New Zealand: Protecting IP in novel food ingredients & derived products

Last Updated: 12 October 2011
Article by Shayne Nam

Food ingredients are the life blood of the food industry, and many commercial products contain "secret ingredient(s)" which their manufacturer claims give them a competitive advantage over rivals.

In today's market of fast moving consumer goods, the push to develop or discover improved ingredients that act as substitutes for natural agents while providing benefits such as increased nutrition and shelf life has never been stronger. For that reason alone, food ingredient manufacturers devote a large amount of resources for continued R & D to discover that vital ingredient.

Once they have developed a novel1 food ingredient(s) or food product containing them, and want to maintain the advantage over competitors, there are some options available.

Keep as a trade secret?

Trade secrets are commonly used in the food industry to protect ingredients, compositions, formulas, and methods of manufacture or processes. The use of trade secrets may be applicable where the product/process does not meet certain patentability2 criteria. An essential requirement of trade secret protection is that total secrecy is maintained. This requires that people inside the organisation do not divulge sensitive information to anyone external.

In some circumstances, trade secrets can provide advantages over other types of intellectual property3 (IP) protection such as patents. These include no registration costs, and protection will remain indefinitely subject to the information remaining a secret (compared to 20 years for a patent)4.

However, there are several disadvantages associated with the use of trade secrets. For example, vigilance must be constantly maintained to ensure confidentiality of the secret. In practical terms this can be difficult depending on factors such as the nature of the secret, and the loyalty and trustworthy nature of employees.

Coca-Cola is often touted as an example of a successful trade secret in action. However, with recent advances in analytical techniques, and the emergence of Pepsi-Cola, whether it still is, or will remain a trade secret is open to debate.

Other food ingredients and products containing them may be readily assessed and the "secret ingredient" obtained via 'reverse engineering'. In fact, some companies specialise in reverse engineering food ingredients and related products. Once the secret has been discovered, any third party is entitled to use it - only patents provide exclusive rights to exclude third parties from making commercial use of it.

Exclusive agreement with food ingredient supplier

Most food manufacturers source raw food ingredients from specialist ingredient manufacturers and suppliers. If the food manufacturer has developed a new food product which contains a vital proprietary food ingredient, one way for them to maintain their competitive advantage is to have an exclusive agreement with their ingredient supplier to prevent their competitor obtaining the same vital ingredient and/or composition.

However noted, a disadvantage of relying on an exclusive agreement is that it does not prevent a competitor from obtaining information on a new food product via "reverse engineering" and then producing the same product using generic ingredients.

In addition, what happens if the ingredient manufacturer goes out of business or is no longer able to supply the ingredient?

Patents - a viable protection option

One of the most applicable forms of IP protection for novel food ingredients and derived products is patents.  Patents for novel food ingredients can be wide in scope and cover many variations of a basic product or process.

Some successful examples include the patenting of the flavour enhancer monosodium glutamate (MSG) in 1908, and the artificial sweetener sucralose in 1976 by Tate & Lyle. More recently, Senomyx (a company which develops novel flavour ingredients and is the owner5 or exclusive licensee of several hundred patents) has recently been granted a patent for S2383, a unique flavour ingredient which allows the quantity of sucralose in food products to be reduced by up to 75 per cent while maintaining the desired sweet taste.

It is also possible to protect a combination of two or more known ingredients if it can be shown that synergy exists between these ingredients, or there is an unexpected effect by combining them. Depending on the degree of inventiveness, it may also be possible to protect related products which provide similar benefits. Tip Top, one of New Zealand's leading ice cream companies, owns a number of patents. An example includes a patent for its Memphis Meltdown® ice cream which combines known ingredients in a unique arrangement (triple layer dipping using caramel and chocolate).

Patenting food ingredients and derived products provides a wealth of business opportunities as the scope for on-licensing that patent could be considerable. The specific advice of patent specialists will ensure that companies can capitalise on the IP of their novel food ingredients and derived products. This means they can maintain their competitive advantage and market edge.

Footnotes

1 One of the requirements for patentability and the first part of the test for inventive step. In patent law "novel"simply means new or not previously known. New Zealand currently has a "local novelty" requirement for patentability. This means that the subject invention will not be novel (and therefore will not be patentable) if it was known or used in New Zealand before the date on which the application for a patent was filed. There is a proposal to amend our legislation in late 2010 to move to an "absolute novelty" standard. This means that the subject matter must not be known or used anywhere in the world before the date of application in New Zealand. If the subject matter is known or used before the date of application, this is known as "anticipation".

2 The extent to which an invention is able to satisfy the legal requirements to be the subject of a granted patent. This is dependent on those aspects of the invention for which protection is sought, as defined by the claims of a patent application. In general, the claims of a patent must include at least one feature that is novel, involves an inventive step and is useful to be patentable. A patent search can be carried out to assess whether an invention is patentable in view of known technology.

3 Refers to the ownership of an intangible thing - the innovative idea behind a new technology, product, process, design or plant variety, and other intangibles such as trade secrets, goodwill and reputation, and trade marks. Although intangible, the law recognises intellectual property as a form of property which can be sold, licensed, damaged or trespassed upon. Intellectual property encompasses patents, designs, trade marks and copyright.

4 A proprietary right in an invention which provides the owner with an exclusive right for up to 20 years to make, sell, use or import the invention. In exchange for this monopoly the patent is published so that others can see how the invention works and build on that knowledge. The patented invention may also be used by the public once the patent lapses.

5 A legal term to describe a person entitled to make an application for a patent. In New Zealand this includes any person claiming to be the true and first inventor, the assignee of the inventor, or the legal representative of a deceased inventor or his/her assignee.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

James and Wells is the 2010 New Zealand Law Awards winner of the Intellectual Property Law Award for excellence in client service.

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