IP and Fast Moving Consumer Goods

I have had a number of interesting discussions with people working in innovation in the Fast Moving Consumer Goods (FMCG) industry in the past month. A few of these occurred at the 'Innovating for the Future' workshop in Sydney a couple of weeks ago, at which I spoke on intellectual property in the food industry.

What I am seeing from these companies are a lot of 'light-bulb' moments where they are finally starting to see the value in strategically protecting their technology- and design-related intellectual property (IP).

One of the reasons why this value may not have been so evident in the past is due to the nature of the industry. The IP system is fundamentally set up to encourage innovation in situations where innovation might not naturally occur. However, part of the nature of the FMCG business is that innovation has been a given: new features, new flavours, new packaging are a must to compete in a crowded shelf space. No special incentives have historically been necessary in a world where products lives are relatively short and competitors are continually pushing for market share.

That is the way things have been. But that is changing.

Throughout the developed world, and especially so in Australia, the rise of the 'private label' or house brand product in the various supermarket chains means your biggest threat now comes from your main customer! Where those customers are large and dominant in the market place, which is certainly the case in Australia's concentrated retail environment, the FMCG manufacturer is being squeezed continuously.

Most significantly, the retailers are adept and pressuring the innovative manufacturer to 'hand over' any successful innovation for use in their own private label range. This, over time, because a severe disincentive to innovate, as the expense and energy required to deliver innovation now provides almost no period of exclusivity in which the innovator can recoup and profit on their investment in innovation. There are always contract manufacturers who the retailers will set up to copy innovations almost immediately if the innovator is reluctant to share their work with the retailer.

And so enters the IP system, where innovation is has been disincentivised, a new tool can be found to, if not stop, at least slow down the march of innovations from the innovator to the retailer. Judicious use of the patent and design systems can create a better power relationship between the innovator and the retailer. The contract manufacturer can no longer step in with impunity to copy a protected new package, product, ingredient etc. In turn, the retailer has to wait longer, or pay more, for innovative FMCG products.

I expect to see this as a trend amongst the more 'switched on' FMCG companies.


by Adam Hyland

Changes Proposed to Australian Patent Prosecution

We have previously reported on the extensive changes to substantive patent law which will come into effect on 15 April 2013.

As with all patent office examinations throughout the world, one aspect is the substantive law: the other is the procedural rules under which the patent office operates. The draft amended regulations which implement these aspects of change have now been placed open for public comment.

Patent Examination
As had been foreshadowed by IP Australia, there are changes to the time frames for dealing with examination. Australia operates a deferred examination system, in which you may request examination at any time, but must do so within five years of the effective filing date, or within a deadline set by IP Australia in a direction to request examination. Third parties can also request examination. In many cases, international applicants await a direction.

At present, directions from IP Australia have a deadline of 6 months. This will now become 2 months. In general, this is a positive change, as it will reduce the period of time in which it is unclear whether an applicant will proceed further or not. From the perspective of the public, or someone conducting a freedom to operate enquiry, time periods where the intention of the applicant to proceed is unclear create uncertainty, and potentially clog up the system with patent applications that are never going to be progressed. It does mean that applicants will have to act more promptly on receiving a direction to request examination.

In a similar vein, at present once a first examination report issues, the applicant has 12 months to place the application in order for acceptance, plus a further 9 months for which response fees are payable, but only when a response is filed. This creates the situation that even where a highly adverse examination report issues, another party cannot be sure of the fate of the application for almost two years, until the notice of lapsing is published. That will now be reduced to a straight 12 months. Consequently, in almost all cases (other than where a hearing or appeal is filed), the fate of an Australian patent application will be clear within a year.

Again, in most cases this is a positive change, as it will mean that applications will be brought to a conclusion more quickly. However, it does allow less time for an applicant to wait for the outcomes of prosecution in other countries, which may lead to inefficiencies in some cases.

Effective date
These changes are proposed to be effective for any application where a request for examination or direction to request examination (as applicable) occur after 15 April 2013. We think that it is unlikely that these changes will not proceed.

These changes provide another reason why we urge applicants to consider entering national phase in Australia early, and requesting examination prior to April 2013. The changes to onus of proof, new rules on support for claims, increased scope for inventive step attacks, and other amendments mean that there are very clear advantages for applicants to have requested examination in Australia before 15 April 2013.


by Peter Franke