Back to Gatorade 11. Gatorade
Ahead to Gatorade 18. Case: Who Owns Gatorade?
The ownership decision balances the legal requirements for patent - material that is new, useful and not obvious and the proper balance of the rights of the University the public through the government and the inventors who applied basic chemical principals in a new and unanticipated way.
Gatorade 16. Who Owns Gatorade®
Dr. Cade's group offered Florida's athletes a balanced drink that would provide essential hydration, salt replacement and energy boost. As a result of decades of scientific understanding and commercial development, beverages designed to relieve the fatiguing effects of exercise have become a huge international market. Worldwide annual sales of such products exceed $US 1.5 billion.
In the late 1960s Dr. Cade and the young physicians offered Gatorade® to their employer (the University of Florida) and to the government. They had no takers. But they still believed they had made a worthwhile invention. Patents protect the rights of inventors to their inventions. A United States Patent prohibits anyone but its owners from making, using or selling the invention as described by the claims in the patent, for twenty years after the inventors file their patent application. The inventors came to the United States Patent Office with a description of Gatorade® and a series of claims about the product.
United States Patents convey the power of exclusion. If the Patent Office issued the doctors' patent, the doctors would give up their secrets. The claims would describe to the public the composition of Gatorade. But no one in the United States would be able to make the product without Dr. Cade's permission until the patent expired. If Dr. Cade's group held a patent on Gatorade®, they would control the product for the better part of two decades. Others might sell a competitive product, but only if they negotiated a license with the Cade group first -- a license that could make Dr. Cade and his associates quite well-off.
Dr. Cade's group had sold their interests to Stokely-VanCamp. They pursued their patent as Stokely-VanCamp began to manufacture Gatorade®.
The Gatorade manufacturing process was not a straightforward. Issues of product sterility required that the beverage be sterilized by heat prior to sale. This costly sterilization process contrasted with the process for carbonated soft drinks. (The carbonation of soft drinks renders the beverage acidic. Bacteria cannot grow in the acid environment, so that soft drinks do not require sterilization.)
As Stokely Van-Camp began to market and sell Gatorade® the University of Florida and the United States HEW suddenly overcame their disinterest in the product. The University now claimed that since its employees developed the beverage, the formulations and any patents should belong to the University. HEW looked at its contracts that supported some of Dr. Cade's research. Dr. Cade and the government agreed the HEW money was not directed toward the development of a sports drink. Nevertheless, HEW claimed ownership of the inventions resulting from work it funded. The government did not want patents filed, it preferred to have the technology open to all.
The parties went to court. Most legal settlements please no one. This final agreement was no exception. Stokely VanCamp became the owner of the formulations but they were required to pay a substantial fee to the University of Florida. Stokely-VanCamp and Dr. Cade's group agreed not to patent the product as the government wanted. Thus anyone could develop their own product using the inventions of Dr. Cade's group.
The Quaker Oats Company purchased Stokely-VanCamp in 1983 and became the owners of Gatorade®. In the first thirty years after Dr. Cade's original formulations more than 50 different products were marketed in the United States as sports drinks.
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