Gatorade: A cautionary and success story on the importance of having a university IP Policy

I just came back from a very productive trip to Cebu and Dumaguete. My mission there was to teach university administrators and faculty members about intellectual property rights (IPRs) and why every school should have its own IP Policy.

Conducting Basic Orientation Seminar on Intellectual Property Rights to university administrators and faculty members from different schools all over the Visayan islands.

It was no surprise that there wasn't much accurate knowledge about IPRs floating around. I have been visiting schools all over the country for some time now and the same old recurring theme always comes to greet us: educators need to be educated about their IP rights and those of their students. They need to learn how their copyrights, trademarks, industrial designs, trade secrets, utility models and patents figure into their daily work.


After the basics, we then go into the more difficult task of crafting IP Policies for each individual school, institution or university. 


So what is an IP Policy and why is it so important when we already have the IP Code? 


IP Policies are rules set by a group, institution or even an individual to govern the ownership, management and transfer of IPRs. It's important for institutions and schools because the people working for them need to know how much of their IPRs they get to keep and how much they need to give up to be part of that group. 


Even if the IP Code is sufficient to provide protection of IPRs, the law also leaves us with a wide latitude of contractual freedom so that people and institutions get to decide how IPRs are managed among them. Upon this wide space, institutions need to craft a predictable rulebook on IPRs so that those who create them can manage their expectations as to how much money and credit they will receive for their work.


Universities and colleges are IP manufacturers of the highest grade. It's only a matter of time before that student stumbles upon that formula to destroy that formerly incurable disease or that professor invents human teleportation. What we believe to be science fiction is explored and made real every day in these schools. With such prolific intellectual activity, there is great potential for creation and commercialization of intellectual assets. 


The classic success and cautionary story on the importance of IP Policies is the story of how Gatorade came to be.


What we recognize today as the gold standard in sports drinks was created in the laboratories of the University of Florida in 1965 by a team of university researchers, upon the request of Florida Gators assistant coach Ray Graves -- the drink, of course, was later named after the team.

Taken from Wikipedia.org and used for educational & historical illustration only.

This drink was designed to quickly hydrate a player and replenish the carbohydrates and electrolytes lost during physical exertion. The invention was a massive success and was considered to be the tipping point that led the Gators to win their first Orange Bowl championship against the Georgia Tech Yellow Jackets.


Word would then spread to the different schools and the different states and sports teams started ordering Gatorade by the truck. Gatorade was then purchased by the Quaker Oats Company and then by PepsiCo. It would be marketed worldwide and was accepted as the official sports drink of the NFL, the NBA, the NHL and even NASCAR. Today, Gatorade makes roughly a billion dollars in revenue each year. From this, the University of Florida has received $100 million in royalty payments alone. (http://www.gatorade.com/history/default.aspx)

Taken from www.gatorade.com and used for educational & historical illustration only.

So what's the problem here?

Well, for starters, there were several lawsuits concerning the ownership of the Gatorade formula. Because there was no clear IP Policy in place during the time of its creation, the government was said that the researchers had no proprietary rights over the formula because they were using federal money to fund their research. The University of Florida also claimed IP rights over the formula because its facilities were used for its creation. 


After the bloody legal battle, a settlement was reached awarding 20% of the royalties to the university. 


Indeed, the story seems to end well. But one can't help but wonder how much more the university could have received if it only had an IP Policy in place. 


Going even further, could the researchers have had a larger share in the revenue? could the coach who initiated the project have received a small cut? could the student assistants who helped the researchers have received a portion of the rewards or at least credit for the invention?


All these things could have been clarified a school's IP Policy. A mere chapter in the student handbook could have spelled the difference between a million dollars and nothing. 

Discussing Copyright and IP Policy with faculty members of the Notre Dame University in Cotabato City (Photo by M.R. Dy © 2010)

Here in the Philippines, these same questions and conflicts arise every day. Each time a student submits a thesis or dissertation, the faculty member who spent long hours refining the work and advising the student wonders if he or she should get credit for the extra effort. Such credit could have been used to secure a professorial promotion or a study grant had there been a policy in place.


Each time a professor publishes a book that was edited by a team of students, they wonder if they should be credited as co-authors or if they deserve a tiny bit of the royalties as a reward for their work. Such acknowledgement could have been included in the student's CV, giving him or her a chance at better employment and further studies.


Fair is only fair if you agree upon a set of rules before playing the game. People working in a university setting miss so many opportunities to improve their careers, their portfolios and their incomes because no IP Policy exists to manage their rights. I have been a victim of this. If we had an IP policy when I was still in college and law school, I could properly claim to be an author of at least three books. Right now, I don't even know what rights I have over my thesis.

A hotbed of invention and innovation -- The Agricultural Engineering Workshop at the University of Southern Mindanao, Kidapawan Campus (Photo by M.R. Dy © 2010)

We have been travelling the country from Baguio to General Santos City and have found the response of the different schools to be very encouraging. Today we have over 30 colleges and universities with active IP Policies and 20 others that are drafting theirs. This gold mine is slowly being excavated one school at a time.


Genius is everywhere. We simply have to manage it. 




