In a previous column, we addressed the use of trademarks as a tool to create consumer recognition, and the importance of “freedom to operate” for marketing products, both significant elements of a company’s intellectual property strategy.

In this issue, we focus on another element of intellectual property: patents. This is not a legal opinion for your intellectual property (IP) options, but rather a business perspective to aid in developing your IP strategy.

The investment for bringing new nutritional ingredients and products to market is increasingly expensive. At Natural Products Expos 20 years ago, larger dietary supplement companies would launch a wide array of new products. Much of the product novelty was based on a new “story,” and being first-to-market was important. The strategy was akin to throwing spaghetti against the wall and seeing what sticks. Since then, the importance of proprietary clinical research as well as the cost of developing, manufacturing, and launching new products has increased significantly.

There are also new players in the ballgame. Over the past few years, I have worked with several pharma biotech start-up companies that were interested in adding nutraceutical products to their portfolio pipeline. Quite different from the investments most dietary supplement companies make in new product development, the biotech start-up industry is well-funded and is spending millions of dollars in research for novel bioactive ingredients. They move at a much faster pace compared to the traditional pharma model; however, they cannot afford to launch products quickly and just hope they happen to “stick.”

Given the significant investments these companies are making, they value protection for their intellectual property. Unlike the pharmaceuticals they are developing, the nutritional ingredients may not be new molecules with corresponding regulatory protection.

Protecting Your Invention
So then, how does a nutraceutical company, regardless of size and budget, protect its inventions? Patents are one option, and are far from unique for dietary supplements. There have been 7,180 patents issued or pending that use the term “dietary supplement” or “nutraceutical” in a U.S. patent claim. More broadly, there have been over 32,500 patents issued or pending that use one of those terms in the body of the patent (e.g., specification).

To be clear, not all patents are equal. The strength of a patent is largely defined by the strength of the claims. To help understand how to devise a sound IP strategy, let’s begin by summarizing its key components.

Intellectual property is a term which collectively refers to “creations of the mind” such as copyrights, trademarks, patents, trade secrets, and related rights. Under intellectual property law, owners and/or creators of a particular IP have certain exclusive rights. Copyrights, trademarks, and patents protect different things and are not interchangeable.

For example, copyright protects “original works of authorship” such as literary and artistic works. The owner of a copyright has an exclusive right to reproduce or copy or produce derivative works, to name a few entitlements. To secure a copyright, a registration with the U.S. Copyright Office is not required, but it is highly recommended. 

Trademark protects, for instance, a word, phrase, design, sound or combination of any of those elements. The trademark is affixed to the goods/products and identifies the source (e.g., a brand) of goods/products of one party from another party. Service marks are similar to trademarks, except they identify the source of services rather than goods.

Patents uniquely protect an invention. A patent may be granted for a new, useful, and non-obvious invention, and gives the patent holder a right to prevent others from practicing the invention without a license from the inventor. Patents are grants made by the government that confer upon the creator of an invention the sole right to make, use, and sell that invention for a set period of time. Patentable subject matter includes, for example, composition of matter (e.g., novel nutritional formulations), articles of manufacture, method of nutritional use for specific indications, and method of manufacturing.

Simply put, a patent is a contract with a government that affords to the patent owner the right to exclude others from making, using, offering for sale, selling, or importing the invention (as defined by the claims of a patent). Patent rights have a limit on life span, geographic area, and the scope of claim coverage.

The duration term of a patent lasts for a maximum period of 20 years from the filing date, provided the patent is “maintained” for the entire period by timely payment of maintenance fees. Upon expiration of a patent term, the patent is in the public domain and may be used freely by anyone.

Patents are limited to the geographic area of the country of issuance and are available to be used by anyone in countries in which they are not issued. Worth mentioning, a common mistake with patents involves equating a published international application filed as Patent Cooperation Treaty (PCT) with an international patent. There is no such thing as an international patent; publication of a patent application does not qualify as a patent either.

To be considered useful, the invention must provide some immediate benefit to the public. An inoperative invention is not a useful invention; however, the mere identification of the physiological activity of a compound that is relevant to an asserted nutraceutical use provides an “immediate benefit to the public” and satisfies the utility requirement.

To be novel, the invention must not previously be known or used by others. This includes items that may have been previously patented, described in a printed publication, or otherwise disclosed to the public.

The final condition—non-obvious—means the invention must not be an obvious modification of a known item or process. This obviousness criterion is evaluated from the perspective of a hypothetical person of ordinary skill in the prior art.

Can Natural Products be Patented?
Examples of what can be patented include a compound or ingredient isolated from a natural product or a composition or mixture not found in nature. Also consider protecting: 1) a process of making a compound/composition, 2) a new method of isolating/combining, or 3) a new method of formulating/delivering a nutrient or other ingredient. Additionally, consider a new method of using a compound/composition. Examples include a new use of a known compound/composition or known use of a patentable new compound or composition.

There are certain situations when an invention may be better protected as a trade secret. Keep in mind that when filing for a patent application, all aspects of the invention must be disclosed. There are times when one may not wish to share this information publicly. For instance, if the invention is difficult to reverse engineer, or if it has a short lifetime in the marketplace, then protecting the technology as a trade secret may be more appropriate. Just keep in mind that trade secrets may not be patented by their owners if in use for more than one year—yet they may be patented by someone else.

Patents directed to novel compounds provide the strongest protection because they may prevent competitors from making similar bioactive compounds. Such patents may cover a nutraceutical product regardless of its formulation, method of making, or method of use.

Patents directed to methods of use are the second most valuable types of claims. “Method of use” patents cover both approved and unapproved medical uses and indications. Be aware, such patents are prohibited in many countries outside the U.S. without meeting additional requirements.

Patents based upon method of manufacturing are less valuable than composition of matter claims because they are harder to “police,” as manufacturers rarely make their processes public. Also, method steps may be changed to avoid infringement liability. Often method of manufacturing practices are better protected as trade secrets. It is important companies with such trade secrets protect sharing them with other companies (e.g., marketing partners) with sound confidentiality or non-disclosure agreements and ways to safe-guard trade secrets in the workplace.

Understanding how to protect, maximize, and exploit IP rights provides competitive advantage and may assist in attracting marketing partners and financial investors. Partners and investors will be inquiring whether you have obtained the appropriate legal intellectual property protection to secure your brand and/or technology. The strength of the patent is measured by the quality of the claims. As your product or service becomes successful, a well-written patent’s commercial value is increased. To ensure you have a strong and enforceable patent, seek help from a qualified patent professional with knowledge of the nutraceutical industry.

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Gregory Stephens
Windrose Partners

Greg Stephens, RD, is president of Windrose Partners, a company serving clients in the the dietary supplement, functional food and natural product industries. Formerly vice president of strategic consulting with The Natural Marketing Institute (NMI) and Vice President of Sales and Marketing for Nurture, Inc (OatVantage), he has 25 years of specialized expertise in the nutritional and pharmaceutical industries. His prior experience includes a progressive series of senior management positions with Abbott Nutrition (Ross Products Division of Abbott Laboratories), including development of global nutrition strategies for disease-specific growth platforms and business development for Abbott’s medical foods portfolio. He can be reached at 267-432-2696; E-mail: gregstephens@windrosepartners.com.