Consumer products and IP (Part 1): why it matters
Intellectual property (IP) rights can be a blessing and a curse for consumer product designers, manufacturers, and sellers. IP rights allow companies to protect their own creations, limit others from obtaining detrimental IP rights, provide licensing opportunities, and help deter legal challenges. But consumer products companies also face significant exposure to IP infringement claims in the form of patents, trade secrets, trademarks, copyrights, or false advertising.
This is the first in a series of posts where we will walk through various IP issues impacting consumer products—and what companies can do to make the most of opportunities and mitigate liability.
Consumer products and IP: why it matters
Does IP matter for consumer products? Yes.
Take, for example, patents.
According to the World Intellectual Property Organization, consumer products represent a significant portion of patent applications filed worldwide. Of the nearly 3.2 million patent applications published in 2018, more than 1 out of every 7 relate to audio-visual technology, pharmaceuticals, food chemistry, mechanical elements, furniture, games, or other consumer goods.
That’s nearly 500,000 applications each year.
These fields saw an average 5.6% growth between 2008 and 2018, with food chemistry in particular growing 11.4%.
If one of these applications is granted and issues as a patent, an owner can enforce the patent against others. This could result in expensive consequences for the accused: injunctions; monetary damages; royalties; and, in exceptional cases, reimbursement of the patent owner’s attorney’s fees.
Consumer product companies are not immune from these actions.
In a 2018 study, consumer products held the top spot as the most active industry for patent infringement litigation, with damages averaging around $1 million. Recently, the Federal Circuit affirmed a jury verdict for patent infringement of over $3.1 million against a producer of light sensor devices. (SiOnyx v. Hamatsu Photonics).
In other words, knowing about IP provides opportunities; inadvertently ignoring IP can lead to potential costly consequences.
The rundown on intellectual property for consumer products
IP protections allow owners to enforce rights against another party that steals or profits from the owner’s ideas, designs, know how, written product, or brand goodwill.
By designing, manufacturing, importing, or selling consumer products, companies put themselves at risk of exposure to lawsuits claiming infringement of another’s IP. (check out our previous post on this issue). At the same time, these actions may also open companies up to the possibility of obtaining valuable IP rights.
Consumer products uniquely cross into all areas of IP.
For example, a single toy can be protected by and/or infringe/misappropriate/violate:
- Utility patents through how its manufactured,
- Design patents through its design or shape,
- Trade secrets through its production process and distribution,
- Trademarks through its look or branding,
- Copyrights through writings or sounds, and
- False advertising laws through its marketing.
Consumer product companies can obtain protection and avoid liability through careful considerations and proper counseling.
IP applied: intellectual property considerations for consumer products
In this series, these questions—and more—will be asked and answered:
- How do I guard against utility patent infringement?
- Does my product infringe a design patent?
- Will my manufacturing process misappropriate a trade secret?
- If I sell this widget, can I avoid trademark infringement?
- Does another copyright cover my good?
- If I market this product, do I risk violating false advertising laws?
- What type of IP protection should I seek?
- When should I seek these protections and how?
The series will focus on four primary goals:
- Establish a foundation for understanding the importance of IP as it applies to consumer products;
- Suggest considerations for determining whether to seek IP protections;
- Offer warning signs for knowing when consumer products may infringe another’s IP; and
- Provide guidance for when to consult IP specialists.