't pursue them in court, or they pay a small licensing fee."
Dan Murray, associate director of marketing and sales and nutrition at Georgia-based Lonza Group, agrees patent holders can come under attack and find themselves in a quandary as to how best to react. "One company will violate a patent because they know it is weak," he observes. "It is then a tough one for the company that owns the patent because if they go to court and lose the patent, the whole market may get flooded and that could be worse for them anyway."
According to Phil Harvey, PhD, the US-based National Nutritional Foods Association's (NNFA) director of science & quality assurance, weak patents reflect an industry that is yet to fully come to terms with the importance of the scientific method in product development. "In the drug, medical devices and biotechnology industries there is more investment in patents," he says. "But in those industries the marketing follows the science, whereas in our industry the science follows the marketing."
Phil Brown, brand manager for Ester-C (now owned by Zila, formerly Inter-Cal) believes much of the problem with weak patents lies in an increase in the number of patents being filed. This has led to the patent office being inundated with more applications than its resources will allow it to thoroughly scrutinise. "The patent office can only do so much. It's a problem with any regulatory authority—they don't have the expertise, and there are so many patents being filed now," he observes, noting that in an ideal world, "patents would be more thoroughly investigated by the people that approve them so that once a patent is approved it is closer to being incontestable."
Vitamin C variant Ester-C has about eight years of patent protection remaining, which is cause for concern at Zila, but hardly a cause for panic. The patent has allowed them time to establish their brand name in a market dominated by large pharmaceutical players. Indeed, it is smaller companies that often have the most to gain from the patenting process—if they can afford the cost involved to get one in the first place.
"Gaining patents is not cheap," Brown says. "Plus you have to pay patent fees every year. There is a lot of paperwork involved. But our patents have given us protection, and that has proved invaluable." Ester-C obviously possessed good science as Zila has defended infringements on its patents and come out the other side with its temporary monopoly intact.
Research Is Critical
Harvey believes smaller companies can help themselves to improve patents by leveraging university research. "Companies don't utilise academia enough when they are researching products," he says. "I would like to see more university/private sector relationships, because universities do have resources that some of the companies in our industry don't have. The disadvantage is that university research can be very slow."
Kemin Foods is one company that has made the most of university research. Many of its patents have been licensed from academic institutions. Kemin Marketing Director Steve Hanson is buoyant about the power and potential of patents.
He noted that the Patent Cooperation Treaty, the aim of which is to link patent offices around the world, would reduce the cost and time involved in establishing patented products in global markets.
A spokesperson for DuPont notes that while the patenting system may not be perfect, its benefits are manifold and far outweigh its flaws and occasional inequities. "Patents exist because at the end of the day they confer value to society," he says. "It's a legal monopoly for a given period of time, but there are societal benefits, and they do much more than just restrict competition for a period of time. The pace of product development, the pace of knowledge creation, the pace of value to consumers would be slower if the investors in that knowledge didn't have some way of ensuring they could recoup that investment over time. If we go to a marketer and a retailer, they are going to want to find ways to differentiate offerings in the marketplace, and patents are a principal means to do that."
Almada agrees. "If you can weave your unique product together with solid science, you have a double layer of protection against people using your science and attributing it to their product."
As a case in point, Lonza is about to do just such a 'weaving.' "We've got a product we are in the process of launching," says Murray. "Because we have a strong patent, we can make significant investments to back it up. This helps the whole chain from manufacturing to promotion to retail. It allows you to establish a price premium as well, without the worry that someone will come along and chop your legs out from under you."