Product companies in the 21st century must be agile and capable of rapid execution. The competition has never been so fierce due to the proliferation of the global economy, including typical competitors in the market, former manufacturers and future competitors who are currently working within the company.
Historically, businesses primarily faced competition in the United States, but the ease of transportation and marketing through the web makes anyone a potential competitor. As technology increases the speed of product development, technology, such as 3D laser scanners and mass spectrometry, accelerates reverse engineering and copying other people’s products.
Manufacturers, especially non-US manufacturers, will sometimes continue to produce and sell your products to other distribution channels after you switch to a new manufacturer to avoid reassigning workers and production lines.
Companies always face the challenge of current employees or contractors, such as computer programmers, leaving the company. Employees often have access to software and sometimes to confidential or secret information.
Consumer Product Competition Challenges
Due to the ease of copying, reverse engineering, and unscrupulous manufacturing partners, consumer product companies often find themselves with competitors soon after a new product is released, often within months. Also, the more popular the brand, the faster competitors show up. To make business even more difficult, the ability of competitors to distribute counterfeits has become much more prevalent on Internet sales platforms (eg Amazon and eBay).
The most recent (and problematic) competitive trend is for US competitors to buy consumer products, send those products to Chinese organizations that review the author’s issued and pending patents, and formulate design products to produce similar products which do not infringe patents. . This design effort around the patent is legal, but often has a material impact on the author of the consumer product.
Two possible competitive defenses include intellectual property (IP) protection and over-marketing of the competitor. External marketing can be difficult with today’s low-cost online marketing tools. Meanwhile, takedown policies for intellectual property infringement vary for each major marketplace.
Intellectual property generally includes patents, trademarks, copyrights, trade secrets, trade dress and know-how. It is important for businesses to perform intellectual property maintenance to protect their ideas. These include:
Patent Assignment Provision: All officers, employees and contractors/consultants must be required to assign intellectual property, including inventive ideas. Without a written assignment, the owner of the invention is the employee, and their ability to leave your company with the idea of becoming or joining a competitor, or even worse, licensing your technology to a competitor (yes , it is legal)! The assignment of the patent should help deter executives, employees and contractors from becoming a competitor.
Copyright: For products that include software, a copyright application must be filed with the US Copyright Office for each major update. File within three months of publication to be guaranteed statutory damages (and attorney’s fees) for infringement.
Protection of Trade Secrets: Maintain a list of trade secrets and limit access to those with a need to know.
Intellectual Property for Consumer Products
Such rapid competition has placed a greater burden on securing intellectual property earlier in a product’s lifecycle. How can you do this? A systematic working relationship between a product developer and an IP advisor must exist.
Here’s a strategy to better integrate your IP program with product development to secure IP earlier in the product lifecycle. Communications should take place in three phases:
- After concept acceptance but before design/engineering: For consumer products, since the cost of patent infringement is so high, it is highly recommended to perform a novelty search and/or a freedom to operate search to help ensure that the concept has innovative features that are potentially patentable and help avoid patent infringement. From the search results, the patent attorney can focus on inventive features to protect the product and guide the company on how best to avoid patent infringement. Consider filing a provisional utility patent application and/or design application(s) at this stage.
- Once the technical design is complete: Once the inventive features are learned, file one or more patent applications. These must be provisional or non-provisional depending on the potential for the evolution of the product. The budget can also play a role in the decision. (Note: For products with unique ornamental design features, file one or more design requests to avoid inadvertent loss of international rights.)
- After prototyping is complete and before production or product announcement: Perform a final check to see if any additional product features need to be protected. It is important to note that due to the problematic tendency to “design around”, ensure that the scope of design alternatives is wide enough to help minimize design alternatives.
Make sure the company’s workflow includes the IP attorney to ensure all patent filings are complete before announcing or releasing the product! Also ensure that trademarks and copyrights are registered and patent and trademark clearance assessments are within acceptable risk tolerances.
Timing is everything
A utility patent normally takes 18 to 30 months to be granted (fast track: 6 to 12 months) while design patent applications take 12 to 18 months to be granted (5 to 9 if fast track).
For consumer products, the goal is to get a patent issued as soon as possible to enforce against competitors. Applications for utility and design patents may be filed with a Expedited review demand. When patent examiners examine expedited applications, a more “cooperative” examination usually takes place. Design patent applications filed for expedited review (under 37 CFR 1.155 must include Form PTO/SB/27) to require a pre-review search must have been completed and a list of categories/subcategories and an information disclosure statement to be filed.
Trademarks generally take 9-15 months and no expedited filing is possible. Once desired product names are determined, clear the names to reduce the risk of having to rename/rename later due to another trademark infringement, and submit a federally registered trademark as soon as possible so that a trademark is granted before or early in the product’s life cycle.
Copyrights take 6-12 months to clear, possibly 10 days if expedited (existing infringement usually needed to expedite). Be sure to protect your product as much as possible, including manuals, photos, software, etc. Remember to protect your company logo in addition to the trademark, as a counterfeit often includes the company logo on counterfeit products. It is suggested to include a copyrighted logo on the goods so that counterfeit products that also include the copyrighted logo will face copyright infringement (relatively speaking, it is VERY easy to remove goods from importation and distribution with copyright infringement).
A formal copyright program is useful to ensure that copyrights are part of the intellectual property protection program. Registering software makes programmers more likely to buy software when they leave the company. Moreover, since a copyright must be registered to file a copyright lawsuit, you can also file a claim for damages in a timely manner. For software records, be sure to file the software with redactions to show that the trade secrets are in the software, thus supporting subsequent trade secret enforcement.
These are granted immediately. For life science software and technology, it is recommended to have a formal trade secret program in place that documents the actual trade secret and to maintain formal trade secret protection. The court will want to know what the trade secret is and how did you protect the trade secret.
When marketing the product, mark your product with appropriate IP identifiers, such as “Patent Pending”, patent number when granted, appropriate trademark symbol and/or copyright notice. Product and packaging branding will at least make your competitors think twice before producing a counterfeit or similar product. Remember to remove the patent marking when the patent(s) expire.
Beat the competition
Due to the rapid competition with consumer products, intellectual property assets must be protected earlier in the product life cycle for maximum protection. As such, IP must be properly incorporated during product development, and each IP asset must be accounted for and filed in a timely manner. If patent applications are expedited and granted before competition appears, competitors are reduced and infringing products are removed from the market, allowing your business to thrive.