Here are time and money saving patent strategies for early-stage medtech companies.
Roman Fayerberg and David J. Dykeman
Venture capital (VC) funding for medical technology companies has been challenging in recent years. A strategic patent portfolio is crucial to a medtech company’s growth and survival and can help secure funding. A recent study found that a startup has about a 2.5 times greater chance of achieving success within 10 years of VC investment if it holds patents before the investment. For early-stage medtech companies, patents are often an important way for investors to place a value on a company’s technology and judge the potential success of the investment before sales that often begin only after regulatory approval.
While there are no short cuts to building a strategic patent portfolio, this article discusses several techniques that can help early-stage medtech companies get a head start on competition.
License a Proven Technology
Licensing a proven technology is a quick way to begin building a patent portfolio.
Medtech companies can license technology that is already patented from academic institutions and research hospitals. Licensing such technology not only comes with a patent portfolio, but also can minimize the risks associated with new technologies and shorten the time to market. The inventors may have already tested the technology, established the proof of concept, and will likely be available to perform further research to improve the technology or serve as scientific advisors to the company.
Large medical device companies are another potential source to obtain proven technologies with patent protection. Often, large medtech companies own patented technologies that they are no longer pursuing for business reasons, or anything related to the technology itself. Many promising technologies are sitting on the shelves of medtech companies. Licensing such technology can benefit the large medical device company as well as the early medtech company. The large company can recoup expenses incurred in connection with research and development of the licensed technology, and reduce risks associated with further development and testing by effectively outsourcing these functions to the licensee. If the technology is successful, the large company can acquire it back or receive a royalty. At the same time, the early-stage company acquires rights to a technology that has already been tested and patent protected to some extent.
Licensing an already-tested, patent-protected technology is advantageous and can help early stage companies quickly establish their presence in the technological space.
Utilize USPTO’s Fast Track Programs to Develop an In-House Patent Portfolio
To build a patent portfolio faster, early stage medtech companies should consider utilizing the United States Patent and Trademark Office (USPTO) fast track programs, Track 1 and Accelerated Examination.
Due to the USPTO’s backlog of about 560,000 patent applications, it currently takes an average of two years for a typical utility application to obtain its final disposition (36 months for applications with request for continued examination). In contrast, the USPTO fast track programs strive to achieve a final disposition of utility patent applications within 12 months of filing. As of June 2015, the average pendency of a Track 1 prioritized patent application was about 6.4 months. Other ways to accelerate a USPO examination include the Patent Prosecution Highway program based on an issued foreign patent and the age-based program designed for inventors who are 65 years of age or older.
The USPTO fast track programs are more expensive than regular examinations and accelerate costs that would normally be spread over a period of years. However, early-stage medtech companies can still utilize these programs for their key patent applications in order to quickly obtain issued claims covering the most important features of the product. Additional patent applications with claims of different scope can then be filed via regular examination to form a “picket fence” of patent protection around the core aspects of the technology.
Fast track programs are also available in other key geographies, such as the Pace Program in the European Patent Office. Filing international patent applications further strengthens a patent portfolio and expands a company’s presence in the global marketplace. While foreign patent applications can be expensive, filing in strategic countries with a large target market for the product can be critical to the commercial success of the technology.
Using the fast track programs, medtech companies can beat the wait time at the patent office and build a patent portfolio faster.
Know Your Competitors
In addition to building their own patent portfolio, early-stage medtech companies should also become familiar with the prior art patent landscape of competitors in their technology space.
Knowledge of the patent landscape can help companies further focus their product development and patent strategy. For example, review of the relevant patent landscape can identify technology spaces with fewer barriers for entry, due to the light patent coverage. By obtaining patent coverage in a technology space with fewer competitors, a medtech company can become a dominant player in that space. Knowledge of prior art may also help companies prepare stronger patent applications that anticipate potential rejections during USPTO examination.
Understanding the patent landscape can also help medtech companies identify potential infringement issues and address them early in the technology development cycle. It is more difficult and costly to change the product design after regulatory approval. Additionally, the America Invents Act (AIA) of 2011 introduced a number of provisions that make challenging patent applications and problematic issued patents easier. For example, the post-grant review provisions of the AIA allow challenging issued patents in the USPTO on any grounds of invalidity within nine months of the issuance of a patent. The post-grant review is designed as a cheaper alternative to extremely expensive patent litigation. Pursuant to the AIA, third parties also have an expanded opportunity to submit relevant prior art to the USPTO along with explanation of relevance while the application is pending, which may be adopted by the Examiner to reject the pending claims. Using these procedures, medtech companies may be able to eliminate problematic patents of their competitors.
By understanding the relevant patent landscape and competitors, medtech companies can improve their own patent position, while identifying and addressing potential issues early.
In the current medtech investment market, a strong patent portfolio can be critical in securing financing for med tech companies. By working with a strategic and business-minded patent counsel, medtech companies can develop a strategic patent portfolio quickly and successfully.
This article is presented for informational purposes only, and it is not intended to be construed or used as general legal advice nor as a solicitation of any type.
David J. Dykeman, JD is co-chair of Greenberg Traurig’s Global Life Sciences & Medical Technology Group and co-chair of the firm’s Boston Intellectual Property & Technology Group. Reach him at [email protected]
Learn more from Fayerberg at MEDevice San Diego, September 1–2, 2015, in San Diego. He'll be presenting "Patent Strategies to Protect Innovative Medical Technology & New Product Development" on Sept. 2.
[Image courtesy of NOKHOOG BUCHACHON/FREEDIGITALPHOTOS.NET]