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MMEC Business Advisor
Intellectual Property, or IP can be defined as a product of the human mind or intellect; including ideas, inventions, expressions, methods, processes, unique names or chemical formulas which have potential commercial value and can be expressed in tangible form. The United States Patent and Trade Office (USPTO) has the duties of governing IP in the USA.
By the above definition, IP could be as straight forward as the secret ingredient
in your Perfect Bloody Mary. IP can also be more complex, such as a highly engineered,
Rare Earth bearing Nano-structured catalyst that is integral to the production of
some esoteric and valuable wonder material.
IP not only refers to patents, but also to Trade Secrets, Copyrights and Trademarks, as well as affording certain rights to the owners or inventors of distinct company names or packaging designs.
Patents, perhaps the most commonly known area of IP, are divided into three categories:
- Utility Patents – Ideas and inventions such as new drugs (Viagra), mechanical devices (better mousetrap), manufacturing methods (anodizing), etc. In 2015, the USPTO received 589,410 Utility Patent Applications, resulting in 298,407 awarded patents.
- Design Patents – Used to protect ornamental objects, unique designs etc. – such as a USB charger shaped like a conventional telephone. Determining if something should be covered by a design patent or a utility patent can be tricky, but there are a few simple tests that can help.
- Plant Patent – Applies to asexually reproducible plants (grafts and cuttings). New plants, both asexually produced and produced via pollination can also be potentially protected by a Utility Patent.
It is important to remember that IP rights are offensive in nature, not defensive. Having a patent issued by the USPTO does not afford the owner automatic protection
from infringement. Rather, it grants the owner certain rights to exclusivity and
potentially affords them a framework for offensive legal recourse. The USPTO is not
responsible for making sure no one else is using your patented ideas; that responsibility
falls to the patent owner. Rather, the USPTO role is to keep others from patenting
ideas or inventions that too closely resemble patents already granted, also known
as “Prior Art.”
Any inventor, entrepreneur or business entity developing or using IP should be familiar with the basic concepts and terminology used to describe IP. In particular, understand the importance of confidentiality; do not disclose an idea or innovation publicly if the intent is to patent it or treat it as a trade secret. Prior to discussing or disclosing un-protected IP, be sure to have an executed NDA (Non-Disclosure Agreement) in place.
There are several good IP reference books readily available. Over the years, Patent It Yourself(D. Presseman; 2014) has become a common reference tool used by many inventors and the like. It provides a thorough, comprehensive and straightforward resource to guide users from idea to marketed invention. For those looking to gain an understanding of how IP is used at the highest levels, the book Triumph of Genius (R. K. Fierstein; 2015 ) provides an in-depth account of the landmark IP suit brought by Edwin K. Land and Polaroid against Kodak
- Dave Allard MMEC
MMEC Business Advisor
The most important aspect of starting a food manufacturing operation is Food Safety. Nothing will be more important to you and your business than never having a customer become sick, or injured, or worse from consuming your product. Food Safety in the food manufacturing world is overseen by the FDA, State and Local authorities, and many times large distributors of your product. Generally this oversight will consist of on-site audits. An auditor will walk through your operation from start to finish and will conduct a paperwork review of your production records.
Over the years, Food Safety in the US has become formalized and standardized in an
effort to provide the best possible safeguards for you and your customers. The FDA
has mandated Good Manufacturing Practices to be followed by every food manufacturing
facility. These practices are published in the Code of Federal Regulations (CFR117)
and provide guidance in cleaning ability, sanitation, and cleanliness of processing
areas and prevention of microbial and chemical contamination.
A good Food Safety Program in your facility can be broadly thought of in two ways:
- First: Reduce the chance for any hazardous material to become introduced into your product stream. Control them at the source. This requires a variety of programs, called Prerequisite Programs, which you should have in place. Your employees should be trained in them, and they should be followed. In addition, you should be checking frequently to ensure that they are being followed. Think of them as your SOP’s, or Standard Operating Procedures. In other words: what things do you do, how you do those things, when you do those things, where you do those things, who does those things, and how do you know those things were done.
- Second: If a failure occurs in one of your Prerequisite Programs and a critical hazard should become introduced into your product that could cause harm to a customer, how will you detect, and remove it before you ship the affected product? Or better yet, how will your business design a system that doesn’t allow this to happen in the first place.
This is the purpose of a Hazard Plan, better known as a HACCP Plan. HACCP stands for Hazard Analysis and Critical Control Point. These plans have been mandated by the FDA for certain high-risk foods like juices and canned foods, although many other manufacturers follow a HACCP Plan because it is good business to not harm your customers, and because many retailers, wholesalers, and distributors require a HACCP Plan regardless of the product you make.
The two efforts mentioned above work best together. Relying only on your HACCP Plan while utilizing weak Prerequisite Programs is a recipe for disaster. For example, relying on a vision system to inspect finished product works best if the incoming load of hazards is infrequent. If chemically tainted product, broken glass, insects, etc. are being detected by the vision system, then the Prerequisite Programs upstream are in need of an overhaul. The possibility exists that some of these issues may pass through the vision system due to faulty maintenance, operator error, or any number of other reasons.
Prerequisite Programs can be varied depending on the facility and processes involved. The 12 most commonly found are: Facilities (clean, well laid-out, secure, weather proof), Suppliers, Sanitation, Pest Control, Employee Training, Specifications, Production Equipment, Personal Hygiene, Chemical Control, Warehousing and Shipping, Traceability and Recall.
You should have procedures or policies in writing for each of these, detailing what and how your company handles the areas of operation. Some may be brief, while others may require a set of written procedures that require step by step procedures and training. Signed off check sheets are important to serve as records of your sanitation activities. All Prerequisite Programs should list on the front page who is in charge and their job title, where the actual program manual or documents are located, who has revision authority, how often the program is reviewed, and which personnel are trained in the program.
Generally speaking, think of a hospital. We expect there should be no dirty dressings or bandages on the floor, utensils and equipment should be properly stowed, doctors wearing proper clothing, hand washing available, etc. That image in your mind is what your operation should be like. After all, you’re making people’s FOOD.
MMEC Senior Business Advisor
The very first baby boomers turned 65 in 2011; 10,000 turn 65 every day. Baby boomers own 63% of the private businesses in U.S., and 80-90% of their wealth is tied up in their businesses, where it is highly illiquid. Here in Montana, many of those businesses have been managed as a source of cashflow to support lifestyle; rather fewer owners have viewed their businesses as a source of wealth beyond income.
A recent Exit Planning Institute survey confirms that 76% of baby boomers who own businesses plan to transition over the next 10 years, and 48% plan to do so in the next 5 years. Alarmingly, the survey found that 12 months after selling, 3 out of 4 business owners surveyed “profoundly regretted” the decision, and 75% of private businesses put on the market don’t sell. A very common reason for ‘no sale’ is the gap between value expectations of the seller, and the price that potential buyers are willing to pay. Fully half of all business exits were not voluntary, but resulted from death, disability, divorce, disagreement, or distress.
Owners wishing to leave on terms and at a time of their choosing should focus on exit planning well in advance; I’ve heard it said many times that owners who don’t sufficiently plan for a successful exit are busy preparing for an unsuccessful one. So what’s an owner to do? In my experience, owners ‘lean in’ when asked a fundamental question “Do you know what your business is worth?” That difficult, triggering question gets to the heart of an essential, early step in exit planning; correlating owners’ “life-after-business” plans with their personal financial plans and the value of their biggest and most illiquid asset, their business. That eye-opening data frequently jumpstarts serious exit planning endeavors, about which, more next time....