Intellectual Property Strategy for Cosmetic Companies

Intellectual property constitutes the epicenter of the intangible economy. Currently, these assets equate to nearly 85% of the intangible market capitalization of listed multinational companies. From a legal perspective, the PACTE law illustrates the growing awareness of issues related to innovation and, more broadly, to intellectual property strategy for companies as a lever for growth and competitiveness. Cosmetics play a major role in the French economy, being the second most important export sector, and a global leader in this market: 23% of market share worldwide.

What is the Intellectual Property Strategy for Cosmetic Companies?

What is Intellectual Property?

It encompasses industrial property and literary and artistic property. Industrial property specifically aims to protect and enhance innovations and creations. It includes technical creations such as patents, ornamental creations such as designs and models, and distinctive signs such as trademarks. Regarding literary and artistic property, it involves copyrights and related rights.

In France, the legal standards for intellectual property are found within the Intellectual Property Code.

What are Cosmetic Companies?

Cosmetic companies encompass all products or services intended for beauty. This includes perfumery, for example. The cosmetics sector represented 24 billion euros for France in 2018 (Febea).

The Benefits of an Intellectual Property Strategy?

Intellectual property is a key strategy for a company, whether it’s a startup, SME, or multinational. Despite the valorization of “made in France”, competition is increasingly fierce in the cosmetics field. To remain competitive and grow, companies use intellectual property management for various business objectives.

A Major Competitive Advantage

These strategies allow the company to differentiate its offer from those of its competitors and protect its monopoly. The consolidation of this competitive advantage promotes the company’s development, particularly in terms of increasing its market share and profitability. The protection of innovation prevents a competitor from marketing a product or service with the same innovative characteristics. As a result, the company benefits from a monopoly situation on the protected innovation.

A Growth Accelerator

Intellectual property management allows companies to develop through R and their innovation projects. R stands for research and experimental development (RD) [qui] encompassing creative and systematic activities undertaken to increase the sum of knowledge and devise new applications from available knowledge. It includes basic research, applied research, and experimental development ” (INSEE).

As an illustration, the cosmetics sector spends 650 million euros annually on R (Febea).

A Communication Tool

This strategy allows it to enhance its brand image. As an illustration, the technological recognition, or even technological leadership of a company, allows it to improve its notoriety and increase its negotiating power and credibility with partners.

An Intangible Capitalization Tool

It also allows the company to raise funds and strengthen its intangible capital. Holding a portfolio of industrial property titles is reassuring for investors.

As an illustration, holding a patent for a startup triples its chance of taking off (France Brevets).

Protection of Intangible Assets Through Intellectual Property

Intangible assets can be protected by various intellectual property titles.

Copyright

The creator of an intellectual work, provided it is an original form, meaning it demonstrates the imprint of the author’s personality, benefits from protection by the mere fact of its creation, without the need to register or finalize the work (Articles L. 111-1 and L. 111-2 of the Intellectual Property Code – CJEC July 16, 2009, Infopaq C-5/08).

The creator benefits from economic rights and moral rights.

Economic rights include the right of representation, which is the dissemination of the work to the public by any means, and the right of reproduction, which is the material fixation of the work by any process allowing it to be indirectly communicated to the public (Articles L. 122-1 and following of the Intellectual Property Code). A work can give rise to various forms of exploitation.

Moral rights are personal, perpetual, inalienable, and imprescriptible (Articles L. 121-1 to 9 of the Intellectual Property Code). Moral rights include:

• The right of disclosure of the work: the author alone has the right to disclose their work or refuse to do so;
• The right of paternity: they benefit from the right to respect for their name and status;
• The right to respect for the work allows for protecting the integrity of the work against addition, removal, or modification;
• The right of withdrawal and repentance: the first refers to the possibility of modifying the “work, the second refers to the possibility of unilaterally breaking the assignment of the” work in exchange for compensation.

This protection extends to 70 years post-mortem after the author’s death (Article 123-1 of the Intellectual Property Code). Cosmetic packaging can be protected by copyright. Currently, the fragrance of a perfume cannot be protected by this protection (Cass. Com., December 10, 2013, n°11-19.872).

