Intellectual Property in the Fast Food Sector
Fast food businesses of all sizes create intellectual property (IP). IP assets can be extremely valuable, constituting the majority of the value for successful enterprises. It is vital to consider protection of IP early in the business lifecycle, as this may become difficult or impossible with the passage of time.
Intellectual property protection in the fast food sector covers everything from the formulation of ingredients and recipes to the branding of the product. Various types of IP rights exist, and all of these should be considered in order to create a barrier to entry to competitors.
Patents are a powerful monopoly right granted for technical innovations. Patents are widely used within the food sector; examples include the composition of food ingredients, the actual process of making the food, and the packaging used to present it. Fast food concerns should seek to patent protection in circumstances where, for example, the packaging features provide advantages, or improves delivery to the consumer in a novel fashion and involves an inventive step in the process. Equipment used in the preparation of food, and the processes used often constitute a competitive advantage and protection via a patent is appropriate.
The process of applying for a patent is not straightforward, particularly when international protection is considered, and it is always recommended to seek the advice of a professional.
A trademark is a type of intellectual property consisting of a recognizable sign which identifies products or services of a particular source from those of others. They constitute one of the most valuable forms of intellectual property protection in the fast food sector – for example, the McDonald’s brand has recently been valued at $130.4 billion. As soon as a new product is created it is important to consider aspects that can potentially be protected by a trade mark. Generally, more distinctive brands are easier to protect.
Copyright is legal right that protects the use of your work once your idea has been physically expressed. It pertains to literary, dramatic, musical and artistic works in the broadest sense. Copyright, unlike patents and trade marks, is automatic. Any “work” that is generated as part of the operations of a fast food business is copyright, as long as it is “original,” i.e. not itself copied. Copyright thus applies to menus, recipes, promotional literature, advertising etc. An important aspect to consider is if such materials are prepared by third parties (e.g. contractors), the copyright should be assigned to the business.
Two flavours of design exist – registered and unregistered. Designs protect the “appearance” of a product, and find extensive use in the field of fast food, where the packaging of the product often constitutes an important component of the overall branding. Even if technical features which would allow patent protection are missing, registered protection is often available for boxes, bags and containers. Even the product itself, if the appearance is distinctive, may be capable of registration.
Any confidential commercial information which gives a business a competitive edge may be considered as a trade secret. In the fast food industry this may include recipes, manufacturing processes and details of loyalty schemes, etc. By their nature, these rights are not registered, but are usually considered to represent a business advantage.
Why Protect IP?
Intellectual property is a crucial asset to any business, especially one in an industry as competitive as fast food. First and foremost, it presents a barrier to competitors seeking a free ride of the resources that have been expended in developing an appealing proposition. Registered assets are an asset on the balance sheet, and can help in raising capital for growth or increase the valuation in an ultimate exit. In the UK, patented products attract a favourable tax regime under the “patent box” system. Finally, obtaining protection in overseas markets allows for licensing and franchising in these territories, presenting an additional potential revenue stream.
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