trademarks at nestle

Finance & Control1

Patents and Technology Transfer

Cornelis Schüller - Group Head of Patents


Genève, 6th November 2007

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Patents and Technology Transfer Introduction

The Patenting Process

Technology Transfer in Theory

Technology Transfer in Practice

Conclusion

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Introduction Universities/public research

Innogenetics

Nestlé

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Exclusive rights vs. Full disclosure

Encourage scientific/technological development

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The Patenting ProcessPatents are primarily used for,

Protection of R&D results Preventing competitors from entering a certain field Avoid being blocked out of a field by third parties Cross-license to get access to third party products and

technologies Marketing tool

» Proof of innovativeness» Selected licensing» PR.

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Trade Secrets

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Trade Secrets (1) employees move to other companies, including

competitors more often there is no such thing as ‘life-time’ employment anymore,

education is similar if not identical in terms of textbooks, handbooks,scientific journals etc.,

access to information is universal via the internet,

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Trade Secrets (2) access to information is universal via the

internet,

retrieving information from inside or outside of a company is easy,

via internet or on discs etc. huge amounts of information can be transported unnoticed, industrial espionage is growing, think of the formula 1 wherein McClaren was accused of using Ferrari info.

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Trade Secrets

The Current Situation

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Current situation Patents protect economic interests

Patents serve to attract investors

‘Patent or perish’

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Technology Transfer …..the process of developing practical

applications for the results of scientific research.

…..the process of transferring process and production technologies from one factory to another.

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Technology Transfer Transfer of Patent Rights and

Trademarks

Transfer of Technology

Licensing as the Core of a Larger Contractual Package

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Key players

Universities/public research

Innogenetics

Nestlé

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Universities/public research Bayh-Dole Act(1980) gave universities

control of their publicly funded patents, Prior to enactment the US goverment

had 30,000 patents 5% of which were licensed

Petitions for ‘march-in’ rights have mostly been denied.

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Universities/public research Association of University technology

managers 6000 members (w.w.) US univ. 3000 US patents/year. Research budget 40 billion USD, Licensing revenues 1.4 billion USD

Top 5 institutes account for 91% of the revenues (Univ. Calif., Stanford, Harvard…)

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University (Groningen)The TLG’s profileWho are we and what do we do? The Transfer & Liaison Groep is a faculty

department of the Office of the University of Groningen (RuG). We function as the main link between RUG academics on the one hand and authorities (local, regional and national) and the business community on the other. You can find us at the university’s Zernike Science Park.

http://www.rug.nl/?lang=en

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Innogenetics 2006- Product sales increased by 13.2% to reach

€47.9 million- Total revenues increased by 10.6% to reach

€53.7 million - Total income increased by 6% to €58.0

million- Operating loss from continuing operations

€25.7 million versus €20.0 million in 2005- Cash position €22.3 million

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Innogenetics products

(web site : Innogenetics (2007)

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>€1bn – Growth 15%*

Diagnostics

Treatment

Diagnosis

Outcome

Specialty DiagnosticsPredisposition

profiling

Diagnosis

Treatmentselection

Treatmentmonitoring

>€23bn – Growth 6%-7%*

Treatment

Figure 1

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Figure 2

Distribution HCV genotyping Bayer license fee, R&D funding,

milestone payment,transfer price

Co-development rapid microbiology Roche license fee, R&D funding,testing milestone payments,

royaltiesOut-licensingHIV-1 group O Abbott license fee, royalties

BayerRoche bioMérieux/O.T.Dade BehringOrtho-Clinical Diagnostics

HCV genotyping Roche license fee, royalties

Specialty Diagnostics – Partnerships


22 Finance & Control

Nestlé in Figures 2006• Worldwide Sales: CHF 98,458 billion

• EBIT: CHF 13,302 billion

• Net Profit: CHF 9,197 billion

• Factories: 481 in 87 countries

• Employees: Around 265,000• Organic Growth: 6.2 %• R&D Expenditure (F&B): CHF 1.7 billion

(1.8% of sales)

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Sales by regionPercentage of total F&B sales in 2006

Americas42.4%

Africa, Asia, Oceania19.3%

Europe38.3%

( Excluding globally managed businesses ( Pharmaceutical, Nestlé Waters, Nestlé Nutrition)

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Sales by Product Group in 2006

• PetCare

•11.6%


Nestlé, NAN, NIDO, Dreyer's, Mövenpick

Pro Plan, Purina ONE, Friskies, Dog Chow

• Milk Products• Nutrition• Ice Cream

•25.8%

Nescafé, Nesquik, Milo, Nestea, Perrier, San Pellegino

• Beverages•26.3%

•17.9%

•

Cooking AidsPrepared Dishes

• Chocolate• Confectionery• Biscuits

•11.6%

6.8%

• Pharmaceuticals

Stouffer's, Buitoni, Maggi

Kit Kat, Smarties, Crunch, After Eight

Alcon Laboratories, Galderma

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Nestlé's top competitors in 2006

