Avoiding Problems While Collaborating in the Medical Textile Industry

In the textile industry, medical textiles represent one of the fastest growing segments of the
market. Driven by a demand for new innovative products, the medical textile industry is constantly evolving and looking for ways to improve the efficacy and wearability of medical products. However, as with many textiles, commercializing a medical textile can be prohibitively expensive—the manufacturing equipment is costly, research budgets can balloon, and the timeline to reach the market is frequently unpredictable. In addition to the costs of developing a medical textile, companies also must obtain U.S. Food and Drug Administration approval before selling their products in the domestic market; this process can take years.
 
Companies may seek to overcome these barriers by outsourcing parts of the manufacturing process to partner companies or universities—this kind of arrangement is often referred to as a horizontal supply chain. A horizontal supply chain can be beneficial because it fosters a more collaborative environment that helps get a finished product to market faster. For example, when companies work together, there is more specialized expertise and varied approaches to problem solving—which can reduce upfront costs, lead to an improved finished product, and allow for more competitive pricing later on. However, from a legal standpoint, working collaboratively can also create problems.
 
In this article, we highlight how collaboration can affect patent rights, and provide suggestions that may help companies avoid problems arising out of improperly including or excluding an inventor from a patent application.
 
The Legal Implications of Working Collaboratively on Inventorship
In the United States, patents grant the right to exclude others from making, using, selling, offering for sell, or importing the patented invention. Essentially, obtaining patent rights provides the patent holder an opportunity to enter the market exclusively and profit from the invention before his or her competitors. Another benefit of obtaining patent protection is that patents can be sold or licensed to others, which means that a company can profit from their patented invention even if they do not manufacture it themselves. In order to obtain a patent, the invention must meet the legal requirements of patentability. In this article, we focus on the legal requirement that the true inventor(s) must be named in the patent application.
 
Conception of any idea begins with an inventor—an individual who had a light-bulb moment, offered a solution to a problem, or had a spark of creativity. However, identifying the inventor (or joint inventors) is not always a straightforward task. This is especially true in the medical textile industry where scientists at different companies often collaborate.
 
There are several requirements to keep in mind when determining whether one is a joint inventor. Each of these requirements must be satisfied:
 

• Collaboration: Joint inventorship can only arise if some form of collaboration or common effort exists between one or more individuals. For example, scientists who work in groups and share ideas would be considered collaborators regardless of whether they are in the same physical location.  
• Contribution: Each inventor must contribute to the idea that ultimately becomes the patented invention. This requires more than just providing general research tips or an overall goal, rather to be an inventor one must have a specific idea in mind and a particular means of achieving that result. As an example, if two scientists jointly agreed to develop an improved hernia mesh, and Scientist 1 suggests a specific fabrication and Scientist 2 suggests a specific finishing, both would be considered joint inventors.
• Considerable Contribution: Finally, the contribution that each inventor makes must be significant. In other words, the contribution must be one that is new and not just a concept well-known by others in the medical textile field. For example, if the fabrication proposed by Scientist 1 was already known to improve hernia meshes, he would not be considered an inventor, because he did not contribute anything new. As another example, if Scientist 1 came up with the idea to use both the fabrication and finishing to make the hernia mesh and Scientist 2 merely used well-known techniques to manufacture Scientist 1’s invention, Scientist 2 would not be an inventor.

 
Establishing collaboration, contribution, and the significance of that contribution is highly fact-specific and requires a close look at the work of each individual participating in the collaboration. Thus, collaborating companies must have measures in place to track individuals’ contributions to product development and ensure that each company understands their right to any resulting patents from the collaboration.
 
Avoiding Legal Issues Caused by Incorrect Inventorship
In view of the legal requirements required to be a joint inventor, good record-keeping is important to collaboration. Good record-keeping may take different forms for certain companies; however, there are some general guidelines that we suggest for recording and tracking the product development process:
 

• Have a System for Recording Information: No matter what form it takes, a company should have a permanent, complete, and continuous method of recording where ideas originated and the work conducted to carry out those ideas. These records may be in the form of bound or digital laboratory notebooks where the details of meetings, experiments, and data are kept.
• Track Who Enters Information: Further, it’s just as important to know who recorded information as it is to record the information itself. Make sure that all record keeping entries are dated and signed (preferably by two people; more preferably, at least one person from each collaborating company). This will allow companies to track the source of information and follow up with questions if needed later on.
• Have a Contract in Place that Discusses Intellectual Property Rights: Collaborating companies should ensure that contracts are in place that address the intellectual property rights of each party. Joint development agreements typically state that patents on inventions jointly made by employees of both contracting parties will be jointly owned. However, parties should also carefully consider all provisions relating to ownership rights, in particular, the rights and obligations of the parties with respect to jointly owned patents. Patents are property rights and may be owned by one or more parties. This means that, if there is a dispute between the parties and no writing exists regarding ownership, the outcome may be unpredictable. When considering ownership provisions, it is important for companies to talk to each other and determine how patent rights will be owned. For example, Company 1 may fund the research and development of Company 2’s product, and in return Company 1 may own any resulting patent rights and grant Company 2 a nonexclusive license.

 
By taking measures to maintain good records and clear contracts, collaborating companies are better equipped to file patent applications naming the proper inventors and reduce the likelihood of future disputes. Although the initial undertaking of putting record keeping systems and contracts in place between the parties can be daunting, these measures are essential to collaborating on product development and maintaining healthy long-term business relationships.
 

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Mareesa Frederick is a partner at Finnegan, Henderson, Farabow, Garrett & Dunner, LLP. Her practice focuses on complex, high-stakes intellectual property litigation, with a particular emphasis on Section 337 proceedings before the International Trade Commission (ITC). She was named by The Legal 500 U.S. as a Next Generation Lawyer for ITC patent litigation. Frederick also has extensive experience counseling clients on pre-trial strategy, strategic licensing opportunities, and patent portfolios. 
 
Courtney Bolin is a law clerk at Finnegan. She focuses on all aspects of patent litigation and prosecution, and client counseling and works with a variety of technologies, including textiles, aerospace materials, consumer products, medical devices, and mechanical and electrical systems.