Innovation - The specialty chemicals sector is made up of a diverse range of organizations: large multinational chemical companies, contract manufacturers and research organizations, bulk manufacturers, raw materials suppliers and many more in between.

Despite the varied products and services that these organizations offer, if you were to ask each of them what makes them stand out over their competitors, it is likely that a similar answer will emerge: "innovation."

At this summer's Chemspec Europe event in Geneva, "innovation" was touted as being the key to most companies' offerings: innovative products, innovative processes, innovative strategies, innovative solutions. The list seems endless. Clearly, it seems that in order to be relevant in the current specialty chemicals sector, you have to be an innovator.

Innovation, Great - But What About Imitation?

While there can be no doubt that offering innovative products and services is desirable, what good is innovation if it can be imitated? The answer is probably "no good at all." In fact, failing to protect innovation is arguably more damaging than never innovating in the first place. After all, if innovation requires an investment in time and money, if is never actually protected, then the reality is that the time and money is simply being spent for the benefit of someone else; in effect, competitors are having their innovation done for them.

There are of course a number of ways in which innovation can be protected, each having advantages and disadvantages.
The simplest and most cost-effective way to protect innovation is to keep the know-how behind the innovation secret. While this option may be adequate in some situations, the ability to reverse engineer innovative products can mean that this method may only buy a couple of years of innovation "lead time" at best. At worst, the know-how is leaked and the competitive advantage is effectively lost.

Patents - More Than Just A Piece Of Paper

A more robust option is to use patents to protect the innovation. Of course, patenting actively requires the disclosure of the know-how behind the innovation. As a result, patenting is seen by some as giving an advantage to competitors in countries where patent protection is deemed to be less effective.

However, it is suggested that perhaps this view may be a little overstated. While it is acknowledged that the patent systems of a number of emerging territories have not been perfect at protecting the interests of patentees, these systems are improving. Pressure is being put on those underperforming countries and they are now coming to understand that they are going to have to bring their legal systems up to an acceptable standard. In this regard, it should be noted that granted patents are valid for 20 years from the filing date of the initial application.

As a result, it is potentially short-sighted to say that just because a patent system is not perfect now, then protection is not worth pursuing. The lifetime of a patent is likely to give ample time for underperforming legal systems to catch up, and so potential problems with enforcement provisions may be addressed well before the expiry of the patent.

Therefore, companies refusing to protect their innovations through patents because of historical enforcement difficulties are potentially giving up an opportunity to obtain many years of invaluable patent protection. Indeed, rather than keeping imitators at bay by keeping the relevant know-how secret, it could be argued that innovators who fail to patent are in fact giving imitators a free pass to reverse engineer and obtain the know-how, safe in the knowledge that legal action from a patent infringement suit is not an option.

Given that the gulf in investment from research and development to launch is greatest in high technology industries, then the risk of not protecting the know-how behind the innovation must also be greatest. Of course, there is a cost associated with patenting that may not be considered by some to be worth the resulting protection, especially in the short term. However, businesses should not overlook the fact that as well as providing robust protection of their innovation, patents also can also actively add value and contribute to their business in a number of other ways.

Patents are seen by potential investors as a significant measure when assessing the value of a company. Accordingly, as well as actually defending the know-how behind innovation, patents can provide a platform for stimulating further investment and additional innovation.

Also, patents and other intellectual property can be leveraged to obtain additional funding and investment. It is very difficult (if not impossible) to leverage unprotected know-how and so patents can possibly provide a route to additional funding not conventionally available.

In view of the ability of patents to both provide protection for innovation and at the same add value to a balance sheet, what areas of technology should be the focus of patenting activities in the specialty chemicals sector?

We Innovate, But What Should We Patent?

When it comes to specific products, provided the invention is new and not obvious, patents can be applied for in many areas. Final materials, starting materials, intermediates, formulations, enantiomers, polymorphs and enzymes can all be the subject of patent protection. Additionally, improved compositions, blends, alloys, dispersions and emulsions may also be the subject of patent protection.

However, patent protection for improved and scaled-up processes should also be considered. Improvements to otherwise known processes can be particularly important for contract manufacturers. If a process can be improved to increase yield, reduce temperature and reaction times or reduce harmful by-products, it should be protected. By being the sole provider of an improved process, cost reductions can be passed onto customers and therefore provide a tangible competitive advantage. Indeed, rather than just claiming to innovate, companies who patent such improvements can show that the innovation benefits their customers' bottom line.

The ability to patent new uses of known substances should also not be neglected. In many instances, it is the new application of an old substance which proves to be particularly profitable, especially where the cost of the product is low or has yet to find a suitable industrial application. For example, the ability to patent new uses of known substances may be particularly relevant in resurgent technology areas such as the nano-sector.

Academically interesting nanomaterials that were developed many years ago but didn't find any suitable industrial applications could now be reinvestigated and applied to other technology areas. While these previously known materials cannot be patented in themselves, their new applications potentially could be.

Summary

Patenting innovation is a robust way of protecting the fundamental know-how that a company has created. Not only do patents provide a legally respected and harmonized way of preventing others from imitating innovation, patents also provide investors with a more tangible means of valuing a company. Patents can therefore be seen as actual evidence of "innovation" and lend some credibility to using a term which is coming fatigued.

Also, the additional ability of patents to potentially provide alternative means for securing investment should not be overlooked. Patents can provide a versatile tool in protecting, quantifying and even strengthening the critical know-how which is at the heart of the "innovation" which the specialty chemicals sector values so highly.