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Avoiding Traps in the F&B Sector

Issued: February 22 2018

While chefs, restaurateurs and shop owners may make a mean barbecue, century egg or nasi lemak, they probably don’t have the experience to properly protect their famous recipes or the designs of their restaurants. But by keeping just a few things in mind – and a visit to an IP expert – those rights can be easily protected, lawyers tell Asia IP.

Since April 1, 2016, the Examination Guidelines for Patent and Utility Model in Japan has been revised, and a new patent system has been introduced in the field of food and beverage invention, that is, the use invention of F&B. According to the previous guidelines, even when novel use or application of an ingredient of F&B was found, such use or application of the known ingredient was not considered as a distinctive feature. On the other hand, under the revised guidelines, novel use or application of the known ingredient can be a novel technical feature in a claim. “For example, the revised guidelines exemplify that the invention of a food composition for preventing hangover, comprising an ingredient A as an active ingredient is distinguished from the mere food composition comprising the ingredient A as long as (i) the use in 'preventing hangover' is based on the discovery of an unknown attribute of the ingredient A and (ii) the use based on such attribute is distinguishable from any known uses,” says Kunimitsu Komatsu, a patent attorney at Nakamura & Partners in Tokyo. “Because the market size of functional foods is increasing in Japan, the new system for the use invention of F&B could motivate researchers of functional foods.”


However, the scope of a granted patent of the use invention of F&B could be a subject of dispute. “For example, it is very clear that an F&B product explicitly labeled with the patented use of the claimed ingredient infringes on the patent, and no label and no advertisement of the patented use result in no infringement,” Komatsu says. “On the other hand, even if a label of an F&B product does not explicitly describe the patented use, such a product may be considered as an infringing product if its advertisement on a website explicitly describes the patented use of the claimed ingredient, or if its label or advertisement implicitly describes it.”


In addition, ingredients of F&B could be used for various purposes, and the same purpose could be achieved by different ingredients. “Accordingly, some F&B products may comprise the claimed ingredient for conventional purposes, but may also comprise an active ingredient different from the claimed ingredienttoachieve the same effect as the patented use,” Komatsu says. “It would be very difficult to assess the infringement of such products.”


“Of course, judgement of infringement is made on a case-by-case basis, but there is no court decision in Japan regarding the scope of the use invention of F&B at present," Komatsu adds. “Companies in the F&B sector cannot know how the court would assess the scope, but still have to take some measures against the use invention of F&B filed by other companies during the development of F&B products.”

Lin Li Lee, a partner at Tay & Partners in Kuala Lumpur says that the common mistakes the F&B sector tends to make when filing for IPRs include:

1) Ill-timed filing of IPRs;

2) Not conducting searches beforehand to ascertain whether the mark, patent or industrial design is available;

3) Not checking on the registrability of a mark, patent or industrial design before filing;

4) Not checking on compliance with labelling or packaging laws;

5) Not working closely with IP counsel during the developmental stage;

6) Attempting to apply self-remedy or DIY solutions to IP issues;

7) Entering into the wrong contracts;

8) Forgetting about copyright; and

9) Forgetting about non-disclosure agreements.

“Before discussing trade secrets, exchanging know-how or confidential information, we advocate having nondisclosure agreements in place,” Lee says. “We strongly recommend working closely with IP counsel even at the developmental stage of F&B in order to minimize complications or delays to registration and maximise protection of the IP and the value of it.”

Brit Nelson, a partner at Jackson Walker in Houston, generalizes the mistakes into three categories, namely: not knowing what you don’t know, not timely getting help, and not proactively considering a third party’s IP.

Not Knowing What You Don’t Know

Great businessmen are not necessarily great IP protectors. The oversight is not due to lack of intelligence, but due to the lack of knowledge and experience in a specialized field with traps for the unwary. “Know your strengths, but know that you don’t know all that you need to know about IP and get help to make informed decisions. This trap particularly applies to smaller companies and start up enterprises. It also applies to some of the largest companies because of their organizational complexities of communications between different departments in changing processes, updating products/devices, or producing a different marketing approach,” Nelson says. “A particular department may not realize the importance of the need for protection of those components. They may fail to communicate to the proper departments the planned changes before too much momentum occurs. Often, the changes are implemented even though IP is not protected.”

“As an example of potential IP, let’s imagine a beverage company creating a new beverage dispenser with new selfcleaning operations. It will have updated artwork on the face of the dispenser for consumer appeal and display the name of the product and the company logo. You might protect the associated IP in multiple ways. Failure to consider the multiple ways can lead to loss, often a permanent loss, of IP that would keep a competitor from entering the market with a similar design. Registrations for a trademark on the dispenser, trademark on the beverage from the dispenser, trademark on the brand of the dispenser, and trademark on a logo can be very important. If the dispenser continues a generally well-known shape that is a characteristic of your company, then registering trade dress in a trademark application for the shape may be appropriate. Registration of multiple variations of your main domain name stops third parties from registering those variations and misusing or diluting your branding created through your main domain name. By your registrations of variations on the main domain name, you can redirect customers to your main domain name and limit a third party from registering those secondary domain names that customers unwittingly might use and be misdirected to that third party’s site,” Nelson says.

