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3M Seminars: 

3M Seminars Technology Commercialization Seminar 2 Developing and Securing Intellectual Property

Seminar Series Overview: 

Seminar Series Overview Step 1: (Seminar 1) Identifying opportunities Step 2: (Seminar 2) Protecting The IP Step 3: (Seminar 3) Financing The Venture Step 4: (Seminar 4) Developing a Successful Business model Steps in Technology Commercialization (Seminar 5) Technology Commercialization inside Corporations

Seminar 3 Preview: 

Seminar 3 Preview Financing the Venture: Incorporating your business Financing your business Speakers: Frank Vargas – attorney, Renaissance Law Group Panel of investors & Entrepreneurs

Seminar 2 Outline: 

Seminar 2 Outline Robert Atkinson, J.D. & Brad Pedersen, J.D. IP Categories Decision Drivers What are patents? Patentability vs Infringement IP Strategy Foreign vs Domestic IP Goals by Stage of company IP Do’s and Don’ts Discussion and Questions

I.P. in Medical Device Industry: 

I.P. in Medical Device Industry “Aggressive litigation over medical device patents has increasingly become a corporate weapon in the battle to bring lucrative products to market and block competitors.” Source: “Patent Problems Pending”, Pioneer Press 1/12/03

Medical Device Patent Trends - 2002: 

Medical Device Patent Trends - 2002

Major Medical Device Litigation 92-02: 

Major Medical Device Litigation 92-02 Source: Gregory Aharonian, Internet Patent News Service, September 2003, www.Patent ing-art.com/economic/awards.htm

I.P. Categories: 

I.P. Categories

I.P. Comparison: 

I.P. Comparison

Decision Drivers: 

Decision Drivers Determine what category it fits into Consider standard industry practices Weigh these factors:

Examples – what type of protection?: 

Examples – what type of protection? Pacemaker lead anchor design.

Examples – what type of protection?: 

Examples – what type of protection? Manufacturing method for pacemaker lead.

Examples – what type of protection?: 

Examples – what type of protection? Software for pacemaker

Examples – what type of protection?: 

Examples – what type of protection? Pacemaker name.

Why Patent?: 

Why Patent? Protect your technology Establish barriers to entry Obtain financing Provide an entity on which to establish value for your company Leverage against lawsuits against your company Facilitate higher acquisition value

What does a patent do?: 

What does a patent do? Right to exclude others from Making Using Selling Importing The invention (as defined by the claims) For 20 years (from the filing date) In the United States Can sue a competitor for infringement Can assign or license in exchange for payment

What does a patent NOT do?: 

What does a patent NOT do? Government enforced monopoly on the invention (claims must be self-enforced) Protection from being sued for infringement (may still infringe other’s patent) Guaranteed (may be found invalid or not infringed) Capable of stopping competitive R&D (stops “commercial” activity only)

What are the Parts of a Patent?: 

What are the Parts of a Patent? Cover Page Bibliographic Data (note filing date) Abstract (does NOT define scope) Sample Drawing Drawings Specification Background Summary of Invention Detailed Description Claims (define scope)

What are the Parts of a Patent?: 

What are the Parts of a Patent? Cover Page Bibliographic Data (note filing date) Abstract (does NOT define scope) Sample drawing

What are the Parts of a Patent?: 

What are the Parts of a Patent? Drawings

What are the Parts of a Patent?: 

What are the Parts of a Patent? Specification Background Summary of Invention Detailed Description

What are the Parts of a Patent?: 

What are the Parts of a Patent? Claims (define scope)

Patentability vs. Infringement: 

Patentability vs. Infringement USPN 5,123,456 to Green et al. USPN 6,123,456 to Yellow et al.

Patentability –  compare your claims to prior art: 

Patentability – compare your claims to prior art Compare claims in your patent to prior art (e.g., prior patents & publications) Need one distinguishing feature in your claim Novel Non-obvious Described in specification Shown in drawings

Patentability –  compare your claims to prior art: 

Patentability – compare your claims to prior art Prior art Your Claim USPN 5,123,456 to Green et al. USPN 4,123,456 to Red et al. A writing instrument, comprising: a hollow wooden shaft; a graphite core disposed in the shaft; and an integral eraser attached to an end of the shaft.

Infringement –  compare your product to other’s claim: 

Infringement – compare your product to other’s claim Compare your product to other’s claims To avoid infringement, at least one element of claim must be absent from your product May also try to invalidate claim

Infringement –  compare your product to other’s claim: 

Infringement – compare your product to other’s claim A writing instrument, comprising: a hollow wooden shaft; and a graphite core disposed in the shaft, with an end protruding from an end of the shaft. Your Product U.S. Patent No. 5,123,456 to Green et al.

Claim Summary: 

Claim Summary Assume claim reads on “It” “It” Invalidates claim if before “It” Infringes claim if after CLAIM “IT” compare

General I.P. Strategy: 

General I.P. Strategy Patent Portfolio (build assets) Protect Core Technology Broad & Enforceable IP, 3-D Photocopier Protection Protect Product Development & Extensions Early and Comprehensive Filings Create Barriers to Entry Portfolio Mining, Continuation Practice, Picket Fencing Tactics, Feature Protection, Future Protection Freedom to Operate (limit liabilities) Establish Clear Path Competitive Surveillance, Opinion of Counsel, Key Licenses, Patent Bargaining Chips

IP Assets Effect Acquisition/Investment Value: 

IP Assets Effect Acquisition/Investment Value “In the medical device business, if a company has a poor I.P. position, their value starts approaching zero very rapidly” Michael Berman Company Value I.P. Value

IP Liabilities Effect Acquisition/Investment Value: 

