Intellectual property (IP) assets have come into the spotlight with the passage of the America Invents Act (AIA), the U.S. Patent reform law signed by the President last fall. This event marks the first major revision of U.S. patent law since 1952. In light of the change from being a “first to invent” to a “first-inventor-to-file” system and other provisions taking effect on March 16, 2013, business owners now more than ever need to take a “boots on the ground” approach in order to secure and preserve their an IP position in the marketplace.
Because the current marketplace in nutraceuticals, dietary supplements and functional foods is so dynamic and lucrative, it is very competitive and as a result, very dynamic, with changing consumer tastes and bidding wars for suppliers with the hottest items. To ensure a steady supply of products in such a competitive atmosphere, entrepreneurs intent upon adapting during economic downturns while maintaining proper investment ratios need to consider developing their own patent portfolio, locking in access to a product or process, thus enabling greater control of specific market niches, tamping down potential competition and, guaranteeing survivability during tight markets.
What is patentable, in the first place? Generally, “anything under the sun made by man,” may be eligible for patent protection. This includes compositions, articles of manufacture, improvements thereof, or useful processes. An important subset of inventions pertinent to the nutritional and dietary supplement industry include:
New combinations of ingredients
Purified or enriched extracts
Therapeutic treatments or methods of use
Therapeutic method of using an old compound
For example, a purified or enriched botanical extract or bioactives isolated from a natural material may be protected by a patent if they are new, novel, and unobvious.
When first considering if whether seeking patent protection is appropriate, inventors and companies should be asking themselves: what are the strengths and weaknesses of currently available products and/or processes; what problem are we solving with our invention; are we doing it better; if we use or sell our product or process can someone else copy or recreate it easily; and what advantage is there to bringing this product or process to market. If, on the balance, the answers to these questions highlight potential areas for competitive advantage, you should be exploring your patenting options.
If you can chart a reasonable course of opportunity for patentability, a patent application may be filed. Applicants, one or more individuals (or a company), can follow one of two paths when seeking patent protection for their inventions. The first path involves the filing of a regular or non-provisional patent application which initiates the formal process of examination with the United States Patent & Trademark Office (USPTO). Formal examination is an extended process of revision and negotiation of patent claims. The patent claims will ultimately define your exclusive right in the marketplace. Patent applications and issued patents may be analyzed in order to determine monetary value, licensing revenue, royalty streams, among other financial metrics. A regular patent application filed in the United States starts a 20-year clock of pendency and protection that may be extended to worldwide coverage, depending on the willingness to invest time and money.
The second path involves the filing of a provisional patent application. In this case, an inventor, investor, or company (as applicant) can effectively drive a stake into the ground while concurrently developing the product or market, by filing a U.S. Provisional patent application. The provisional track allows some flexibility in timing at a more nominal cost, providing a one year period for additional development, all before the filing of the full patent application. This option is available to all U.S. filers. As a bonus, this one year period does not count against the aforementioned 20-year patent term.
For both paths the application of sound scientific principles and practices in the development of new inventions is a key consideration when seeking patent protection. Record keeping is extremely important. If detailed laboratory notes (or even back-of-envelope ideas) are available, they should be summarized in a record of invention, which may provide the information necessary to reach a go, no-go decision, or serve to initiate a patent search to gain more complete information with regard to competitive position.
The collection and documentation of supporting data is also important. For example, in the case of a nutraceutical product or formulation that has been developed (and perhaps experimentally tested) using an enriched extract or new botanical combination, in vitro or animal studies may be correlated to potentially useful in vivo effects. A reasonable correlation between the evidence and the asserted utility is sufficient to claim a use. Initial studies may be augmented by follow-on clinical studies in order to further support the patent claims.
Finally, there is no substitute for continuing re-evaluation and analysis of your present patent portfolio based on sales, competitive environment, production and marketing costs, and other market drivers. This inevitably leads the administrators of modest or larger patent portfolios to construct and cherish dynamic, inherently useful valuation charts, which should be based on the most current and relevant information available to the industry executive team. This principle has been recognized for some time in the accounting and finance field.
And also bear in mind that if a company desires the best worldwide protection for their invention, it should file a patent application as soon as possible, ideally before any public disclosures or on-sale activities. Another modernizing feature of the new Patent law (AIA) is that an applicant for patent may be a company or other legal entity, provided the inventor(s) have assigned their invention, or are under an obligation to assign, under, for example, an employee agreement.
The scope of this article does not touch on other effective IP instruments: to protect brands (Trademarks), ornamental designs (Design Patents), original works (Copyrights), or in-house trade secrets. These and other topics are appropriate subjects for future installments. Furthermore, regulatory issues may loom large as commercialization is implemented for a product going to market. These and other issues need to be considered as you build your patent portfolio. Be sure to seek out a competent patent prosecution attorney to work with, who will guide you through the process to bring your inventive, marketable and scalable ideas to fruition.
Leahy-Smith America Invents Act, Public Law 112-29, Sept. 16, 2011 to amend Title 35, United States Code.
Manual of Patent Examining Procedure, (M.P.E.P.), Eighth Ed., Rev. 9 (Aug. 2012) 2164.02.
T. Cromley, J. of Accountancy (Nov. 2004) 31-34.
Van Gieson, Intellectual Asset Mgt. (Jan/Feb 2012) 31-38 (www.iam-magazine.com).
M. Amin, “Evaluating an IP Portfolio,” SupplySide Insights – R&D (April 2012) 1(1): 23-26.
Talati and A. Gurnani, “FDA Issues Controversial Draft Guidance on New Dietary Ingredients,” FDLI Update (March/April 2012) (2): 10-12