Stop seeing double: how the alcohol industry is using IP to beat the counterfeiters

According to The Food Crime Annual Strategic Assessment[1], published recently by the Food Standard Agency’s National Food Crime Unit, piracy could account for more than one billion pounds of annual UK food and drink trade. Different businesses benefit from usage of different anti-counterfeiting measures. These can present opportunities in terms of creating and building value in your business through intellectual property (IP), but also risks in terms of navigating third party IP.

Whatever techniques are employed, however, making them visible to consumers can help to build trust of your brand in the marketplace, increasing the value of your IP. The alcohol industry is embracing a range of anti-counterfeiting measures which prove to consumers that drinks companies are willing to invest in ensuring only legitimate, quality products bearing their branding reach the shelves.

Peter Winckley of tonic wine producer Buckfast explains that they employ a combination of anti-counterfeiting technologies, registered and unregistered IP rights to protect their brand and product. The Buckfast recipe is a trade secret, while their name and mitre device logo have both been registered as trade marks by GJE. The logo is used both on the cap and the label of their bottles. The screw caps are of a snap open style to indicate any tampering and both the cap and the ring that remains on the bottle after opening are marked with batch number and bottling date. The label is also barcoded. All of these measures have become familiar to Buckfast’s customers and retailers, making it easier for them to identify fakes.

Alcohol producers sometimes use chemical markers to track their product and identify marker-free counterfeits, though regulations must of course be considered where additives to the drink itself are used. Whilst the recent Brexit vote might result in the UK adopting its own legislation in this field in due course, EU law is likely to remain in force for a few years yet. It will of course remain relevant to UK companies exporting to the EU in any case.  Some marker technologies are patented. For example, European patent number EP2038647[2] protects aspects of the use of maltose as a marker for ingestible products.

The increasingly pervasive “Internet of Things” or IoT is starting to be added to the arsenal of anti-counterfeiting technologies available to food and drink producers and packagers. Thinfilm, a Norwegian printed electronics specialist, initially developed smart bottle technology for Diageo’s Johnnie Walker Blue Label. This has been modified for use on wine bottles in collaboration with G World Group, a global authentication company, and Ferngrove Wine Group, a Chinese-owned, Western Australia premium wine company. The bottles were unveiled at last year’s Mobile World Congress Shanghai.

The bottle labels incorporate extremely thin printed electronic sensors which can detect if a bottle has been opened. NFC tags, similar to those used for contactless payments, uniquely identify individual bottles in the supply chain. The tags remain active even after the factory seal has been broken and allow consumers to scan the bottles with their smartphones to verify authenticity and obtain additional product information.

Thinfilm and G World Group have both protected their investment in this innovation using the patent system; Thinfilm’s NFC OpenSense tags are patent-pending and G World’s SAMSCAN process is patented around the world. Of course, such technology need not apply only to alcoholic products. The broad range of possible applications presents Thinfilm and G World Group with huge potential to monetise their patents in other fields, for example via licensing.

As far as the damage to the alcohol industry is concerned, the International Federation of Spirits Producers estimates that spirits companies lose over one billion dollars per year due to counterfeits[3] so there is certainly a commercial incentive for them to embrace technology to protect their brands. Governments also have an incentive to help; across the EU an estimated €1.2 billion of government revenue is lost due to wine and spirit counterfeiting, along with 23,300 direct and indirect job losses[4].

UV-Vis absorbance spectroscopy can be used to identify the brand of spirits, and even the grade or distillery of origin. This technique can therefore be used to identify counterfeit and watered-down alcohol products. Even more sophisticated identification software based on neural networks is also under developmentc.

Henry Langston, Product Manager at Ocean Optics, whose modular spectrometers and complementary technologies can be used for such optical testing, has noticed a shift in the drivers for developments in testing techniques in recent years from biomedical applications to solutions for the food and drink sector. This shift illustrates how the food and drink industries are looking to existing technology in other fields for a quick route to high-tech solutions.

Searching patent databases can allow you to understand what technology already exists, potentially triggering ideas for developments. If you do find or develop some technology you’d like to use, GJE can help you to establish whether you have freedom to operate in respect of third party patent rights, or might require a licence.

Being aware of relevant patenting activity can also help you to identify prospects for R&D collaborations. It is essential when embarking on this kind of project though to ensure the collaboration agreement sets out clearly what IP each party is bringing to the discussions, and who will own any new IP which results.

If your company has developed an innovative way of protecting against counterfeiting, GJE may also be able to help you to gain patent protection for your idea. This can allow you to license your technology to other companies, or to carve out a space which gives you an edge over your competitors.

When it comes to protecting your brand and packaging, we can register your trade marks and designs, advise on what unregistered IP rights (copyright, unregistered design right, know-how, goodwill etc.) you may already have, and how to enforce and exploit these to maximum benefit. Enforcement of trade mark and design rights can be key in preventing counterfeits and/or dilution of a brand, while we can also set up UK or EU-wide customs watches based on your registered IP, to ensure interception of counterfeits at borders.

If suspected counterfeits are identified, GJE can investigate and contact the relevant parties on your behalf. For example, a renowned bread and flour company sought our advice about suspicious merchandise products available through various online marketplaces. The sellers were claiming that the souvenir merchandise was reclaimed from a closing factory. Our detailed investigations revealed that the products were indeed counterfeit and that the sellers were acquiring the products from a third party in good faith. We contacted the sellers, advising them that the products were not genuine, and asked for details of their source with a view to taking direct action against the counterfeiter. The sellers confirmed that they would not be selling the infringing items in the future.

Whether you choose to protect your brand and product from counterfeiters with high-tech or low-tech solutions, and however you deal with any counterfeits that do make it onto the market, visibility is key. At a time when consumers are well aware that their “beef” burgers might contain horse, and “vodka” might even be antifreeze, they need their trusted brands to make it very clear to them that products bearing their branding are the real thing. Failure to safeguard your brand in this way is likely to result in genuine damage to your business, reputation and market share.

Gill Jennings & Every LLP are a specialist intellectual property law firm based in London. Our patent and trade mark attorneys provide commercially focussed advice on legal protection for innovations and brands to companies ranging from start-ups to multinationals. We have a team of patent and trade mark attorneys who specialise in advising clients in the food & drink sector.

[1] The Food Crime Annual Strategic Assessment

[2] EP2038647

[3] Ocean Optics Application Note: Sampling of Spirits

[4] The economic cost of IPR infringement in the spirits and wine sector

This article was originally published in Food Science & Technology.

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