0

10

20

30

40

50

60

70

80

Nestlé PepsiCo Kraft Foods Unilever Coca-Cola Mars Danone CadburySchweppes

GeneralMills

ConAgra Kellogg's Sara Lee

Food

Sale

s (in

bn

USD

)

2006 World's largest Food and Beverage Companies

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Some perspectivesSales growth 2006 (CHF b)

- 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000

Hershey

Kraft

Campbell

Unilever

Numico

Heinz

General Mills

Coca Cola

Danone

Cadbury Schweppes

Nestlé

FC-JUR/TM/UB – 10 January 2000

Our Brands



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25 brands with sales overCHF 1 billionBeverages Chocolate, confectionery and biscuits

WaterPrepared dishes and cooking aids

http://www.nespresso-game.com/offer/

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25 brands with sales overCHF 1 billion

Milk products PetCare

Ice creamNutrition Pharma

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Local tastes and needs Nestlé tailors products to local tastes

and needs:– around 200 Nescafé blends to answer local

consumers expectations

Malaysia Japan RussiaPoland Africa, GreeceRussia, Israel

SwitzerlandEuropeJapan

FC-JUR/TM/UB – 10 January 2000

The Group Intellectual Property Department Manages IP Rights

Worldwide



Organisational Intellectual Property Department

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Strategic and local brands are protected & managed

365Strategic

Local

Brands

7'653

22'132

Protections

84'253

Managed by 17 Regional IP Advisers (RIPA's) for local Nestlé Operating Companies

Managed by Center IP Department in co-operation with the Strategic Business Units ('SBU's) and the RIPA's

Status 24.10.07 / E.Dum.

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Nestlé has a substantial patent portfolio

The Nestlé patent portfolio contains as at 24.09.2007: 10'418 granted patents 6'173 pending cases which may result in

the grant of a patentThey key patenting territories for Nestlé are:USA, Europe, Canada, Japan, Australia, and more recently China and India.

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Most Valuable Global Brands 2006

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Technology Transfer Nestlé

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• Société des Produits Nestlé S.A. is the registered trademark and design owner and Nestec SA is the registered patent owner, in both cases acting as nominee for Nestlé S.A., who is the beneficial owner- Central ownership applies to trademarks linked

to strategic as well as to local brands• These rights are licensed, together with

know-how, to the Nestlé Operating Companies who pay royalties for their use

Nestlé's IPRs are centrally owned & licensed to local Nestlé Companies...

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Nestlé SA(Holding Co.)

Nestec SA(Knowledge Co.)

OperatingCompany

KnowledgeandLicences

Funding

Royalties

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Joint VentureNestlé is party to a number of important

JVs: BPW (Beverage Partners Worldwide)

with the Coca Cola Company CPW (Cereal Partners Worldwide) with

General Mills Innéov with l’Oréal Galderma, Lactalis etc.

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‘Innovating the Future’This strategy is enhanced by the following continuous improvement into consumer insights and their

translation to innovative products built on superior science and technology,

harnessing the vast expertise in our research and development work,

working closely with leading universities and outside partners on cutting-edge science and technology,

recruitment of open-minded and passionate innovators who can bridge science, technology and business needs,

bigger pioneering innovations that hit the “innovation sweet-spot” where best in class science and technology combine to deliver precisely the needed N,H and W products needed.

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Technology transfer ….

- includes patents, trademarks, brands etc.- extensive defence is needed against

counterfeiting and copying.

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Counterfeits are a serious problemand a crime in most countries!

Example NESCAFEin Russia

Trademark infringement

+ Unfair competition

+ Fraudulent act with penal sanction

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NESCAFE PLATINUM in Russia

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Universities rely on technology licensing groups which are

not always experienced enough, license (co-own) and are therefore free to

exploit outside of field of sponsoring company. feel the pressing need to exploit, as patents

cost money and are perishable, understand that technology is only the starting

point, may get additional sponsoring for further

research, further co-development and licensing of IP relating to same project.

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Biotech companies/INNX further develop certain fields like

Universities, are tied to the Industrial results of their

licensee, still rely heavily on public subsidies, understand that the basic, scientific steps

are not the most rewarding as there is a long way to go to a final product and that is where a big part of the risks is located.

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Food Industry/Nestlé primarily has direct ownership of results by

direct investment, either by full-ownership or in the form of JV’s,

intergroup licensing involves multiple subjects know-how, training, patents, trademarks,

is more and more accepting ownership by developers outside their own field of use, especially with engineering firms,

Starts co-development in ‘Open Innovation’ with peers.

is more open for licensing especially since developments are going fast and so IP becomes outdated faster.

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