“A copyright on the artwork on the dispenser, such as on the front face of the dispenser, can keep others from misappropriating your efforts. A copyright on the shape of the dispenser can also be possible if the dispenser or dispenser components have a shape with creative aspects. A registered copyright on the software or firmware code used in producing the beverage, self-cleaning the machine, or otherwise controlling the machine can be important. Registered copyright on the associated marketing brochures, website materials, manuals with artwork or important to keep the competitor from misusing your work. Trade secrets on mixing formulas, flow rates, techniques, software for producing the beverage and other trade secrets need to be protected from disclosure generally by employee and contractor agreements and taking steps limiting access to such information. Adverting compliance with government and industry regulations on ingredients, product literature, any claims of the benefit of the product are important as well. The protection could include a utility patent on the particular self-cleaning function or other aspects of the beverage dispenser. The protection could include a design patent for a particular shape of the overall dispenser or key components of the dispenser that are separate from just their functionality.”

The bottom line is to know that you need help in some way at some level on some subjects and get early advice from IP counsel, Nelson says. “For start-ups and small companies, that means not asking your friend, cousin, or brother-in-law who may be a great business litigator or tax attorney. Navigating through the professional aspects of possibilities needs professional assistance from IP counsel.”

Not Timely Getting Help

Getting help later may sometimes be very costly, Nelson says. “In many instances, particularly with patent and trade secrets and sometimes with trademarks, ‘later’ is too late with a permanent loss of IP. To help remember, we’ll phrase a remedy to this mistake as the three S’s: starting early, staying in frequent communication, and solidifying rights.”

Starting early helps staying ahead of marketing efforts and operations to allow sufficient time to consciously consider the different IP protection options. Starting early can also help direct initial efforts and fine-tune the efforts as progress occurs. Starting early also helps avoid loss of rights by inadvertently not taking action, or in some case taking action, that can cause a loss of rights. “Initial choices can permanently damage your IP or cause an infringement of a third party’s IP that sometimes requires restarting with new IP. Trademarks can be improperly used and lose their status as a trademark or improperly chosen resulting in defending against a third-party infringement claim and loss of your trademark work and development expenses. Trade secrets can be permanently lost, particularly by improperly contacting potential suppliers of products and services for your company. Copyrightable work product may not be secured or may be owned by someone else than you intended, such as work product produced by a vendor or contractor for your company without an obligation for assignment. Patents can be lost immediately in most countries if the invention is disclosed in a product brochure or website, sold in the marketplace, used in secret to produce a product that is sold in the marketplace, or even offered for sale to others,” Nelson says. “In some countries, such as the US, patents can be permanently lost by providing information to a vendor for a bid for a new product, who then returns the bid to your company, creating an offer for sale of the product.”

Staying in frequent communication with the research and development and marketing departments, and timely interfacing with IP counsel can be critical. “A quick note updating IP counsel can help avoid traveling down a path of wasted effort that has to be discarded. It is not uncommon for a marketing department to launch a new advertising program and fail to consider the trademark and copyright aspects of the programme. It is not uncommon for early contracts with consultants, vendors, or even employees to not expressly provide that the work product is to be owned by the company. It is not uncommon for engineers and designers to present a paper at a conference on a new concept, even by approval of management, but fail to consider that the disclosure may permanently damage patents and other IP associated with the concept,” Nelson says. “Some companies ask their IP counsel to periodically attend company meetings discussing new designs or marketing programmes to stay up to date and be able to provide timely advice.”

Solidifying rights to selected IP is a natural out-flow of taking the above preemptive steps. “Your IP counsel who has been timely informed as the process, device, product or marketing programme is developed can and more effectively help you solidify your IP with registrations, agreements, licenses, and procedures for keeping your IP valuable,” Nelson says. “Your IP counsel can provide advice and help avoid misunderstandings on ownership of website material, advertising brochure manuals, artwork, trademark searches and clearance opinions, patents, and other proprietary rights.”

Not Proactively Considering a Third Party’s IP

It is not uncommon for a company to launch a programme or product and, after the launch, to discover that a third party already has relevant IPRs. As a result, meaningful IPRs may not be available to the company. “Time and talent can be wasted,” Nelson says. “Two S’s help reduce those unfortunate circumstances: searching for IP of third parties (otherwise known as ‘look before you leap’) and staying updated on competitor’s efforts.”

Searching for IP of third parties can save tremendous efforts, wasted expenses, embarrassment to you and your company, and liability for damages. “The early investment can reap significant savings and results. Initial trademark searches can be done either within the company and by IP counsel. More sophisticated searches by trademark search firms that scan across multiple databases of national, worldwide, company names and products, domain names and web searching are also possible and relatively inexpensive. Therefore, for any important trademarks, searching is highly recommended prior to deciding on a trademark and any marketing programme based on the trademark. Similarly, other rights can be searched, such as patents by searching national and international databases for relevant technology that may be protected by patents,” Nelson says. “The proactive searching helps avoid unintentionally intruding into a third party’s realm who may have a legitimate claim against your company.”

Staying updated on competitors’ efforts help guide your efforts in at least two ways. “First, staying updated allows you to determine whether your competitor is already developing rights in a similar manner as you are. You can guide your development efforts and marketing to avoid intruding on the competitor’s IPRs that exist before your development efforts as a defensive move,” Nelson says. “Second, you may be of the capture areas that are available around the competitor’s IP. Processes, F&B devices, products from such devices can map out the IP areas occupied by your competitor, and then you can create IP around your competitor’s IP that may still be available. Thus, you effectively foreclose the competitor from expanding into the IP area that you have preemptively occupied.”


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