Innovation in the chemical industry is essential for growth. But, innovation can be a costly process. According the American Chemistry Council, chemical companies in the United States alone invested $12 billion in research and development in 2017.
Innovation at chemical companies typically involves four types of investments in products/technology:
- Incrementally improving existing products
- Upgrading/replacing existing products
- Developing products for adjacent technology areas
- Developing new products in a new technology area
An innovation project in the chemical industry can easily require tens to hundreds of thousands of dollars of up-front investment. In addition, a significant majority of these innovations may never generate revenue to offset their development and patent costs.
However, each new development that does enjoy a successful commercial launch creates a revenue stream for a specific period of time—ideally many years. Chemical companies will want to attain exclusivity for this period of time, whether it’s 5, 10, 15 or 20 years. That’s why protecting intellectual property (IP) associated with research and development to safeguard major investments of capital and time is so important in the industry. A patent attorney will work to extend the market life of the product development undertaken by exploring the types of legally granted monopolies—patent, trademark or copyright—to protect the IP and maximize the return on investment.
After considering what customers will pay for the innovation and knowing the costs to develop the innovation, the estimated revenue and profits associated with the innovation can be determined. The IP costs of protecting the innovation will include the expense for patents, trademarks and copyrights. The additional IP investment, to protect the innovation, can be adjusted based on anticipated revenue. If the revenue stream anticipated is very large, manufacturers will want as much IP protection as possible.
Larger companies typically consider the legally granted monopolies (patent, trademark, copyright) much more than the smaller inventors/businesses, who might struggle to afford these methods due to cost and the need for immediate revenue to sustain their business. Additionally, they may not want to delay product launches while legal protections on the technology is filed.
Patent, Trademark or Copyright
- Patent—the monopoly on making, using and selling a utilitarian article, composition or process. Patents detail how to achieve the utilitarian features of products to make our lives easier and better. The primary goal of patent law is to encourage innovation and commercialization of technological advances. Patent law incentivizes inventors to publicly disclose their innovations in exchange for certain exclusive rights for a limited time (20 years). The international patent application process is generally expensive, complex and time consuming.
- Trademark—the intellectual property that is associated with an image, symbol, slogan or words that identifies and distinguishes the source of the goods of one party from those of others. A trademark is associated with a business entity or person.
- Copyright—the monopoly granted for a period of time for the artistic creation of literature, visual arts, music and related artistic endeavors. It is the collection of rights automatically vested to a person or organization after creating an original work. A work must be original, creative and fixed in a tangible medium. It includes the right to control the reproduction, making of derivative works, distribution and public performance and display of the copyrighted works
Marketing materials are essential for creating visibility in the market for a new or improved product. Copyrights protect marketing materials by keeping competitors from duplicating the artistic elements of literature, websites, products presentations and other marketing materials. As a practical matter copyrights make competitors create their own “original” marketing materials rather than adapting the marketing materials of the original product creator with word processing and image processing software. Trademarked material means nobody can tap into the goodwill and brand that a business entity has worked to build with their trademark.
Depending on where a product will be marketed and sold, exploring IP protection on a country-by-country level is essential—and the costs to apply can vary greatly. It can cost $2,000-5,000 to apply for a 20-year patent and then $14,000-50,000 after it’s granted for maintenance over the 20-year life time of the patent. Patents can cost about $20,000-50,000 per country (including legal fees). Trademarks can cost as much as $5,000 per country. Trademark registration in the United States may remain in force for potentially unlimited consecutive ten-year periods as long as the owner meets the legal requirements for post-registration maintenance and renewal.
Copyright registration fees are generally less but can still impact the overall investment in IP. For instance, in the United States they can range from $35 to $85 and last for the life of the author plus an additional 70 years. For a work made for hire, the copyright endures for a term of 95 years from the year of its first publication or a term of 120 years from the year of its creation, whichever expires first.
The bottom line though, is that chemical companies will continue to innovate. And that will require the continued strategic management of IP protections to safeguard and maximize the value of those IP rights—and the revenue associated with delivering innovations to the chemical marketplace. An IP attorney can provide more specifics when considering the best approach to IP protection.