Innovation Insurance for Medical Device Companies

In an industry where a single innovation can save countless lives, medical device companies must make a critical choice in protecting their intellectual property (IP): publicly disclose their breakthroughs with patents, or maintain them as carefully protected trade secrets. The stakes couldn’t be higher.

The intersection of patent and trade secret protection presents unique strategic challenges for medical device companies. When deciding between these options, companies must balance business objectives against risk factors.

Patents provide robust legal protection through exclusive rights that prevent competitors from exploiting protected innovations. This exclusivity creates opportunities for revenue generation through licensing agreements and strengthens market position. Patents can enhance corporate value and attract investors by demonstrating technological leadership. When infringement occurs, rights holders can seek remedies including monetary damages, injunctive relief, and enhanced damages.

However, patent protection requires public disclosure of technical information, which becomes publicly available, and thus, the protected invention becomes accessible to competitors for use after the patent expires. In contrast, trade secrets provide perpetual protection if confidentiality is maintained. Trade secret holders can pursue remedies including actual damages, unjust enrichment recovery, and damages for misappropriation.

For medical technology companies, this choice impacts market position, regulatory compliance, and patient care. Protection strategies must consider regulatory approvals and manufacturing processes. Companies often employ both patents for core innovations and trade secrets for manufacturing processes, maintaining competitive advantages through complementary protection.

Understanding Patents

While patents are perhaps the most widely recognized form of intellectual property protection, their scope and limitations are often misunderstood. Patents form an important part of the foundation of IP protection, granting powerful exclusivity rights that prevent others from making, using, selling, or distributing protected innovations. 

This exclusivity serves as a deterrent to competitors while providing patent holders with significant market advantages, but patents do not necessarily grant the patent holder the right to commercialize their technology. Rather, successful commercialization, particularly in regulated industries like medical devices, depends on multiple factors beyond IP protection, including securing necessary regulatory approvals, navigating market dynamics, and implementing effective enforcement strategies.

The strategic value of patent protection must therefore be considered within this broader context of bringing innovations to market successfully.

Landmark Patents: Transforming Patient Care

Two groundbreaking patents demonstrate how IP protection drives medical innovation. The Fogarty Embolectomy Catheter (1963) revolutionized vascular surgery by enabling minimally invasive blood clot removal. This patented innovation transformed patient outcomes by reducing surgical trauma and recovery times. The patent’s success validated how IP protection can both advance healthcare and reward pioneering work.

The da Vinci Surgical System likewise showcases how patent portfolios fuel technological breakthroughs. By protecting its core robotics technology, Intuitive Surgical established market leadership in minimally invasive surgery. This exclusivity enabled continued platform refinement, illustrating how patent protection sustains both innovation and commercial success.

Modern Patent Enforcement: The Masimo v. Apple Case

Building on these landmark patent examples, recent cases demonstrate how modern companies are employing sophisticated IP protection strategies. The Masimo v. Apple case¹ exemplifies this evolution through three key enforcement mechanisms.

First, Masimo’s strategic use of the International Trade Commission (ITC) demonstrates effective patent enforcement. Unlike traditional courts, the ITC can quickly block infringing imports through exclusion orders. By filing an ITC complaint against certain Apple Watch models allegedly infringing its health-monitoring patents, Masimo sought swift market protection without waiting for lengthy court proceedings.

Second, Masimo employed a layered protection strategy by combining patent infringement and trade secret misappropriation claims. This comprehensive approach created multiple defensive barriers, making their innovations harder for competitors to circumvent. The strategy demonstrates how companies can leverage different forms of IP protection to build a more robust defense.

Third, Masimo’s use of the ITC to stop infringing products at the U.S. border and prevent them from entering the country illustrates modern enforcement tactics against global competitors. This multi-pronged approach, combining traditional litigation with trade measures, highlights how companies can effectively protect their innovations in today’s complex international market.

