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IP: More than just patents

Intellectual property in isolation isn’t enough – it’s what you do with it that counts. That’s what Vital Foods learned, and global giant Nestlé has taken notice

EverEdge IP CEO Paul Adams (centre) and Director of Intellectual Property, Paul Davies (left) with Vital Foods CFO Mike Hollier (right).

Most senior management understand that intellectual property is a critical component of business strategy. But what Kiwi company Vital Foods discovered is that intellectual property by itself isn’t enough – it’s what you do with it that counts.

Leveraging deep agriculture and bioscience roots, Vital Foods developed a kiwifruit pulp drink in the early 1990s as a natural digestive aid. Kiwi Crush quickly won several national food awards and is now widely used in hospitals and nursing homes where it is promoted by doctors and dieticians.

Building on this success, Vital Foods developed a unique process to manufacture a kiwifruit extract powder, Zyactinase, which is more readily absorbed by the digestive system. Clinical trials established both its safety and effectiveness in improving digestive health and in 2007, the company launched a new product, Phloe, containing Zyactinase to great success.

But while the company was developing great products, managing its IP portfolio was becoming more of a challenge. The company filed a series of patents and trademarks without a clearly thought-out strategy. The result was a tangle of intellectual property rights and a ballooning IP budget.

In 2009, Vital Foods was referred to EverEdge IP by one of its major shareholders, BioPacific Ventures, a venture capital firm in the biotechnology space.

“BioPacific Ventures heard how we were helping companies to better manage and commercialise their IP,” says EverEdge IP CEO Paul Adams. “They felt we could really help Vital Foods.”

EverEdge’s first step was to complete a comprehensive audit of Vital Food’s intellectual property portfolio, from patents, trademarks, copyright and contracts through to the know-how, trade secrets, confidential information and plant variety rights. Adams says it became clear that much of the business value was in know-how and trade secrets: “Vital had a substantial IP portfolio but the patent component was somewhat disjointed with some patents being of questionable overall value and costing the business unnecessary money.”

EverEdge worked with Vital Foods management to prune back the portfolio so the company could focus on where its real value was – pertinent, defendable patents in important jurisdictions such as the United States and also the company’s trade secrets and proprietary production processes.

“We cut out a lot of dead wood and put in place systems and processes to better manage the valuable IP they had especially in their proprietary processing and manufacturing systems,” Adams says. The next step was to look more strategically at where Vital Foods’ R&D, and therefore IP development, was going. EverEdge helped identify valuable patent protection for novel uses for Vital Foods’ technology, and recommended the best patent attorney to file the application.

It’s 18 months on and the hard work has paid off. In July 2011, Nestlé took an 18 percent share in Vital Foods. The global food giant set up its Nestlé Health Sciences division in early 2011 to invest in the nutraceutical space. Vital Foods CEO Gursh Bindra says Nestlé has a billion Euros in venture capital. “IP is a critical consideration in its investment decision-making. They saw the advances in science-based nutritional solutions we had created, and the valuable IP we had built around those, and felt they needed to take a position in what will be a huge market.

“Working with EverEdge helped widen our thinking around intellectual property – that it’s not just about patents and trademarks, but the whole gambit. Without having our portfolio in order, there wouldn’t have been nearly the same level of interest from Nestlé. Looking forward, EverEdge has helped us understand where we should and shouldn’t go with our R&D. We can get on with the rest of our business, while they help strategically manage our growing IP portfolio.”

Bindra says it’s valuable to get an independent view of your IP from someone who is objective and isn’t making money from decisions to file or not to file. EverEdge doesn’t file patents or trademarks for clients, so they’re independent.

Vital Foods is currently re-expanding its IP portfolio – something Adams says it wouldn’t have been able to do if it had continued its previous strategy – and is in a strong position to become a leading player in the digestive health market around the world. “Vital Foods has really hit its straps now. You can see that in the investment by Nestlé. Multinationals like Nestlé don’t take a position in a company unless they have strong, well-managed intellectual property.”

However, he underlines the importance of going to the appropriate expert for advice: “Patents aren’t ‘good’ or ‘bad’; they’re business tools and like any other tool you have to be careful how you use them. Vital Foods is a great story. Changing their approach to managing IP has made all the difference. They’re on their way to big things.”

In brief
While EverEdge IP’s team includes experienced patent and trademark attorneys, it chose to be independent of the patent attorney industry and does not file patents or trademarks on behalf of clients. It provides independent and objective advice about how valuable ideas should be protected, managed and commercialised.

Contact
Paul Adams,
CEO, EverEdge IP,
(09) 489 2331,
p.adams@everedgeip.com,
www.everedgeip.com