Here are ten strategies that medical device makers of all sizes can use to build a solid patent portfolio.
Hyeongsu Rick Park and Ron Schoenbaum
Medical device companies, especially those in startup mode, frequently struggle to build a patent portfolio. A patent portfolio can help a company protect its market share by asserting its patent rights against infringers and can generate revenue through license or sale. For startup companies, a patent portfolio is often important for obtaining funding. However, companies sometimes fail to obtain patent rights. In many cases, the failure to obtain patent protection results from an absence of established procedures for identifying and assessing potentially patentable inventions. In other cases, the failure is attributable to contractual deficiencies.
This article provides ten strategies that can be implemented by medical devices companies--both big and small--to aggressively build a strong patent portfolio. To put these strategies into context, we first provide an overview of how and why companies frequently lose patent rights.
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How are patent rights most commonly lost?
Valuable patent rights are frequently lost for a variety of reasons. First, inventors and companies sometimes fail to recognize, before the bar date for filing a patent application, that they have developed a patentable invention. Sometimes, the notion of patentability perceived by inventors is different (and typically much more stringent) than the standard applied by the U.S. Patent and Trademark Office (USPTO). As a result, inventors often fail to recognize that they have a patentable idea. As one example, the invention may be a novel combination of existing or conventional elements or steps, in which case the invention may be difficult to ascertain.
If a company delays filing a patent application for their invention either intentionally or unintentionally, intervening prior art may reduce or eliminate the otherwise available scope of protection. For example, the company's sale of a product that embodies the invention may bar the company from obtaining patent protection.
Under the America Invents Act, if an inventor publicly discloses an invention or if a third party publicly discloses an invention obtained from the inventor, the inventor has a one-year grace period to file a patent application. If the inventor does not file a patent application within the grace period, the inventor is barred from obtaining patent rights for the subject matter that was publicly disclosed. In other words, if an inventor discloses an invention and waits more than a year before filing a patent application for such invention, U.S. patent law bars the inventor from obtaining a patent.
Second, even if inventors recognize the potentially patentable invention, they might lack motivation to participate in a patent process. For example, they may not like working with patent counsel to prepare patent applications or might be morally opposed to patents and the patent system in general.
Third, a company may lose its patent rights by accidentally disclosing product details before a patent application is filed. For example, a member of the marketing department may disclose details of a new product to potential customers. The company may release a beta version of the product to a small number of testers without a non-disclosure agreement. In these cases, the company may be barred from patenting its invention if it waits more than one year to file.
Fourth, a company may mistakenly think that it owns patent rights when it actually does not, due to contractual deficiencies. For example, a joint development agreement may lack a favorable IP ownership provision, or inventors might fail to execute an appropriate invention assignment agreement. The company should closely read and negotiate the terms of agreements that assign or determine patent rights.
Ten strategies for aggressively building a patent portfolio
A medical device company at any stage should think ahead and strategize to build a strong patent portfolio. The impact of the strong patent portfolio is long-lasting and may benefit the company even before it is formally created. We suggest ten strategies that a medical device company can adopt to aggressively build a strong patent portfolio. Many of these strategies seek to identify potentially patentable inventions before it is too late to file.
1. Provide a simple idea submission form
It is important for a company to create a system in which its employees can freely disclose their ideas and inventions to those responsible for making patent filing decisions. Making invention disclosures as easy as possible is important for the company to build a strong patent portfolio. For example, providing an invention/idea submission form on the company's intranet can be a great starting point. A simple, online form that can be completed within 5 to 15 minutes is usually enough. The company can later take time to evaluate whether to seek patent protection for the submitted ideas and whether additional details are needed.
A medical device company should also periodically remind inventors of the invention submission form and consider incentivizing them to submit their ideas. For example, a reminder e-mail with a link to the invention submission form may be sent to employees on a regular basis. The company may reward inventors when they submit ideas or when patent applications are filed or are granted as patent (as described below).
2. Conduct periodic "brainstorming sessions"
Companies should also consider periodically (e.g., annually) conducting "brainstorming" or "invention harvesting" sessions. Each such session can, for example, be a one-hour session with a group of 5 to 15 inventors, optionally attended by patent counsel. These sessions need not be limited in scope to ideas currently being implemented or products currently being developed. The company should encourage its employees to participate in these sessions and should inform the attendees that no idea is too basic to be considered.
