Intellectual property (IP) is a major asset of any medtech company. Bruce Dean and Joanna Westwood discuss how you can not only protect your IP, but maximise its value.
Bruce Dean Joanna Westwood
All businesses own intellectual property (IP) in one form or another. For many organisations, especially for R&D-driven businesses, establishing IP rights is a way to protect the substantial investments made in R&D and brand development. However, IP rights are more than just defensive rights: they are a valuable commercial asset that, with the right strategy and advice, can be used to improve revenue steams, attract investment and add value to a business.
Medtech companies have great potential to exploit every aspect of intellectual property protection. The industry’s value to the UK economy is well known. Medtech provides over 120,000 jobs, and contributed over £10 billion to the UK economy in 2008. Given the sector’s strong reliance on high-quality research, IP protection is key to making the most of medtech innovation in the current climate.
Types of protection
To see how your intellectual property can be of most value to your business, it’s a good idea to look first at the different forms of IP that are out there. There are several types of IP protection that can be used alone, or in combination, to enhance the value of your business. The four most common types are listed below.
Perhaps the form of IP that people are most familiar with is trademarks. These protect any marks that identify a product as originating from a particular company, which may be logos, words, shapes or slogans. One of the key advantages of trademarks over other forms of intellectual property protection is their duration, which can last indefinitely. As such, trademarks can be extremely valuable for preserving a market share after patent protection expires. The patent on Viagra ceased many years ago, but the trademark continues to preserve the product’s market share.
Another relatively well-known type of IP is copyright. This protects artistic works such as art, literature and music. Copyright is often overlooked by companies with significant R&D interests, especially in the pharmaceutical and medical technology industries. However, copyright is a valuable tool, particularly for the protection of software and some CAD/CAM technologies.
Many people are also familiar with patents, which are used to protect inventions (the way something works). These offer a fixed-term monopoly (usually for 20 years) to anyone who develops something new and inventive with an industrial application. Patents represent one of the most critical forms of protection in the medtech sector, as its products are typically of a technical nature.
A further, lesser-known type of IP is design rights. These cover the aesthetic look and external form of a product. Design rights can be very useful as they can be obtained very quickly, are significantly less costly than many other forms of protection, and can last for up to 25 years.
All of these types of protection have value and can be used to help businesses in various ways.
Don’t tip your hand
In order for someone to obtain patent protection, their invention must be new – i.e. it must not have been disclosed anywhere. All too frequently, patent attorneys receive urgent requests to file a patent application as soon as possible due to a recent or imminent disclosure.
Often companies looking to attract investment for new innovations disclose their products to would-be investors, and in so doing unintentionally disclose the entire invention, preventing protection from being obtained (and almost certainly ending any chance of attracting investment). Similarly, research can often be disclosed unwittingly at exhibitions and trade fairs or through posters and academic papers, as well as talks during conferences.
Unfortunately, such disclosures often prevent protection from being acquired, leaving competitors free to copy the new products.
The companies that are most successful at generating value from their IP implement an efficient product and invention management process. It is important to identify innovation early, to assess its value in relation to the current state of the market and to manage disclosures.
Patent attorneys can be of great assistance even in the very early stages of development. Often, inventors and those closest to the R&D process do not immediately see the commercial potential of new inventions, or may consider advancements to be trivial. An invention may appear obvious to its creator, but in reality be quite distinctive: something that demonstrates the ‘inventive step’ required for the idea to gain patent protection.
In industries where new developments are constantly being produced, catching inventions early can ensure not only that you are the first to reach the market, but also that you are not excluded from marketing your product by rival businesses patenting in the same area.
Early identification of the products with the greatest commercial potential also allows refinement of the R&D process, so that investment is not wasted in technical fields that have already been extensively studied and, in many cases, well protected.
Most companies involved in research and development understand that for innovation to be successful there must be a planned route to disclosure. Once the internal disclosure has been made, the next step is to assess the commercial potential of the product. It is then possible to decide what IP protection is most appropriate and cost-effective for your product before seeking that protection. Only when the applications are filed should you proceed to make any commercial or academic disclosures.
In order to encourage innovation and an efficient disclosure strategy, many companies operate invention reward programmes, providing incentives to individual inventors to develop patentable products. The reward can vary from a few hundred to several thousand pounds depending on the success of the invention.
Making IP pay
When intellectual property rights have been established, a number of options are available to exploit them. This is arguably the most important stage of the process, as it is where the company realises the value of its R&D and IP investment.
First, intellectual property rights can be sold outright. This offers a quick solution to recoup outstanding (often significant) costs incurred during the R&D procedure, and can be an effective way to generate capital.
Alternatively, it is possible to license IP rights to third parties – either to one specific party exclusively, or to many different parties. An exclusive licence offers a higher royalty as only one party is entitled to exploit the invention, whereas multiple licences can often provide greater market coverage. Finding licensees can often be a favourable option in situations where a particular innovation has specific manufacturing requirements and the owner of the IP rights does not have the necessary infrastructure to commercialise the invention on a profitable scale.
There are also many ways to use your intellectual property beyond the sale or licensing of rights. Being the proprietor of IP rights allows you to prevent third parties from exploiting your innovation without your permission, allowing you to market your product without fear of third parties copying your inventions. If any competitors attempt to undermine your monopoly, you have the power to launch proceedings against them, stop the sale of their products and receive compensation.
Developing a strong patent portfolio is also an excellent way to attract investment, as it demonstrates that the company is actively engaged in R&D and has a sound commercial outlook.
It is not uncommon for companies to keep external IP advisors at arm’s length from researchers and inventors, in order to avoid perceived disruptions to research activities. Large, well-established companies such as pharmaceutical companies, who are well versed in IP rights, often operate their own in-house teams to manage an effective IP strategy, allowing a close bond to form between IP advisors and research teams.
Most small and medium-sized medtech companies do not have such internal resources. Many are also wary of seeking external advice for fear of excessive cost. However, in nearly all cases, the losses made as a result of poorly-planned IP protection are significantly greater, as lack of protection can compromise your right to market your products exclusively and hamper efforts to recoup R&D investments.
The most successful SMEs maintain a close relationship with their IP advisors. Engaging in regular discourse means that their technologies are well understood by their IP team, ensuring a good standard of protection.
Ultimately the most successful approach to managing innovation is to develop an organised IP strategy that identifies innovation early, and to maintain regular dialogue with your legal advisors. In particular, effective IP management systems involve researchers and attorneys who share a passion for a specific field of technology. Seeking advice within a well-maintained relationship enables medical technology companies to avoid the pitfalls of IP and realise the value of their innovation.
Bruce Dean and Joanna Westwood are patent attorneys for Withers & Rogers, working in the chemical and medical technology sectors.