Strong patent portfolio secures future value creation

26 February 2018

The innovation performance of a company is often measured by the number of new patent applications it files. Every year, UPM files approximately 360 patent applications across the world. In Finland alone, the company was granted over 50 patents in 2016 – more than any other Finnish company.

UPM innovations are protected by patents and other intellectual property rights, which Jyrki Ovaska, Executive Vice President of Technology at UPM, sees as a key competitive advantage and value creator for companies.

“UPM has always protected its intellectual property rights by filing for patents, which is becoming even more important as the company expands into new business areas.”
Wood-based biofuels and biochemicals are among the areas where UPM is generously focusing its R&D resources.

“Developing a new product is like going on an expedition. It’s a long journey where new routes open up along the way, allowing us to develop materials for different end-use applications. This journey also leads to new technologies being discovered and patents being filed to protect them,” Jyrki Ovaska explains.

UPM has already applied for patents on several innovations in these new business areas, such as its bio-based UPM BioVerno diesel and naphtha. In addition, the company has patented technologies used to manufacture biofuels from wood-based crude tall oil. Patents are also pending on technologies for manufacturing lignin-based products. Lignin can be used to replace oil-based components.
“Another good example of a patent-protected innovation is the GrowDex hydrogel used for cell cultures in laboratory research,” says Mika Timmerbacka, Director, IPR at UPM.

Patents and other intellectual property rights continue to play an important role in traditional UPM businesses such as paper and pulp production, where maintaining the competitive edge is crucial.

Partners playing a more prominent role

“Today, operations related to innovation involve more and more collaboration and discussion with our partners,” Mika Timmerbacka says.

UPM collaborates with parties such as equipment manufacturers and has a long history of partnering with universities and research institutions on various research projects. Agreements made with partners play an essential part in intellectual property rights management.

“We need to agree on matters related to intellectual property rights at an early stage, long before the innovation is commercialised. This helps us to prevent any disputes in advance,” Timmerbacka states.

Executive Vice President of Technology Jyrki Ovaska says that new business areas also lead to new kinds of partners becoming involved. UPM is for instance collaborating with several start-ups developing new technology — and the way they operate can be very different compared to traditional companies.

“New and growing companies are usually focused on acting fast, so they do not place as much emphasis on making agreements on intellectual property rights. When we’re working with start-ups, it is important to find a way to agree on matters without stifling the flow of innovation and new ideas right at the beginning,” Ovaska notes.

Revenues from licensing patents

Active and professional intellectual property rights management involves regular reviews to assess the importance of each patent to the company. Only those rights that are considered necessary for business should be kept in the company’s own patent portfolio.

Ovaska notes that UPM can also earn revenues by selling or licensing patents to external partners. In the past, forest industry patents were rarely licensed out.

Intellectual property rights management at UPM is a global effort. There is no patent protection at a global level, as each patent is only valid in the country in which it was applied for and was granted.
The process of filing patent applications and managing other intellectual property rights requires a deep understanding of national legislation and regulations.

“The patent application process usually takes about 4 to 7 years. It requires constant contact with the authorities of the country in question,” Timmerbacka says.

Brands also need protection against competitors

In addition to patents, trademarks are another form of intellectual property that is important to UPM, helping the company’s products stand out from the competition. Intellectual property rights also cover assets such as Internet addresses and plant breeding rights. UPM has obtained the latter to protect the eucalyptus species developed for the company’s plantations in Uruguay.

“Eucalyptus had not been grown in the country before, so we had to develop a tree species that was adapted to the local conditions,” Mika Timmerbacka explains.

Many global corporations have come across illegal imitations of their products and cases of unauthorised trademark use, especially in emerging markets. Ovaska says that UPM has had to take action in China, where illegal imitations of UPM copying papers have been available on the market.

“Our policy is to react to any observed abuses immediately,” Ovaska states.

The circulation of pirated copies usually stops quickly once the offending parties have been identified and contacted.

“The Chinese authorities have also been very efficient in taking action to quickly clear such illegal imitations from the market.”

Matti Remes

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