Commentary

Having become an ardent Nespresso consumer in the last few years, I am always interested in news about the single serving pod espresso system pioneered and sold by Nestlé. After a trip to Italy a few years ago, my wife and I became confirmed Nespresso users. Yeah, users, as in “drug” users. Soon after coming home, we gave each other our first Nespresso brand espresso maker and milk frother for a joint Christmas present. I now admit in public that we take our machine on vacation with us, and that we go through severe separation anxiety if we wake up in a hotel without it.

In Europe, the Nespresso craze is not new – the first patents on the machines were filed in the late seventies and machines were first sold in the eighties – and the brand is very well established. The little golden espresso capsules are sold on TV and in magazines by luminaries such as George Clooney and John Malkovich. Boutique Nespresso stores and major department stores sell the magic espresso makers but- and this is a big but- not the pods. No, at least until very recently, if you wanted to drink Nespresso you had to order the capsules directly from the Nespresso club. This is really magical, because your order arrives at your door in 48 hours. Or, you can go to a boutique and pick up your order there in an even shorter time. The whole system is very impressive. And by distributing the capsules this way, the money all stays with Nestlé- none for the grocer.

Recent news articles point out that Nestlé is finally “losing” the patents on Nespresso. And now some substitutes are available in the grocery store. But for years, Nespresso pods were the only game in town if you liked the product. And many of us do. So, imagine having a product everyone wants, that only you could sell. That’s what effective patents can do for you.

In a recent article published April 14, 2014 in the International New York Times, titled “Nestlé loses a clash over single serve coffee,” the author describes a legal ruling in France against Nestlé.[i] According to the ruling, Nestlé is being forced to let their competitors design pods that are compatible with the Nespresso machines. Despite Nestlé’s legal loss, what is clear from the article is just how much winning the company has been doing. According to the article, Nestlé has created a single serve coffee category that is now worth $10.8 billion dollars ANNUALLY and Nestlé is the number 1 producer, with 1/3 of the global market.

How is it possible that after 30 years, Nestlé continues to be the only game in town for single serve espresso capsules? The article points out that Nestlé has “hundreds” of patents on Nespresso.[ii] Nespresso’s global domination fantastically illustrates that to fully protect and exploit your invention, you want more than one patent. You want a fence.

Most inventors and companies cannot afford to file patents on everything they do. But I hope by considering the Nestlé example, you can see the benefit of filing multiple patents. Sometimes, I meet with an inventor who wants to file the perfect single patent covering an invention. However, because the patent law is evolving continually, changing what a “perfect claim” would be, and because the market is also constantly changing, it is impossible to draft a perfect patent application today, that is guaranteed to protect the invention 15 or 20 years later.   A far better strategy is to file multiple patent applications on several important features of your product, and, as Nestlé clearly does, to continue to file new applications on new features over time.

How many and which applications to file are largely a matter of strategic evaluation. You need to be selective for budget reasons, of course, but don’t try to file a single “perfect” patent on your idea(s), because if it is not issued, or if it is later invalidated, you are then left without protection. Instead, break down all the components of your invention and decide which aspects are most important to protect, because, for example, they increase performance, lower costs of manufacture, and, of course, are new- they differ in some way from what is available now. Next, you need to look for key features that a competitor would need to copy in order to produce a useful alternate to your product. Those features should also be protected. (Also, identify key methods that occur fully at the factory which are not visible to the competitor and which you can keep secret. These may be good candidates for “trade secret” protection, which does not require a patent application, and can last forever! Recipes, (think about the recipe for Coca-Cola) may be best protected using trade secrets, thus freeing your patent budget for other features.)

Major revisions or redesigns to the product (or to methods for making it) may present additional patent opportunities. Watching the features that your competitors adopt, and looking for reasons to add claims to pending patents that cover those particular features is another useful strategy.

At the beginning of a new product effort, using multiple, low cost US provisional applications can give you additional time (one year from the filing date) to decide which ideas are really going into the finished products. You can then decide to file US patents on only some of these provisional applications. To further protect the products, consider filing a selective number of PCT applications to leave you the opportunity to obtain international protection. You will have 30 months from filing the PCT application to decide whether or not to pursue the applications, and in how many different places. These are two useful approaches to develop a set of patents around a product or idea.

The goal is to build a fence around the product and methods, known in the patent business as “patent portfolio development”. It’s true that success requires a continuous effort, but if your fence is built high enough, you might, like Nestlé, become the dominant player in your market.[iii]