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IP Strategies in the Cosmetic Industry

A sound intellectual property strategy can add value to any business, generate revenue streams, and act as an additional bargaining chip in negotiations. However, it is often difficult for businesses and inventors to figure out how to reduce their IP costs without sacrificing quality. Below are some practical pointers to consider when formulating your IP strategy. These will serve as a primer to help you ask the right questions.

Diversify. An IP strategy should take a long look at the business, considers all the tools, and choose the right combination. You may think that all you need is a trademark for a product, when the real value is in your patentable process. Alternatively, a process or product may be old as the sun, but your brand recognition and goodwill are the real valuable assets to be protected. Also consider trade dress and design patents for cosmetics and toiletries. Excellent communication with your IP counsel will provide the best results, and yield the greatest value ensuring that every dollar you invest gives you a handsome return.

Consider Trade Secrets. You can maintain a competitive advantage through trade secrets. Examples of trade secrets can include engineering information; methods, processes, and know-how; tolerances and formulas; business and financial information; computer programs (particularly source code) and related information; pending, unpublished patent applications; business plans; budgets; methods of calculating costs and pricing; customer and supplier lists; internal marketing data; specifics concerning customers and suppliers; products and services in research and/or development; collections of data; and other information relating to a company’s business. Trade secrets requires that you and your employees handle the information with care to maintain confidentiality. Additionally, understand that there is a possible tension between trade secret law and the FDA’s ingredient declaration.

Find the Synergy. Compositions that provide a synergistic effect over the individual ingredients may be ripe for patenting. When you find such a synergy, test and document the effect and strongly consider filing for patent protection. If a composition, even if it is not available on the market, is merely a mixture of known ingredients and produces no special benefit, evaluate whether patent protection is possible or worthwhile.

Reduce Patent Prosecution Costs. The United States Patent and Trademark Office has had a backlog of patent applications for years and has attempted to fix this with various methods including raising the costs of Requests for Continued Examination (RCE). By way of background, the USPTO issues rejections of a patent application during examination. If an application continues to be rejected after a Final Office Action, the applicant must file an RCE to keep the application alive. The cost of a first RCE is $1,200, and the cost for every subsequent RCE is $1,700. One way to contain costs is to speak to your attorney about how to eliminate or reduce the number of RCEs, and to utilize the most-recent USPTO programs to get your application allowed sooner. For example, interviews with the Patent Examiner are a great way to advance prosecution in a cost-effective manner.

Know Your Market. Consider the market before you invest heavily in a product or process. Ask yourself whether your IP is directed to technology that is germane to your business or a passing fad. With apologies for overusing a cliché, skate to where the puck is going, not where it has been. Your IP strategy should strongly consider your expected sales.

Global Thinking. It is good for businesses to think globally, but understand that the cost of obtaining IP protection in foreign jurisdictions may be incredibly high. For example, a patent application being prosecuted in China will typically require a U.S. patent attorney, a Chinese patent attorney, and translations of official documents back-and-forth from the office to the applicant. Keep in mind that even if you obtain granted patents in a host of countries, there are additional maintenance fees that must be paid. Additionally, enforcement of IP is quite difficult in some jurisdictions. It is better to take a big-picture look at the IP budget, formulate a strategy with your IP counsel and discuss the benefits of filing in certain jurisdictions.

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