KnowThis Blog Postings
- Published on June 16, 2010
- Posted by Paul Christ
Nestle Takes Legal Action on Sara Lee Coffee Capsules (BusinessWeek)
When developing new products, marketers often seek to make things difficult for their competitors by applying for intellectual property protection. Such protection comes in several forms, including trademarks, copyrights and trade secrets, though many marketers will argue the most powerful form of protection is a patent. In the United States patents can prevent competitors from producing a similar offering for up to 20 years from the date of the patent filing. Additionally, a company can extend their protection by filing for multiple patents covering different parts of an invention or covering add-ons to an original patented product.
But patents can be a tricky game. Unless the patent is written specifically to cover a certain feature of a product, a competitor can potentially introduce a similar product without infringing on a competitor’s patent. Also, many times patents become relatively ineffective when new technologies are introduced that change how something is done. For instance, a patent may work for a product that a customer can use in- person but the patent may not hold if the product can also be used over the Internet.
The idea that a patent must cover specific features is what makes this a fascinating story. For a few years now, Nestlé has successfully marketed the Nespresso coffee maker which offers a convenient method for making single-cup coffee. The Nespresso uses colorful coffee “capsules” that are inserted into the coffee maker. The product has done extremely well in certain European markets and is now expanding to other markets including the U.S
Sara Lee, which markets a similar single-cup coffee maker called Senseo, recently decided to market a capsule compatible with the Nespresso. As expected, this move did not sit well with Nestlé who then filed for patent infringement claiming that only their capsule can be used in the Nespresso. Why would Sara Lee take this chance? According to a story in the Wall Street Journal, Sara Lee believes their product does not infringe on 1,700 patents that Nestle claims to protect its product. (Yes, 1,700 is the number WSJ cited!) This story may also give marketers some insight into how to come up with new product ides - find gaps in your competitors' patents.
“Sara Lee and the others are now trying to piggyback the system that Nestle has taken decades to establish with the associated high investment costs,” said James Amoroso, a food- industry consultant based in Walchwil, Switzerland.
What other types of products follow a similar model in which there is a main unit that requires smaller, frequently purchased products in order to function?
Image by Old Shoe Woman