A patent is a legally enforceable right granted for a new or inventive device, substance, method or process that provides exclusive right for the holder to commercially exploit their invention for the life of the patent (IP Australia). We all have ideas, and as the late Robin Williams once stated ‘no matter what people tell you, words and ideas can change the world’. Great ideas have the capacity to solve a market need and create significant wealth for the inventor. However, with the risks involved, insufficient resources and the strong resilience required for commercialisation, very few ideas become truly profitable opportunities. Many individuals choose to patent their idea – an expensive exercise that won’t necessarily lead to commercialisation. In fact, 97% of all patents never make any money. Whether a patent is an asset or liability is a question that all inventors need to carefully consider. Let’s take a look at the pros and cons of owning intellectual property:
Limit the Competition
Patenting an idea can assist a business in limiting the competition. It prevents other parties from manufacturing and/or selling your invention in jurisdictions in which a patent has been granted. It also allows users to undertake license agreements or to take legal action on the grounds of unauthorised use. Therefore early market entry may assist businesses to establish dominant market share and establish a monopoly.
The exclusivity that accompanies patents, grants the holder with the potential to earn revenue from licenses or sale. As mentioned, licence agreements allow other parties to use the technology in return for an upfront license fee plus royalties. This is a common avenue for commercialisation of medical device and surgical device inventions. Although a patent is an intangible asset, it can also be sold upon valuation of its worth.
Having a patent can add credibility to your product if your company decides to apply for commercialisation grants to raise much needed capital. The novelty or innovative aspects of the technology can be critical to meeting eligibility criteria for the success of a grant. This is of particular importance to ICT (information and communications technology) projects where inventions relating to software and web development activities are deemed ‘day-to-day’ rather than innovative. A patent supports the idea that your product is novel, useful and of potential commercial value.
Patents are not cheap and can become an expensive exercise. Application, examination and maintenance fees can accumulate to thousands of dollars worth of fees over the life of a patent. If any of these fees aren’t paid, the application will not be granted or the issued patent will expire. Consider whether the value of your technology exceeds the time, effort and cost in filing and maintaining an application.
Some patents require public disclosure of the intricacies of an invention. This exposes the product to potential infringement or parties improving upon the original idea. The limited life of a patent may also place undue pressure for businesses to make enough sales to sustain the operations of a business.
Unwanted lawsuits can be associated with patents. Consulting patent attorneys about the legal ramifications of potential lawsuits from competitors is a necessary endeavour. Competitors may try to invalidate a patent or you may need to sue another party for infringing upon your patent.
Ownership of an idea can be a complex exercise. At Inner Maven we can assist entrepreneurs and inventors to devise a patent strategy that suits their commercial goals. Patent strategy development is essential to the protection of your technology. If necessary, we can also direct you to specific patent attorneys that specialise in your area and have the necessary skills we deem appropriate. Don’t start the commercialisation process alone!
Patent law can be a complex topic that leaves entrepreneurs perplexed and out of pocket. It can be a costly exercise, but is absolutely necessary in protecting your invention or medical device for successful commercialisation. Here are some basic principals in patent law.
What is a patent?
It is a property right granted by a government that permits the patent holder to exclude others from making, using, offering for sale, selling or importing the invention for a limited time in exchange for public disclosure of the invention. In other words it commercially excludes others from ‘copying’ or replicating your invention for a specified period of time. In Australia, this period of exclusivity may last up to 20 years from the filing date.
But remember, just because you have a patent, does not mean you have the right to use them. This is dependent on the claims and there may be dominant patents owned by others.
What is patentable?
Patentable subject matter includes:
- Process – eg. Method of making a drug, software that can be industrially applied, etc.
- Machine – eg. Medical imaging machinery
- Composition of matter – eg. New drug
- Article of manufacture – eg. New medical device, New diagnostic kit, New drug formulation, New computer hardware, etc.
What is not patentable?
- Laws of nature
- Physical phenomena – eg. biological mechanisms, biological pathways, chemical reactions, etc.