Assume: $100M Sales Yr. 5 10X Acquisition Value in Yr. 5 = $1B Present Value = Acquisition Value ÷ (1 + r) n n = Year = 5 r = discount factor or risk factor IP Liabilities Effect Acquisition/Investment Value Strong Freedom to Operate Position r = 20% Present Value = $402M Weak Freedom to Operate Position r = 40% Present Value = $186M

IP Liabilities Effect Acquisition/Investment Value: 

IP Liabilities Effect Acquisition/Investment Value The Good - Southbay Medical Prostate Cancer Acquisition The Bad – Angeion Corporation ICD Startup The Ugly - PharmaTarget Drug Pump Startup

Example of I.P. in MedicalProduct Development Process: 

Example of I.P. in Medical Product Development Process

Filing Time Line & Options: 

Filing Time Line & Options

Typical U.S. Patent Prosecution Process: 

Typical U.S. Patent Prosecution Process

Domestic vs. Foreign Considerations: 

Domestic vs. Foreign Considerations To obtain patent rights in any given country, you must have a patent in that country. No such thing as an international or regional patent, (int’l and regional application process) Int’l consolidated appl. process (PCT) European consolidated appl. process (EPO) Cost and Time Budget $10K/country for filing (more for translations) Budget $20K/country for prosecution Allow 3 to 5 years for patent to issue Extensions and delays available Enforcement issues Other considerations Medical methods generally not patentable OUS Target large markets, manufacturing centers, and nations with good enforcement record First to File (OUS) vs. First to Invent (US)

Foreign IP Strategy for Med Tech: 

Foreign IP Strategy for Med Tech Gauge Foreign IP Filing to US/OUS Market Share i.e. 70/30 US/OUS market split means 70%+ of IP budget should be spent on US prosecution When you file Foreign IP, file in Large key market countries (e.g., UK, FR, DE, JP, CA, CH) Countries with competitor manufacturing facility (e.g., IR) Country with cross border enforcement (e.g., NE) File PCT to buy time for market to develop Claim medical device, not method Amend claims in foreign cases as US prosecution develops

IP Goals for Different Stages: 

IP Goals for Different Stages Concept Stage Protect early concepts Research IP landscape to be able to address patentability and freedom to operate Keep good invention records (applies to all stages)

IP Goals for Different Stages: 

IP Goals for Different Stages Development Stage Validate patent strategy with an attorney Develop patentability strategy Develop freedom to operate position Enhance portfolio with additional patent filings

IP Goals for Different Stages: 

IP Goals for Different Stages Clinical Stage Revisit and refine IP strategies Plan for litigation (safe harbor during clinical stage) Establish internal systems (staff, forms, processes) Consider advanced strategies

IP Goals for Different Stages: 

IP Goals for Different Stages Commercial Stage Consider written freedom to operate opinion The rules for FTO opinions will most likely be changing in the next few years, so keep an eye on patent reform for this Implement advanced strategies Continuation Practice Portfolio Mining Picket Fencing

To Do List – Concept Stage: 

To Do List – Concept Stage Prepare detailed invention disclosure Conduct patentability and infringement searches File provisional patent application Recruit patent attorney if funds available Filing fee < $100 Simple (not formal application) Good for only one year Develop Business Plan Develop patent strategy – claim commercial differentiators Develop freedom to operate strategy – distinguish from competitor’s claims or invalidate Use Confidential Disclosure Agreements (CDA) Don’t disclose invention unless necessary File provisional first VCs and physicians may not sign CDA Establish funding within 9 months Significant cost to regularize and foreign file within 1 yr. Significant cost to establish or endorse patent strategy and freedom to operate strategy

To Do List – Development Stage: 

To Do List – Development Stage Recruit patent attorney (if not already) Review patent filings and fix if necessary Develop patent portfolio strategy Develop freedom to operate strategy Use confidentiality agreements Use confidentiality and invention assignment provisions in employee and consulting agreements File new patent applications on improvements

To Do List – Clinical and Commercial Stages: 

To Do List – Clinical and Commercial Stages Re-visit and refine patent strategy File new patent applications on improvements Advanced initiatives Continuation Practice Portfolio Mining Picket Fencing Plan for litigation Re-visit and refine freedom to operate strategy, obtain oral opinion Competitive watch / surveillance Internal Management Assign staff (document tracking, docketing, patent searching, portfolio management, patent review board, etc.) Establish forms and processes (invention disclosure, CDA)

Don’t List – Every Stage: 

Don’t List – Every Stage Garbage in = garbage out (don’t skimp on using a patent attorney for patent drafting) Don’t communicate or take notes about freedom to operate issues without presence of attorney (attorney-client privilege) Horror stories

Biographies: 

Biographies Robert E. Atkinson, J.D. is president and patent counsel for Prospex Medical. Bob is a registered patent attorney with significant experience as an entrepreneur (Prospex Medical I & II, SpinaLabs, Aetherworks I & II), as corporate patent counsel (Boston Scientific), as private patent counsel serving a variety of medical device start-ups, and as an engineer (SCIMED), all in the medical device industry. Prospex Medical is an incubator focused on innovating and incubating novel medical technologies. Brad D. Pedersen, J.D. a partner at Patterson, Thuente, Skaar & Christensen, P.A., received a Bachelor of Science in electrical engineering from South Dakota State University graduating in 1981 and a law degree cum laude from the University of Minnesota in 1986. He has also worked as an attorney for large law firms, Gibson, Dunn & Crutcher in Los Angeles and Dorsey & Whitney in Minneapolis, and was IP counsel for Angeion Corporation, a high-technology medical device company. Brad is experienced in developing patent portfolios and strategies for startup companies and patent portfolio he has developed have resulted in settlements and transactions worth more than $100 Million.