Patent

A patent confers an exclusive right to exploit a patentable invention, which is a technical solution addressing a technical need.

The conditions for patentability of an invention are as follows (Articles L.611-10 and following of the Intellectual Property Code):

• It must be capable of industrial application, meaning the invention must be able to be manufactured or used industrially;
• It must be new, meaning it has never been disclosed to the public;
• It must involve an inventive step, meaning the invention is not obvious to a person skilled in the art given the prior state of the technique.

The patent is protected for a maximum duration of 20 years from the date of filing the application (Article L. 611-2 of the Intellectual Property Code).

This French patent application must be filed with the National Institute of Industrial Property (INPI). If the company wishes to proceed with a single European Patent application, it must be filed with the European Patent Office (EPO). After filing a patent in France, the company can also opt for a Patent Cooperation Treaty (PCT) application, a single procedure to extend its protection internationally in more than 150 countries. In the cosmetics field, R is the most efficient in France with 3.6 patents filed per million euros spent on R (Febea).

Consequently, “” innovation can boost cosmetics through patents. In this context, Trustt beauty is a SaaS software dedicated to the development of cosmetic brands and their data analysis.

Design

The appearance of products is protected by design protection. It generally expresses a company’s identity and its creative force that attracts consumers.

To do this, its appearance must meet two conditions (Article 511-2 of the Intellectual Property Code):

• Novelty means the absence of prior art on the day of filing;
• Individual character means that the appearance of the product does not create the same overall visual impression as a previously disclosed design or model for the informed observer, taking into account the degree of freedom left to the creator.

Designs have a protection period of 5 years, renewable in 5-year increments up to a maximum of 25 years. They can be filed with the INPI for a national application, the European Union Intellectual Property Office (EUIPO) for a Community application, or the World Intellectual Property Organization (WIPO) for an international application. In the cosmetics industry, design protection is commonly used, particularly by perfumery to protect bottle designs.

Trademark

Generally, cosmetics are protected by trademark protection. The latter was subject to an overhaul by Ordinance No. 2019-1169 of November 13, 2019. Trademarks allow consumers to identify products or services and distinguish them from those of competitors.

To do this, the trademark must meet the following conditions (Article L. 711-2 and subsequent of the Intellectual Property Code), it must be:

• Distinctive, meaning the sign must not be generic, descriptive, or functional;
• Available, meaning the chosen sign must not reproduce or imitate a sign benefiting from a prior right for the same products or services;
• Lawful, meaning the sign must conform to public order;
• Non-deceptive, meaning the sign must not be misleading to the consumer.

A trademark is acquired by registration with the INPI for French trademarks, EUIPO for European trademarks, and WIPO for international trademarks. The trademark is protected for 10 years, indefinitely renewable, provided renewal fees are paid (Article L. 712-1 of the Intellectual Property Code).

Is cumulation possible?

Companies, particularly those specializing in cosmetics, can opt for cumulation to grow their intellectual property portfolio. Without difficulty, a cosmetic company can register its trademark with another intellectual property right if it meets the conditions of the chosen regime.

Possible cumulation between copyright and designs

This cumulation is possible provided that the creation meets each of the conditions of the two claimed regimes (Com. March 29, 2017, No. 15-10.885).

Consequently, the rights holder benefits from broader protection thanks to this cumulation. In case of omission or invalidity of the design, the holder can benefit from copyright protection, the latter being acquired without formality. Filing the design allows for acquiring a certain date of creation. In legal matters, the holder can invoke copyright for the first time on appeal, after being dismissed on the grounds of designs. The protection period is longer, as the creator has a total duration of 25 years for designs, as well as 70 years post mortem for copyright. Lastly, they benefit from respect for moral rights, thus they can increase their compensation in case of infringement, especially in case of distortion of the work.

Possible cumulation between patents and designs

A functional and aesthetic creation can be protected both in terms of patents and designs, provided it meets the conditions of each regime. Therefore, the appearance must not be exclusively imposed by the technical function of the product (Article L. 511-8 of the Intellectual Property Code).