3. Educational seminars (online or in-person)
Medical device companies should host educational seminars on patents for employees, at least once every one to three years. Potential topics for the seminar include: (1) what can be patented? (2) how to document inventions and submit them for consideration, (3) why patents are important to the company, and (4) how to deal with others' patents.
4. Form a patent committee
Once a medical device company receives ideas and inventions from its inventors and employees, the company typically needs to decide, for each idea, whether to pursue patent protection. Ideally, this task is handled by a patent committee.
The main function of the patent committee is to evaluate each identified invention based on various criteria, including (1) whether infringements will be detectable, (2) how important the invention is to the company and its competitors, (3) whether the technology will become obsolete in a few years, and (4) the likelihood of obtaining a patent of useful scope. After evaluating each invention on its merits, the patent committee will decide upon future steps, such as (1) whether to file a regular patent application, (2) whether to file a provisional application, (3) whether to do nothing (or to revisit the idea after further development), or (4) whether to create a defensive publication, potentially using a defensive publication service provider such as IP.com.
5. Implement a patent incentive program
Introducing a patent incentive program provides inventors with a financial motivation to participate in the company's patent program, such as by submitting their ideas to the patent committee. A typical patent incentive program would provide $1000 to $3000 per inventor upon filing of a patent application. The company may provide the inventors with an additional award upon patent issuance.
Ascertaining the correct inventors is important for any invention, and a company should pay even greater attention to determining actual inventors of the invention under the patent incentive program. The threshold question for determining inventorship is who conceived the invention. Determining inventorship of some inventions might be more difficult than others, such as inventions created from the brainstorming sessions described above.
6. Conduct an IP audit
A medical device company should consider having its IP counsel conduct an IP audit. The audit typically involves reviewing the company's IP assets, related agreements, and relevant policies and procedures. For example, IP counsel may create or review the company's standard employment agreement, consulting agreement, and non-disclosure agreement (NDA). It is also important to create or review internal procedures for making disclosures to and entering into agreements with other entities. IP counsel can also review any existing license and joint development agreements.
7. Reassess pending applications
If a medical device company already has pending patent applications under prosecution, the company should take time to reassess claims of the pending applications. The company should compare pending claims to activities of the company and its competitors and make sure the claims cover its related products and the potentially infringing activities of competitors. At a minimum, the company should do this when it receives an initial Office Action.
8. Keep a continuation application pending
When a medical device company has a pending patent application that is allowed, the company should consider filing a continuation application. Having a continuation application pending enables the patent owner to pursue additional claims and, in some cases, eliminate infringement loopholes. In addition, the company can use the continuation to have newly discovered references considered. A continuation can also sometimes help eliminate problems caused by new case law introduced after the issuance of the parent application. Keeping a continuation application pending puts the company in a much stronger position for licensing negotiations and litigations.
9. Consider Prioritized Examination (PE)
Companies should also consider the USPTO's prioritized examination (PE) option, which involves paying a fee to have the application examined sooner and faster. Under the PE program, the USPTO issues a first Office Action roughly two to five months from filing and aims to issue a final disposition within 12 months. The applicant is required to promptly submit responses to Office Actions; otherwise, the applicant will lose its PE status. Unlike the Accelerated Examination program, no prior art search is needed, and the applicant does not need to prepare an Examination Support Document. The PE fee is $4,000 for large entities, $2,000 for small entities, and $1,000 for micro entities.
10. Buy patents and applications
In addition to filing patent applications, a medical device company should consider purchasing issued patents or pending patent applications, especially when entering a new market area in which others have established patent portfolios. The company can purchase patents or applications directly from patent owners or through a patent auction or a broker. Such purchasing decisions should be made in the context of the existing patent portfolio, and the company should carefully choose patents or applications that could supplement the scope of the existing portfolio.
By implementing some or all of these ten strategies, medical device companies can reduce the likelihood that valuable patent rights will be lost and can build patent portfolios that greatly increase the company's value.
Ron Schoenbaum, JD, MS is a partner at Knobbe, Martens, Olson & Bear, LLP.
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