July 31, 2018

IP should be the aperitif, the main course and dessert; not just the after-dinner mint

Is a commonly used greeting something you can trade mark?

The recent spat between My Food Bag and giant German food company HelloFresh over the sentence “Hello, fresh start the programme” posed just that question, and more.

Stop using the words “hello” and “fresh” next to each other said the German company. Why should we? Said the kiwi company.

The squabble is a salutary reminder that even in the commodity world of food marketing, intellectual property (IP) issues can still bring you grief. IP is a complex area of law which is perilous to navigate on your own.

Think forward

The New Zealand food and beverage (F&B) industry is a creative and energetic sector but with one weak spot – the number eight wire mentality. We are too “kiwi” for our own good. We think we can “do it all” and “she’ll be right”.

Too often we see exciting new F&B businesses who have developed great concepts and successfully wowed the market, jeopardising their fortune by failing to protect the intangible part of their brain-child. It is often an afterthought. \Not enough time and resources are spent on protecting core assets of the business such as its brand, its reputation, and the look of its products. This can have disastrous results; making it too easy and tempting for competitors with deeper pockets to take advantage.

There is a popular conception that it is too expensive to obtain IP protection or to enforce IP when it is infringed. However, plenty within an F&B business has potential to be protected without incurring significant costs:

  • Registering designs and trade marks with the Intellectual Property Office;
  • Obtaining advice on how copyright (which cannot be registered in New Zealand) can be leveraged to protect certain aspects of your business;
  • Using a well-drafted simple confidentiality agreement to significantly minimise the risk of your recipes, preparation methods or processing of ingredients become public knowledge

These are all steps, to name but a few, which are relatively inexpensive to take and may prove invaluable in future.

Think early

Problems often arise when a start-up takes too long to get its IP sorted.

You spend a long time and a lot of money perfecting a concept and realise it has huge potential – it may be too late to patent it or to protect the look of the resulting product with a registered design if it’s already been made public.

You put in solid hours with a great ad agency at significant cost to develop nifty packaging and branding, name and logo and the public like it – but you haven’t done your homework and your mark is too similar to someone else’s registered trade mark. You are back to square one and potentially liable for trade mark infringement.

The F&B market is intensely competitive in New Zealand, there is a lot on offer (everyone likes to eat). But you have to protect what you create, not just the tangible output of that creation. Long gone are the days of a company’s main assets being its premises or its machinery. What entrepreneurs often fail to realise is that most of the value of their business – what attracts investors in particular – is its IP, and that’s especially true of F&B.

If you don’t protect your IP, others will copy to free-ride and compete; if not from the start, once they’ve noticed you because you are threatening their market share. That may leave you stranded despite having a high-quality product.

Think further

Another common failing is to do a reasonable job shoring up the IP in New Zealand but not look offshore to do the same. Again, delay this and the risk is high that someone visiting New Zealand will see your product, be highly impressed and quickly replicate it in their home country, locking up the IP there as they do so.

IP rights are territorial. New Zealand may be your starter market and it may be a good one, where you have success. If the objective is business growth however, the bigger (much bigger) markets of Australia, the United States and Asia should be on the radar – and work should be done very early on to get IP protection in those markets too. You may have a patent or a trade mark registered in New Zealand but it may be too late to get the equivalent in the US.

Getting IP protection has a cost, of course, but start-up businesses may be able to source grant assistance from the likes of Callaghan Innovation. The payback is undoubtable: market security and investor interest both require strong IP.

A shield and a weapon

Here’s another kiwi take on the German company trying to stop My Food Bag using “HelloFresh”. They see it as bullying. In fact, companies trying to enforce their IP rights are often seen as bullies. Whilst this specific fight does seem a bit petty let’s be real here. IP is both a shield and a weapon. There is nothing wrong with defending your IP rights – though kiwis seem a bit squeamish about it at times. Many (bigger) companies see IP litigation as a way to weaken or eliminate their competitors. You’ve built your business with inspiration, devotion and sacrifice, and ploughed a lot of time and money into it. Why should you let someone else steal your idea and profit from it?

Getting IP protection and making it known that you have IP protection will deter most. Enforcing your IP on the rare occasions it proves necessary may save your business.

Early work to cement your IP makes absolute sense and should be central to your overall business strategy. Make it part of the aperitif, the main course and dessert – don’t leave it till you bring out the after-dinner mints.

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