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IP rights in the nutraceutical sector

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Celebrating World Intellectual Property Day and understanding the various types of IP protection available to protect new product development

According to Mordor Intelligence, the global nutraceutical market (covering functional foods, functional beverages and dietary supplements) is projected to grow at a compound annual growth rate (CAGR) of 7.5% for the period 2022-2027, with Europe accounting for the biggest market share. The nutraceutical sector is home to significant innovation, with companies looking to develop new consumer products and striving to keep up with consumer trends, all while ensuring compliance with evolving industry regulation—such as EU Regulation 1169/2011 relating to food labelling and EU Directive 2002/46/E laying down rules for vitamins and minerals used in food supplements.

Protecting the intellectual property (IP) resulting from the research and development underpinning the sector can help companies to maintain their competitive advantage by preventing others from exploiting the fruits of their labour. As with other innovative sectors, there are different forms of protectable IP rights applicable to the nutraceutical sector that are of varying value, examples of which include:

Patents – provide protection for products (including foodstuffs, beverages, supplements, packaging and machinery), processes (such as recipes or production methods), and uses of products (e.g., cosmetic or medical uses);

Trademarks – identify a product as being from a particular company and include logos (for example, KitKat’s “have a break…”) as well as branding;

Trade secrets – can endure indefinitely if the invention remains a secret (which has worked well for Coca-Cola’s original formula), but provide no protection if another company independently develops the same product or process;

Registered designs – provide protection for aesthetic aspects of products, such as packaging or aesthetically-pleasing food products; and

Copyright – subsists automatically and protects only against copying of literary, dramatic, musical or artistic works (e.g., artwork on product packaging or the written form of a recipe).

Trademarks and branding play a vital role in distinguishing products and services in the nutraceutical sector, and it is therefore no surprise that these IP rights are an important focus for the sector. However, the possibility of patent protection should also be an early consideration for innovative companies for much the same reasons as it is, for instance, in the pharmaceutical industry. Patents can provide the means to ring-fence an area of innovation so that it cannot be exploited by competitors to help reinforce a dominant market position.

Trade secrets, or confidential know-how, have been relied upon historically by the food and drink industry to a varying extent to maintain competitive advantage, typically beyond the maximum lifetime of patent protection (20 years). However, trade secrets are only useful to the extent that it remains possible for the know-how to remain secret, and it remains difficult for other parties to replicate the know-how by, for instance, reverse engineering a product. Trade secrets are therefore not always the most appropriate way to protect innovation, particularly as advances in chemical analysis can make reverse engineering more achievable than it has been previously.

Patent protection represents an alternative form of IP protection that, despite not providing indefinite protection that is potentially possible with trade secrets, has many benefits to innovative companies. Not only do patents offer a monopoly right, they are assets that can be used to add value to a business that can be attractive to investors, and they can be sold or licenced as with other forms of property. Products covered by granted patent rights can also benefit from corporate tax relief. Granted patent rights can also be a useful marketing tool—a stamp of approval that a new product is innovative and unique.

Realising the full potential of IP rights in the nutraceutical sector can come with unique challenges, particularly because of European and national legislation concerning the marketing / labelling of such food stuffs (and indeed considerations whether stricter medicines regulations should be applied to some nutraceutical products). For instance, often what can be useful to help obtain grant of a patent application for a new invention in the nutraceutical sector (e.g., a health benefit of the innovation) cannot be included in the product labelling to consumers easily. Some innovations must also be “claimed” in very particular ways in patent applications to avoid certain exclusions from patentability. Nevertheless, given the increasing competitiveness of the market, there has been an upward trend in innovators filing patent applications at the European Patent Office, with new applications in the “food chemistry” category increasing by 6.1% in 2021 over the previous year.

Author

Speaker circled  (7).png Michael Stott
Partner at Mathys & Squire LLP

Want to learn more about IP rights within the nutraceutical industry? We invite you to attend Michael’s session about Protecting innovation in the Food & Beverage, Functional Food and Nutraceutical sectors in Europe’ in-person at our Vitafoods Europe 2022 in-person show in Geneva on 11 May 2022 at the Main Stage in Geneva. Click here to register now.

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