Two companies in the ingredients business are illustrating that patent infringement of intellectual property (IP) can be beaten in a climate where the majority of transgressors are never brought to justice.
Dutch ingredients supplier Kievit is fighting a sophisticated trademark infringement racket in the Far East it estimates is costing about $3 million per year.
The company is engaged in proceedings against suspected parties in China and Taiwan that it accuses of manufacturing and selling inferior products that bear forgeries of Kievit's name and logo.
In the Chinese situation, unbeknownst to Kievit, a "smart guy" had registered the Kievit name and logo before they entered the market seven years ago, according to Kievit commercial director, Arend Bouwer. Two years ago, Kievit noticed an imitation of its industrial-sized 25kg Vana brand of non-dairy creamer was being sold for less and using inferior Chinese-sourced ingredients.
"They approached the same distributors we use so that in distribution outlets now, you can see our creamer next to the fakes," said Bouwer. "They copied the total bag design, including saying it is produced in Holland while theirs is produced in China. They have also copied the small logo of our bag supplier even the inkjet batch numbers. It is very bad for us because sometimes we receive quality remarks about products not produced by us."
Kievit has mounted a case against the infringer in the Chinese courts for illegal registration of a trademark and expects a decision this year.
In Taiwan, where Kievit owns the trademark, a number of infringers have been producing 1kg products bearing the Kievit logo and company details, and aiming them at consumers rather than businesses. Kievit employed private investigators to locate them, and letters of intent have been sent to suspected transgressors. Those who continue operations will be taken to court, Bouwer said. "The Taiwanese authorities are supporting us completely."
Another company battling patent infringement is New Jersey-based ingredients supplier, Sabinsa. The company obtained an emergency injunction against an Indian company, Alchem International, which resulted in the confiscation of sales and promotional materials related to two of its extracts, for which Sabinsa has issued patents. The confiscation took place at the recent SupplySide East trade show in the US.
"These companies will attend or exhibit at a trade show, offer to sell ingredients that are protected by a patent, and leave the country before action can be taken by the patent holder," said Sabinsa executive vice president for marketing and sales, Mark Sysler.
Despite these success stories, the expense typically associated with patent litigation can exceed hundreds of thousand of dollars, which is too costly for many small companies.
"The initial sticker shock of patent litigation action is intimidating and thus scares away a number of smaller companies," said Katie Richardson, a Virginia-based patent litigation attorney with Burns Doane Swecker & Mathis LLP. "But a patent does offer both a marketing advantage and a mild competitive barrier to others."
In the US, only 6.9 per cent of patent suits are ever tried, while 76 per cent of patent suits are settled out of court. Biotech and pharma patents are litigated almost twice as often as other patents.