You could only do a minor reformulation of 30/30/... if all other such formulations have already been changed via major reformulations. The only "grandfathering" is on the original patents, not on anything else. Existence of any other 30/30/... would mean that a minor reformulation is impossible due to their patent zones being at the minimum of 7 ... any change of a 30/30/... by no more than 5 would violate another 30/30/...'s patent.
Reformulation Sequencing and Overlapping Patent
Zones
"Assume that product 5-1, currently distributed in France only, has a patent zone of 22. Now further assume that the company reformulates it with a totally new formulation targeted to an entirely different market region. What happens to the 'original' patent for 5-1? Does that patent zone of 22 still apply even though there is no brand attached to it? Further, can this company now reformulate product 5-2 with a formulation that 'violates' the 'old' 5-1 patent, now that 5-1 is a totally new formulation? If this is possible and it all took place in one quarter, then is it contingent upon the order of the bids which then determines the order of the new patents? Do patent zones 'disappear' prematurely if the product is reformulated to something altogether different?"
Reformulation sequence is totally determined by bids, regardless of the source (firm) of the bids. The highest bid is processed first. The first of the highest bidder's reformulation alternatives to satisfy patent constraints is accepted and its patent (for the reformulation) immediately becomes 25. All succeeding reformulations must honor all patent zones, including patent zones of newly reformulated products.
On reformulation, the previous patent no longer exists. Thus, its patent zone is up for grabs PROVIDED that no other existing patent (for any firm) already overlaps on the former patent zone. This is the rub and the potential problem. Any particular patent point (i.e., formulation) can actually be covered by multiple products' patent zones. For example, assume that the two reformulations 10/20/30/40/5/5/5 and 10/46/30/40/5/5/5 are submitted in one game run and both are successful. Their patent zones begin at the usual 25 points so other reformulations must be at least a 26 patent zone point difference. Note that these two formulations are 26 patent zone points apart and, thus,
point 10/33/30/40/5/5/5, prohibiting any other product - including themselves - from reformulating to that particular formulation.
Indeed, overlapping patent zones are the reason why a marginal change (of, say, one unit) in a patent can fail. True, patent searches for reformulation are conducted for all other products excluding the one being reformulated at the moment. But, one or more other products' patent zones could already overlap on the intended reformulation point. In summary, the answers to your specific questions are as follows: (1) The "original" patent of 5-1 disappears when 5-1 is reformulated. That patent zone of 22 no longer exists the moment after 5-1 reformulates. (2) 5-2 can be reformulated to the now nonexistent "original" formulation of 5-1 PROVIDED that no other products' patent zones overlap that point in the patent space. (3) This sequence of events could all happen within a single game run involving multiple reformulations. Reformulation bids determine the sequencing of reformulation activity.
Chris Puto (Georgetown University) suggests that this "... is quite similar to trademark rights. Once you establish a trademark, you must continue to use it regularly or run the risk of losing it. The same forces are at work here. Once you reformulate, you are no longer in a position to use [protect via patent] the 'old' formulation."
Strategy
Brand Equity Across the Vaporware Product Line
"In managing brand equity of a firm's line of vaporware products, is there an obvious problem in having multiple brands at different price points in the same market region?"
It might appear problematic to have lower-priced and higher-priced vaporware brands of the same firm marketed in the same region simultaneously. Does the low-priced, low- performance brand somehow tarnish the brand equity (brand image) associated with the high-priced, high-performance brand? "Maybe and maybe not" is perhaps the best answer that can be offered on a priori grounds. It is an empirical question whether customers see the differentiation across multiple brands in a product line as being meaningful. It is also an empirical question whether customers' perceptions of one brand from a firm are influenced by the presence of another brand from the same firm.
Lots of real markets feature multiple brands and/or brand variants from the same firm arrayed along a price-performance frontier. Providing that customers recognize the product line variations as delivering difference performance levels, there is no obvious problem with having multiple brands in the same market region simultaneously. Underlying segment structure presumably plays a major role in this matter. If the various brands in a firm's product line clearly appeal to one and only one sub-segment of customers, then the presence of another of the firm's brands in the market presumably has little or no impact on pre-existing brands' market positions.
It might be possible to examine this issue via test marketing. The diagnostics provided by the test marketing experiment (particularly perceived performance and perceived convenience), as well as hard performance measures like market share, provide a rich set of indicators of the impacts associated with launching an additional brand or brands from the same firm into a market region which already includes at least one of the firm's brands.