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To know more about formulating your own IP Policies, you may email IPOPHL: mail@ipophil.gov.ph






According to 2010 figures, the following schools have active IP Policies:

1. Aklan State University
2. Batangas State University
3. Benguet State University
4. Bicol University
5. Camarines Sur Polytechnic College
6. Camarines Sur State Agricultural College
7. Carlos Hilado Memorial State College
8. Central Philippines University
9. De La Salle University-Manila
10. Eulogio Amang Rodriguez Institute of Science and Technology
11. Laguna State Polytechnic University - Siniloan Campus
12. Mariano Marcos State University
13. Mindoro State College of Agriculture and Technology
14. Naval Institute of Technology
15. Northern Iloilo Polytechnic State College
16. Northern Negros State College of Science and Technology
17. Notre Dame University - Mabel
18. Polytechnic University of the Philippines
19. Samar State College of Agriculture and Forestry
20. Southern Leyte State University
21. Southern Luzon State University
22. St. Jude College
23. Tarlac College of Agriculture
24. Tarlac State University
25. Technological University of the Philippines
26. University of Rizal System
27. University of San Carlos
28. University of Sto. Tomas
29. University of the Philippines - Diliman
30. Visayan State University
31. West Visayas State University
32. Western Philippines University
33. Western Visayas College of Science and Technology
34. Xavier University - Ateneo de Cagayan

The following schools are in the process of drafting their IP Policies:

1. Abra State Institute of Sciences and Technology - Main Campus
2. Ateneo de Naga University
3. Bataan Peninsula State University
4. Bulacan State University
5. Capiz State University
6. Cebu Institute of Technology
7. Cebu State College of Science and Technology - FIZ Camotes, Tuburan and AIFC Campuses
8. Eastern Samar State University
9. Eastern Visayas State University
10. Ifugao State College of Agriculture and Forestry
11. Kalinga Apayao State College
12. Leyte Colleges
13. Notre Dame of Dadiangas University
14. Partido State University
15. Ramon Magsaysay Memorial Medical Center
16. Samar State University
17. University of Northern Philippines
18. University of Southern Mindanao

Fruit of our Land: Dreaming a Philippine GI System

Just last week, I was in Bangkok to attend a regional seminar called ASEAN-ECAP III Regional Workshop on the control of Geographical Indications (GIs). 


This seminar was designed to discuss the GIs of the different ASEAN and European countries. 


Before I go further, I am obliged to discuss the concept of GIs to the general public --


The TRIPS Agreement defines Geographical Indications (GIs) as 

...indications which identify a good as originating in the territory of a Member, or a region or locality in that territory, where a given quality, reputation or other characteristic of the good is essentially attributable to its geographical origin. 

(Trade-Related Aspects of Intellectual Property Rights under the General Agreement on Tariffs and Trades, § 3, art. 22.1.)

Simply put, GIs are marks or labels that tell you where a good or service comes from. In order to qualify as a GI product or service, it must come from that place and that place alone. This might be because of some special physical characteristic of that territory or it can be as simple as the reputation of the product itself or the people producing it.  

Image found at www.thewinedoctor.com

The most popular example would be the wine coming from the Champagne province of France. The grapes, soil, and climate from this particular region have certain unique qualities that allow the production of the high-quality Champagne wine as we know it. Because of its popularity, the term Champagne once became generic as a term to describe any type of white wine, but because of GI protection, no wine can bear the name Champagne except those that are produced from the Champagne Province. Others will have to be called sparkling wine.


The Philippines, along with all the other states that signed the TRIPS Agreement, is bound by international law to protect GIs as intellectual property. Under our system, GIs would be protected under the trademark system, although with substantial modifications.

Nakorchaishri Pomelo protected by the Thai GI System.

Regionally, GIs are starting to be protected and promoted across the ASEAN. Our visit to Thailand gave us a chance to visit the pomelo farms of the Nakorchaishri province, where the producers explained to us how these fruits are to be planted, tended and harvested in order to meet GI standards.

At a glance, it's clear that the Philippines has a wealth of local products that deserve GI recognition because of their quality and reputation. The mangoes of Cebu and Guimaras have been well received in Europe and the US for many years. The Barako coffee of Batangas is legendary among Filipino consumers. From these islands, we have so many food products, beverages crafts, and services that have the reputation and quality that could make potential GI-protected assets.

So what are the advantages of using GIs?

1. Quality Control and Consumer Protection. For products to qualify for GI protection, the producers have to follow standards and specifications. This may include the use of organic fertilizers, avoidance of pesticides and the respect for normal seasonal changes.
2. Price Increase. Because quality control increases, so does price. The consumer does not only buy the product but also the guarantee that the product is of good quality. This is true for both the domestic and the international market. In effect, this improves the reputation of a certain region or town, providing better jobs and opportunities locally. 
3. Market Access. Some countries, especially those of the European Union require very strict quality control measures for products entering their countries. Having GI protection helps in meeting these standards. Although it is not an assurance of market access, GI-protection effectively guides producers into the right direction of producing quality products rather than mediocre ones that would be rejected outright.
4. Promotion. Because the GI system is well-known in the global market, having your product qualify as a GI-protected product instantly includes it in the marketing scheme of GIs globally. 

All in all, it is predicted that this system has the potential to supply tremendous benefits to local producers by bolstering the marketability and quality of their goods. It can also protect these producers by providing them with a niche market that can withstand competition from large companies that attempt to invade the industry. This secures both the identity of their products and the commercial success of their enterprises.

So why haven't we established a GI system yet?

Because we are caught between adapting the sui generis system of EU & ASEAN and the certification/collective mark system used by the United States. It's a battle of IP systems that mirror our own history and foreign policy. Adapting the EU system would give us better market access to the old world, while inviting the ire of our largest trading partner. Using the US system will isolate us from the rest of our ASEAN neighbors and prevent regional harmonization of IP laws and the integration of markets.

Difficult choice. But we need to make it soon. Our neighbors are waiting.

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More on Collective and Certification Marks on my next post.