Fluxxion is a Dutch company whose micro-sieves are used to filter out bacteria from milk, thus extending the shelf life and improving the hygiene of the product. The sieves are also used in the chemicals industry, where they are used to separate chemicals.
The company’s green credentials stem from its products’ ability to save energy and resource use, and reduce waste.
Started six years ago, the company sees intellectual property (IP) as a massive part of its business. “Our value is basically our IP and its deployment,” says Rob van der Meij, chief executive.
Most clean technology companies are relatively young, so IP has a disproportionate weight. But securing IP is a costly process, so there is a constant balance between what you can afford to and what you cannot afford not to do. Nonetheless, “a good IP strategy is essential for any company starting up in this space. It is very costly, so you really have to think through how and when to do it, but it is pretty much the core value of your company.”
When Fluxxion was formed by a group of engineers from the Philips conglomerate, the company “had an understanding of the main ideas, but we did not have a patent”. A generic patent was held by a university professor, which the company licensed and it then proceeded to patent the ideas behind its manufacturing process.
There is another balance that companies must consider, Mr van der Meij points out. “You want your patent to prevent anyone else doing what you do but you have to decide whether to do that by describing everything and revealing all your secrets – or by leaving crucial elements out so your competitors don’t know exactly what you are doing. You have to decide whether you want a defensive or offensive patent.”
It is not just your own technology you have to be concerned with. “What factors could block you from using your own patent? Do I need to block someone else’s patent, or license it? These are all issues you have to consider,” he adds.
One of the first things a start-up business should do is undertake a freedom-to-operate study to ensure that it is not infringing anyone else’s IP. However, this is not cheap and some companies take a gamble. Companies that are backed by outside investors sometimes ask them to cover the costs of the study, but this normally involves a trade-off in terms of the amount of control the company has to cede.
The cost of taking out patents, for a company that sells its products globally, can easily reach €30,000-€40,000 ($37,000-$49,000), although the scale of the patents needed depends on where your main markets are. While basic patent law is fairly similar around the world, there are individual characteristics. It is easier to file a patent in the US than in the EU, for example, because the US requires a much less stringent innovation check. However, this means that it is easier to challenge a patent in the US.
A patent challenge is something to be avoided if possible, Mr van der Meij points out, because good patent lawyers are rare – and expensive.
Fluxxion’s patents cover Europe, the US and Japan, but it also has manufacturing patents. Because its manufacturing process is linked to semiconductor technology, it has these in all the main chip manufacturing markets including Europe, the US, Taiwan, Korea and Malaysia.
An obvious omission from this list is China. Until a few years ago, taking out a patent in China was a risky business, he says. Matters have improved somewhat since China joined the World Trade Organisation, but it is still problematic, he adds.
Another strategy to protect your IP is to outsource different elements of your production among a variety of suppliers so that only you know how to manufacture the final product. Fluxxion’s products are made in France, but less for IP reasons than because the company that makes them is another Philips spin-off.
You might think that once IP is secured, it can be forgotten about, but dealing with IP is a never-ending process, Mr van der Meij says. Not only do you have to monitor your competitors’ IP and your own, but as your patents come to the end of their life you have to refine your products so you can extend your patents and protect your competitive advantage.
Even if you are completely on top of your IP strategy, there is always the danger that a rival will completely circumvent your idea and come up with a different solution to the same problem.
“Dealing with intellectual property is a constant interaction between your technology and your strategy,” says Mr van der Meij, “Can you be first to market and best to market, do you have the best total cost of ownership – and how do you prove it?”