Exploring Patent Infringement

Exploring Patent Infringement

by Suzanne Shelton

The industry has been trying to determine the next "Hot thing." Recent advertisements and press releases to the trade indicate that intellectual property issues may be the next area of focus. For example, on Oct. 17, Sabinsa Corp. issued a news release that it had filed lawsuits against three companies for infringing its patents on ForsLean^® and Bioperine^®. Nutrition 21 is running an ad in trade magazines offering a reward for information and/or evidence leading to the identification of patent infringement on chromium picolinate.

While the industry's primary attention focuses on external pressures buffeting the dietary supplements industry, internal clashes can't be ignored. Is there a perception that treating key ingredients as commodities rather than choosing a branded, possibly patented version equals lower quality? Is a patent better than a trademark, and which kind of patent is less difficult to police? How do companies decide how far to go in protecting intellectual property? And is this a natural extension of the 'borrowing science' controversy that was prominent in the industry several years ago?

Speakers at an ingredient supplier roundtable at Natural Products Expo East indicated that suppliers are polarized into two types: branded and commodities. The implication seemed to be that branded equals quality and the opposite is often true of the other. A similar panel at Natural Products Expo West found Todd Norton, president of Sabinsa, taking industry members to task for taking a commodity buying approach. "There is a growing trend that is disturbing and is taking an adverse toll on this industry," he said. "It is to take a legitimately documented product, borrow its science and then go out and purchase an 'imitation' item of similar reported 'equivalence,' typically untested and unproven, for a cheaper price and pass it off as the real McCoy. To assume that consumers won't notice the difference, and to not provide them the product they think they are getting, is unethical."

As the industry struggles through an economic slump, an increasing number of ingredient suppliers are at least trademarking their top products, if not applying for a patent. Mary C. Mulry, Ph.D., owner of Boulder, Colo.-based FoodWise, said branded raw materials give a quality indication that a product is better than generic and usually has proprietary research. "It gives some protection if a company does have proprietary information, but you have to be careful," she said. "Some suppliers say they have it but actually have little or no testing pertaining to their product."

However, to be awarded a patent, there has to be evidence of efficacy. A patent costs between $10,000 and $15,000 to obtain, while trademark registration is in the $1,500 to $2,000 range. The initial expense can ultimately provide a stronger opportunity for a legal monopoly.

According to Anthony L. Almada, BSc, MSc, the president of IMAGINutrition Inc. in Laguna Niguel, Calif., the best type of patent to have is a 'composition of matter' patent, which is analogous to a drug patent because the holder owns the molecule. An example of such a patent is the one held by Nutrition 21 for chromium picolinate (which just expired). "The beauty of this type of patent is that the holder owns its sales in commerce," Almada said. "Anyone selling it without a license holder of patent would be in violation and could be sued. The patent holder can say 'You have it in your bottle, but didn't get it from us, so here's the lawsuit.'"

The next most desirable patent is a 'utility or use' patent: the right to sell something for a specific use. This is the type of patent Sabinsa holds for the ingredients referenced earlier in this article. The company was granted patents based on novel applications for traditional herbs, which were backed by studies confirming safety and efficacy.

But here's the tricky part: Only if a claim is made for use is there infringement on the legal monopoly. If a manufacturer claims it is for another use, the patent holder can do nothing. However, even if the supplier makes no infringing claims, but the finished product manufacturer does make infringing claims, the patent holder can also sue the supplier as a "contributory infringer" if there are no records of that supplier being clear of the usage and legal limits.

Finally, a 'process' patent deals with a proprietary process related to manufacturing products, which may result in a novel and marketable characteristic to the product. Chemi SpA in Milan, Italy, possesses three patents for the manufacture of phosphatidylserine (PS). The two process patents more clearly define the finishing steps associated with final products of PS, and describe specific methods that the company uses to ensure final product quality. Scott Hagerman, president of Chemi's U.S. affiliate, Chemi Nutraceuticals in White Bear Lake, Minn., said the company is investigating other opportunities for both process and use patents dealing with innovative nutraceutical compounds.

Patent Protection

Despite the legal avenues, many patents are weakly enforced, which reduces, and sometimes negates, their value. "A patent is a monopoly opportunity that is only valuable if enforced," Almada said. "It is the patent owner that has to do the enforcing." Dennis H. Cavanaugh, trademark counsel to Ullman, Shapiro & Ullman, LLP, agreed. "The law imposes an obligation on the patent holder to police the intellectual property," he said. "It is the same obligation you have with a trademark."

There are several difficulties involved in enforcing patent rights. If a patent is not enforced as soon as there is evidence of infringement, it becomes increasingly difficult to do so. And if it is discovered that somewhere--anywhere--the idea has been expressed in print prior to the patent being applied for, the patent is invalidated. The U.S. Patent Office does search, but doesn't always find everything. "An enormous amount of research must be done prior to patent application," Almada said. "The Patent Office won't search obscure publications."

Another obstacle is economics. How much does it cost to protect a patent in litigation? Almada estimated around $500,000. However, when millions of dollars can be made on the investment, it absolutely makes sense. It is very expensive to be sued for patent infringement. Cavanaugh said the "value of a patent is that, once it is issued, there is a strong presumption of validity. It is relatively expensive to challenge a patent's validity in litigation. When you put someone on notice, when an alleged infringer is sued, they are looking at a rather expensive defense, more than defending a trademark case."

Protecting a patent requires a strategic approach, with legal, public relations, and sales components. "A solid public relations program is important in making it clear what the legal situation is that has taken place in the past, and what the legal source is," Hagerman said.

Patent rights involve many aspects of science, business and ethics. "Integrity will take us all a lot farther than opportunism," Norton said. Most industry veterans have long deplored "borrowing science" because it can discourage companies from paying for the studies that validate dietary supplements. Most of them are on the same page regarding patent infringement for the same reasons.

Suzanne Shelton is a public relations consultant to the dietarysupplements industry; she is based in Skokie, Ill., and can be contacted at [email protected].