Building a cost-effective patent portfolio that drives growth involves careful consideration and strategic planning. This article covers cost-effective strategies for medtech companies to build and maintain a patent portfolio that protects their innovations and keeps them ahead of the competition.
Protect Core Technologies and Incremental Improvements
Fundamental to a strong patent portfolio is establishing solid patent protection around the company’s innovations. The core technology must have adequate patent protection to provide technical flexibility and room to operate in the desired medical technology market. A medtech company should consider both current and future business objectives and analyze ways that competitors may attempt to design around its patents. As the core technologies evolve, incremental improvements and varying applications should be patented to form a “picket fence” of patent protection around the core technologies.
Companies should design their patent portfolio to address a well-reasoned business strategy rather than amass a collection of unrelated legal filings. Each patent should be considered a single strategic building block to expand market share and grow a varied and resilient patent portfolio.
Patents Add Value
While they are extremely important for medtech companies of all sizes, patents make up a significantly greater portion of enterprise value for early-stage medtech companies. Patent portfolios are often the only way for investors to place a value on an early-stage company’s technology as sales often cannot begin until after U.S. Food and Drug Administration approval.
Patents are also important for later stage medtech companies that are generating revenue. Experts estimate that the average medical device and drug patent can have a net present value of almost $200,000. Simply put, patents are a source of enterprise value that medtech companies cannot afford to ignore.
In addition to their monetary value, medtech patents also hold great strategic value. A strategic patent portfolio can be used both offensively as a sword to strike out at competitors, and defensively as a shield to avoid competitor attacks. Offensively, the sword prevents competitors from making, using, selling, or importing the patented invention. Defensively, the shield can serve as a bargaining chip against a competitor that threatens to sue for patent infringement.
File Early, File Often
Whether a patent is used offensively or defensively, filing before any public disclosure is recommended. Although the United States has a one-year grace period for filing a patent application after a public disclosure, international patents generally must be filed before any public disclosure. Savvy companies file patent applications early and often.
A patent portfolio can be a medtech company’s most valuable asset, but there is a cost to build a strategic patent portfolio. A cost-saving strategy is to file provisional applications, which provide one year of protection, followed by fully developed U.S. and PCT international patent applications. By filing a provisional patent application, medtech companies can defer larger costs for up to one year and file follow-on provisionals to cover incremental improvements as they build their picket fence of patent protection.
File International Patents Wisely
While foreign patent applications can be expensive, filing in strategic countries can be crucial to the commercial success of a medical product in the global marketplace. Typically, the most important countries for foreign patent protection for medtech products are Europe, Japan, and China. Depending on the product and market, Australia, Brazil, India, and Mexico should also be considered.
By filing a PCT international patent application, foreign patent costs can be delayed for up to 30 months. A single filing in the PCT system reserves an applicant’s right to file the same application in any of the 152 PCT member countries. This gives companies time to further develop the product and potentially enter the market to help defray some of the patent costs.
Patent applications must be filed in each country where protection is needed. Costs increase with each application filed, so it is important to know where to allocate capital ahead of time. A company should consider filing in specific countries with a large target market for the product, countries where competitors’ manufacturing facilities are located, and countries that export medical products to other regions through distribution channels. It is also important to consider the future: while a patent is in force for a 20-year term, a country’s economy and markets may dramatically change.
Beat the Line with Proactive Patenting
To build a patent portfolio faster, early-stage medtech companies should consider utilizing the United States Patent and Trademark Office (USPTO) Track I prioritized examination program.
Due to the USPTO’s backlog of over 30,000 patent applications, it can take three years or more for a medtech patent application to obtain its final decision and issue as a patent. In contrast, the USPTO Track I prioritized examination program strives to achieve a final go or no-go decision for a patent application within 12 months of filing. Track I prioritized patent applications are often allowed in as little as six months.
The USPTO Track I prioritized examination program is more expensive than regular examination and accelerates costs that would normally be spread over a few years. However, medtech companies should still utilize these programs for their key patent applications to quickly obtain an issued patent with claims covering the most important features of the product. Additional patent applications with claims of different scope can be filed via regular examination to build multiple layers of patent protection around the company’s core technology.
Get on the Patent Prosecution Highway
Another way to accelerate USPTO examination involves the Patent Prosecution Highway (PPH) program based on an issued foreign patent or a favorable search report, and the age-based program, which speeds up examination for inventors aged 65 or older. Under bilateral agreements between the USPTO and various foreign patent offices, an applicant receiving a favorable ruling from a first patent office may request that a second patent office fast track the examination of corresponding applications pending in the second office. Therefore, a potential strategy is to obtain allowable claims in the USPTO under the Track 1 procedure quickly, and then proceed to fast track examination in other countries. This combined strategy could allow applicants to obtain patents in both the USPTO and eligible foreign patent offices faster and more efficiently. Consequently, the PPH may help an applicant save time and reduce costs.
Continuations and Divisional Applications Broaden Protection
A cost-effective strategy to grow a strategic patent portfolio is to file a continuation and/or divisional patent application before a patent issue. By filing the same application with claims of different scope, medtech firms can often get multiple different patents to issue from a single patent application. Continuation and divisional patent applications are a thrifty way to increase the number of issued patents and the scope of protection.
Secure Additional Protection Through Design Patents
When developing patent portfolios, design patents are often overlooked in favor of utility patents. Design patents may supplement a utility patent portfolio by providing additional protection covering the appearance of a medical device. For example, design patents can cover the appearance of femoral hip prostheses, an intramedullary nail, and even medical device packaging. While generally having a more limited scope of protection, design patents can still deter potential infringers in the United States and foreign countries.
Design patents protect the ornamental or nonfunctional features of a product. Design patents have no written description, and are limited to one claim that covers only the exact product shown in the drawings. Design patents expire 15 years from the issue date, and do not require any maintenance fees after issuance. Additionally, design patents typically provide a more limited coverage than utility patents, but are quicker, easier, and less expensive to obtain than utility patents.
A company’s patent strategy should adapt to changes in the legal landscape and marketplace. Maintaining a valuable patent portfolio requires that companies periodically perform a patent audit to assess the strengths, weaknesses, and gaps in the patent portfolio. The patent audit may also identify opportunities to enforce patents against competitors. Management should be involved in the patent audit to ensure the patent strategy is effective and supports business objectives.
A strong patent portfolio can be critical for medtech companies to secure financing, attract strategic partners, or be acquired. By working with a strategic and business-minded patent counsel, medtech companies can develop a cost-effective patent portfolio that protects innovations for a competitive advantage.
A registered patent attorney with more than 20 years of experience in patent and intellectual property law, David J. Dykeman is co-chair of Greenberg Traurig’s global Life Sciences & Medical Technology Group. David’s practice focuses on securing worldwide intellectual property protection and related business strategy for high-tech clients, with particular experience in medical devices, robotics, life sciences, and healthcare information technology. David can be reached at email@example.com or at (617) 310-6009.