Trade Secrets: The Hidden Power of Medical Innovation

While patents publicly protect breakthrough innovations like the Fogarty catheter, equally valuable are the closely guarded trade secrets that drive medical device advancement. Three key requirements define a trade secret: the information must be secret, derive commercial value from its secrecy, and be subject to reasonable protection measures. If all three requirements are not maintained, the protection provided by a trade secret ceases to exist.  

Trade secrets in medical technology take many forms, from precise manufacturing processes to sterilization techniques to proprietary algorithms. The stakes are high, as demonstrated by Masimo’s ongoing battle with Apple over allegedly misappropriated blood oxygen monitoring technology, and St. Jude Medical’s $2.3 billion jury award against a former employee who the courts determined stole trade secrets.²

Maintaining trade secret protection requires vigilance through:

• Identifying and cataloging assets that are secrets
• Controlling access on a need-to-know basis
• Implementing robust security measures
• Training employees on confidentiality obligations
• Requiring NDAs (non-disclosure agreements) with external partners

The power of trade secrets lies in their perpetual protection; while patents expire after 20 years, trade secrets like the Coca-Cola formula retain their value potentially indefinitely. For medical device companies, this means trade secrets can provide enduring competitive advantages when properly protected.

However, trade secrets are fragile—once disclosed, whether through carelessness or theft, their protection vanishes forever. This explains why companies invest heavily in comprehensive trade secret programs combining technical, legal, and procedural safeguards.

The Enduring Power and Cost of Trade Secret Protection

Unlike a patent’s 20-year term limit, trade secrets can provide perpetual competitive advantages, as demonstrated by the formula for Coca-Cola—protected for over a century through careful guardianship. This unlimited duration offers a compelling alternative to time-limited patents for companies seeking lasting market protection.

However, maintaining trade secrets requires ongoing investment in systems and procedures similar to those used for quality systems and cybersecurity. Some examples include:

• Personnel training and documentation
• Security systems and access controls
• Confidentiality agreements and policies
• Monitoring and enforcement programs

The key trade-off: while patents protect against reverse engineering, trade secrets offer no defense if competitors independently discover or legitimately reverse engineer the innovation. Once disclosed—whether through analysis, accident, or theft—trade secret protection vanishes permanently.

Powerful Remedies for Misappropriation

Courts increasingly recognize trade secrets’ value through robust damage awards, potentially reaching billions of dollars, as seen in recent verdicts. When misappropriation occurs, owners can obtain:

• Injunctive relief to halt unauthorized use
• Monetary damages for economic losses
• Enhanced damages for willful theft

The St. Jude Medical case exemplifies this trend—a $2.3 billion jury award against a former employee who stole trade secrets, demonstrating courts’ willingness to impose severe penalties for misappropriation.

Choosing the Right Protection Strategy

Medical device companies must weigh two powerful options: patents’ robust exclusivity rights versus trade secrets’ perpetual protection. The choice impacts market position, regulatory compliance, and patient care.

Key decision factors:

• Innovation type: Can it remain confidential?
• Competitive risks: Likelihood of reverse engineering
• Business goals: Short(er)-term ownership rights vs. long-term control

A comprehensive IP strategy often combines both approaches: using patent protection for core innovations while maintaining manufacturing processes, data, and implementation details as trade secrets. This layered approach creates multiple barriers against competitors while maximizing long-term value.

Trade Secrets: A Strong Alternative to Patents

For certain technologies, such as innovations that resist reverse engineering, trade secrets offer a compelling alternative to patents. This protection strategy safeguards valuable business assets—from manufacturing processes and technical formulas to customer lists and pricing strategies—through careful confidentiality rather than public disclosure.