- Compound in state of nature (Refer to blog Challenges to Patentability in Biotechnology)
Requirements for patentability
Just because you have an idea, doesn’t mean it is instantaneously patentable. There are specific requirements that an inventor must be aware of. The invention must:
- Be novel
- Be useful
- Involve an inventive step (Anticipated by prior art, not obvious)
- Have sources of known prior art
- Be written description in “best mode”
The “best mode” requirement is a safeguard against an individual’s desire to withhold information and to obtain patent protection without making a full disclosure.
Inner Maven has extensive experience working with inventors and patents, and can make introductions to patent attorneys who can also guide inventors through this process.
Rapid advances in biotechnology have posed challenges for legislators and biotechnology companies as legal systems struggle to determine the patentability of biological matter. Key issues include the ownership of genes, the law of nature in diagnostic methods, GMOs and biopharmaceuticals.
Litigation that has reversed decades of US precedent is best demonstrated by the ‘Myriad’ case. Mutations in the BRCA1 and BRCA2 genes are well known in the medical community for being linked to increased risk of developing breast and ovarian cancer. The issue in this case, is whether the isolation of DNA is patent eligible. The US Supreme court invalidated previous claims that upheld the patent eligibility of the BRCA genes, by claiming that isolated DNA is a product of nature and therefore not patent eligible. The court later clarified that nucleic acids in which the order of the nucleotides has been altered do remain patentable. But the question remains how much of a ‘change’ is necessary or considered ‘significantly different’ for companies to retain their IP.
The question of ‘what is natural’ was also raised in the ‘Prometheus’ case. Diagnostic methods that apply a high level of generality to laws of nature were deemed patent ineligible. For instance, diagnostic methods that measure an increase in metabolite levels in a patient, is considered a naturally occurring phenomenon and too ‘general’. Any additional steps in the diagnostic process are considered well-understood and conventional activities that are routinely performed, e.g. administering the drug, determining metabolite levels, etc. Claims that cover application of the natural law or involve conventional steps are therefore not patent eligible. This raises the question for many diagnostic companies. Is the methodology in their diagnostic step sufficiently inventive and ‘significantly different’ from the natural law for them to retain the IP?
The US legal system is currently dealing with these challenges of ownership. An alternative strategy for inventors is to pursue narrower claims on items, items that are clearly novel and ‘significantly different’, e.g. a novel molecule, a new medical device, new formulations, etc. Further patent applications can then be filed if necessary, once the issue of patentability is more clear-cut.
Ownership of IP is pivotal in the commercialisation process. If you are looking to file a patent in the US that relates to genetic material, be wary of the challenges in patentability. Inner Maven can provide introductions to patent attorneys that can give consultation and advice on this matter and often work together with them through gaining IP protection.
A confidentiality agreement, also known as a non-disclosure agreement (NDA) is a legal contract between two parties. It restricts the sharing of confidential information outside of the parties involved. An NDA should be drafted and signed before commencing any discussion with third parties. This is particularly useful when discussing your medical device or idea with potential partners, licensees or investors. Protecting information that is not publicly available is important for commercialisation. Here are some essential elements of an NDA:
- Choose a Two-Way agreement to prevent disclosure issues
- Clarify the ‘field’ as clearly and narrowly as possible. The field will be your product of interest. Eg “BioCyst possesses information relating to CB3748, a novel antigen”
- Specify information that you do not want to receive, eg. the structure of a molecule, specific design of a medical device, etc.
- Clarify the permissible uses of any Confidential information and the purpose of using this information
- The NDA should specify that the confidential information will be disclosed in writing, and that all confidential information be marked as ‘Confidential’. If confidential information is discussed orally, this should be summarized in writing within a specified time period.
- All confidential information should be destroyed or returned after termination of contract.
- Determine who is covered in the NDA. Will the information need to be discussed to external consultants or subsidiaries of the company? Clarify whether this information can be disclosed.
- Specify the right to retain an archival copy to know what has been discussed.
- Specify the exact date and time period where information can be disclosed and must be maintained as confidential.
- There should be an exception clause, stating the definition of ‘not confidential’ e.g. if the information is already known to the receiving party
Inner Maven can help you draft various legal agreements. We have engaged in numerous discussions with potential licensees, investors and partners that have required the disclosure of confidential information. This is pivotal to protecting your IP and idea.