Three key advantages make trade secrets particularly attractive:

• Perpetual Protection: Unlike patents’ 20-year term, trade secrets can provide indefinite competitive advantages when properly maintained
• Strategic Confidentiality: By avoiding public disclosure, companies prevent competitors from designing around their innovations
• Cost Structure: While avoiding patent filing fees and costly attorney expenses, trade secrets require ongoing investment in security measures

However, this power comes with inherent risks. Trade secret protection demands rigorous safeguards:

• Comprehensive security protocols and restricted access
• Employee and third-party NDAs and continuous monitoring
• Protection against both accidental disclosure and theft

Most critically, trade secrets offer no defense whatsoever against independent discovery or reverse engineering. Once exposed—whether through security breaches or inadvertent disclosure—protection vanishes permanently. This vulnerability makes trade secrets particularly risky for easily duplicated innovations, while ideal for confidential processes that resist reverse engineering.

Comparing Protection Strategies

When deciding between patent and trade secret protection, companies should weigh the specific advantages and disadvantages of each approach. Table 1 provides a summary of the advantages and disadvantages.

Aspect	Trade Secrets	Patents
Duration of Protection	✓ Perpetual protection if properly maintained	✗ Limited to 20-year term
Public Disclosure	✓ No public disclosure required	✗ Requires full public disclosure
Cost Structure	✓ Lower initial costs (no filing fees)	✗ High initial costs (filing fees, attorney fees)
	✗ Ongoing security investment needed	✓ Lower ongoing maintenance costs
Legal Protection	✗ No protection against independent discovery	✓ Exclusive rights against all uses
	✗ No protection against reverse engineering	✓ Protection against independent discovery
Security Requirements	✗ Requires strict security protocols	✓ No special security measures needed once granted
	✗ Needs continuous monitoring
	✗ Mandatory NDAs and access controls
Business Strategy	✓ Ideal for processes resistant to reverse engineering	✓ Best for visible product features
	✓ Good for manufacturing methods	✓ Ideal for licensable technologies
	✓ Suitable for customer/pricing data	✓ Good for easily reverse-engineered innovations
Risk Factors	✗ Permanent loss if disclosed	✗ Risk of patent invalidation
	✗ Vulnerable to security breaches	✗ Public disclosure may benefit competitors
	✗ Risk of employee disclosure	✗ Limited term of protection

Advantages of Patents

Patents offer significant strategic advantages for companies in the medical device space, providing both protection and pathways for growth.

Through exclusive rights, patent holders gain complete control over their innovations—blocking competitors from making, using, or selling protected technologies while commanding premium prices. This exclusivity creates valuable opportunities for revenue generation through licensing agreements and strategic partnerships.

The structured legal framework of patents provides clear paths for enforcement when infringement occurs. Patent holders can pursue powerful remedies through the court system, including monetary damages, injunctive relief, and enhanced damages. This reliable protection framework builds investor confidence while reducing risks in licensing deals and strategic partnerships.

Beyond direct market control, a strong patent portfolio enhances corporate value by demonstrating technological leadership. For both emerging and established companies, patents signal R&D commitment and innovation capabilities that attract investors and partners. This reputational advantage helps secure funding while creating opportunities for industry collaborations that drive growth.

The combination of exclusive rights, clear legal remedies, and enhanced market credibility makes patents an attractive option for medical device companies seeking to protect differentiating innovations while also maximizing commercial opportunities. 

Disadvantages of Patents

While patents provide powerful market advantages, they also carry some trade-offs. The required public disclosure of technical details may enable competitors to understand and potentially design around protected innovations, though companies need not reveal their most optimized implementations.

The financial burden presents another challenge. Beyond initial filing fees, ongoing maintenance costs and potential legal expenses can strain resources, particularly for startups. These cumulative costs typically exceed trade secret protection expenses, making patent decisions strategically critical.

Patents also face inherent limitations. The 20-year protection period may expire while innovations still hold significant market value, while the complex application process for obtaining a patent offers no guaranteed success. Applications face rigorous examination and may be rejected for lack of novelty or overlap with existing technologies.

These constraints drive many medical device companies to adopt hybrid protection strategies, using patents selectively while maintaining certain innovations as trade secrets.

Advantages of Trade Secrets

Trade secrets offer some key advantages for protecting medical innovations. First, they provide perpetual protection without expiration, allowing companies to maintain competitive advantages indefinitely as long as confidentiality is preserved.

Second, trade secrets avoid the substantial costs of patent prosecution. While security measures are necessary, the overall expenses typically remain lower than patent-related fees, making them attractive for resource-constrained companies.

Finally, trade secrets provide immediate protection without patent examination delays. Companies can safeguard innovations instantly through proper security measures, avoiding the uncertainty and waiting periods of the patent process.

These advantages can make trade secrets a great complement to patent protection, particularly for manufacturing processes and technical details that derive value from confidentiality.

Disadvantages of Trade Secrets

Trade secrets face three critical weaknesses. First, they offer no protection against independent discovery or reverse engineering; competitors who legitimately develop the same innovation can freely use it.

Second, maintaining protection requires extensive security measures including access controls, employee training, and cybersecurity systems. These essential safeguards demand significant ongoing investment.

Finally, protection can be permanently lost through a single breach, disclosure, or misappropriation. Once information becomes public, trade secret status vanishes irreversibly, making careful protection critical.

These vulnerabilities drive many medical device companies to employ hybrid strategies, using patents for core technologies while maintaining manufacturing processes as trade secrets.

Balancing Dual Protection Strategies

Companies can employ complementary patent and trade secret strategies while navigating distinct legal frameworks for enforcement. Patent claims can be drafted broadly to protect general concepts while preserving specific implementation details as trade secrets (for example, by disclosing ranges rather than optimal values). However, this approach requires careful consideration of patent enablement requirements, as withholding critical technical details could invalidate protection.

For medical device companies, this strategy often works best by patenting core innovations while maintaining manufacturing processes and technical parameters as trade secrets. This creates multiple layers of protection with different enforcement mechanisms.

When enforcement becomes necessary, patent disputes must be pursued in federal court or a federal agency such as the ITC, while trade secret misappropriation offers both federal and state remedies. The Economic Espionage Act and Defend Trade Secrets Act provide federal protection, including criminal penalties and civil remedies. Additionally, state-level protection through the widely adopted Uniform Trade Secrets Act gives trade secret owners flexibility in choosing their enforcement venue for civil cases, though criminal cases must be pursued federally.

This dual protection framework allows companies to strategically leverage both federal patent rights and layered trade secret protections at the state and federal levels, creating a comprehensive intellectual property strategy that maximizes legal protection.

Landmark Cases Highlight IP Protection Challenges

Recent high-profile cases illustrate the complex strategic decisions companies face when protecting medical innovations. The ongoing Amgen v. Sanofi dispute³ demonstrates the rigorous requirements for patent protection of biological inventions. At issue was Amgen’s attempt to secure exclusive rights for PCSK9 inhibitors, which faced challenges over patent enablement requirements. The case, reaching the U.S. Supreme Court, underscores how even slight variations in biological methods can dramatically impact patent scope and enforceability.

Similarly, the CRISPR patent battle between the Broad Institute and the University of California (UC)⁴ reveals the high stakes of securing rights to transformative technologies. Their competing claims to the revolutionary gene-editing technology highlighted how critical factors like timing and detailed claim drafting are for protecting foundational innovations. The Broad Institute secured initial patents for eukaryotic cell applications, while UC claimed priority for the core invention, demonstrating the complexity of IP protection in rapidly advancing fields.

The trade secret landscape presents different but equally significant challenges, particularly regarding employee mobility. The Biosense Webster case exemplifies a common scenario where departing employees allegedly misappropriate confidential information for use at competitors. Similarly, in MicroVention v. Balt US,⁵ former employees were accused of taking thousands of confidential documents related to medical devices for treating aneurysms to start a competing venture. The resolution, including an injunction and substantial monetary settlement, demonstrates the powerful remedies available for trade secret misappropriation.

These cases collectively highlight why many medical device companies employ complementary protection strategies—using patents for core technologies while maintaining manufacturing processes and technical details as trade secrets. This hybrid approach helps navigate the distinct challenges and advantages of each protection method.

Global IP Protection Strategies

Patents and trade secrets follow distinct paths for international protection. While patents require formal registration through established international filing systems, trade secrets offer unique cross-border advantages through two key mechanisms.

First, trade secret protection emerges automatically when information meets the three core requirements outlined in the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS): secrecy, commercial value from secrecy, and reasonable protection measures. This widely adopted framework among WTO members enables simultaneous protection across jurisdictions without formal registration, transcending territorial boundaries through the information’s inherent nature.

Second, U.S. trade secret law provides powerful extraterritorial reach. Both U.S. courts and the International Trade Commission enforce federal trade secret law against foreign misconduct when either the offender has U.S. ties or misappropriation activities occurred within U.S. borders. The Masimo v. Apple case demonstrates how companies can leverage the ITC’s authority to block infringing imports and protect trade secrets internationally.

While cross-border enforcement presents challenges, trade secrets’ borderless nature and expanding U.S. protection mechanisms offer strategic advantages for international businesses. Companies can benefit from relatively uniform global frameworks while accessing robust U.S. enforcement options when available, creating a complementary approach to traditional territorial patent rights.

Making the Right Choice

The decision between patent and trade secret protection requires careful strategic analysis of an innovation’s characteristics and market context. For medical device companies, this choice fundamentally shapes their competitive position and ability to protect valuable intellectual property.

When an innovation can be readily reverse-engineered or when maintaining confidentiality proves challenging, patent protection typically offers the most secure path forward. Patents provide clear legal rights to exclude others and create opportunities for licensing and monetization, which is particularly valuable for high-stakes medical innovations with significant commercial potential.

Conversely, trade secrets excel when companies can effectively maintain confidentiality and when the innovation resists reverse engineering. Manufacturing processes and technical parameters often fall into this category, making trade secret protection an attractive option for these aspects of medical technology. The indefinite duration of trade secret protection, coupled with lower maintenance costs, can provide lasting competitive advantages when properly secured.

The optimal strategy often emerges by evaluating core business risks: if employee departure with confidential knowledge poses the greatest threat, trade secret protection may be preferable; if independent discovery by competitors is more likely, patent protection offers stronger safeguards. Recent cases like Masimo v. Apple and the CRISPR patent disputes illustrate how these considerations play out in practice, with companies leveraging both forms of protection to secure their innovations.

Ultimately, many medical device companies find success through complementary protection strategies—using patents to protect core technologies while maintaining manufacturing processes, technical details, and other business information as trade secrets. This balanced approach allows companies to maximize the distinct advantages of each protection method while building comprehensive barriers to competition.

References

¹ Masimo Corp. v. Apple Inc., C.D. Cal., No. 8:20-cv-48.
² Pacesetter Inc. v. Nervicon Co., BC424443, California Superior Court, Los Angeles County (April 2011).
³ Amgen Inc. v. Sanofi, 143 S. Ct. 1243 (2023).
⁴ Univ. of Cal. v. Broad Inst., No. 2017-1907 (Fed. Cir. Sep. 10. 2018).
⁵ MicroVention, Inc. v. Balt, USA LLC, 8:20-cv-02400 (C.D. Cal. Filed Dec. 22, 2020).

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Aris Gregorian is a Principal at Schwegman Lundberg & Woessner, P.A., specializing in strategic IP procurement and portfolio management for fields including medtech, automotive, software, and AI technologies. Prior to his legal career, Gregorian worked as an engineer, focusing on RF systems, satellite compliance testing, and GPS modem design.

Ryan Connell is a registered patent attorney and Principal at Schwegman Lundberg & Woessner, P.A. His practice includes medical device, chemical, and biotech patent preparation, prosecution, and intellectual property due diligence. 

Doug Portnow is a registered patent attorney and Of counsel at Schwegman Lundberg & Woessner, P.A. His practice focuses primarily on medical device patent preparation, prosecution, and intellectual property due diligence. Prior to entering the legal profession, Portnow was an engineer designing medical and surgical devices.