3M Seminars
Technology Commercialization Seminar 2
Developing and Securing
Intellectual Property
Seminar Series Overview
Steps in Technology Commercialization
Step 1: (Seminar 1)
Identifying
opportunities
Step 4: (Seminar 4)
Developing a
Successful
Business model
Step 2: (Seminar 2)
Protecting
The IP
Step 3: (Seminar 3)
Financing
The Venture
(Seminar 5)
Technology Commercialization inside Corporations
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
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Robert Atkinson, J.D. & Brad Pedersen, J.D.
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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
“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
1800
Medtronic
Guidant
St. Jude
J&J
BSC
1600
Cummulative Issued Patents
1400
1200
1000
800
600
400
200
0
1996
1997
1998
1999
2000
Year
2001
2002
2003
Major Medical Device Litigation 92-02
PARTIES
YEAR
ACTION
AMOUNT
Medical Instrument. v. Elekta
2002
Lawsuit
$424,000,000+
Cordis/Johnson & Johnson v. Boston Scientific
(Stent)
2000
Lawsuit (rev)
$324,000,000
Cordis/Johnson & Johnson v. Medtronic (Stent)
2000
Lawsuit (rev)
$270,000,000
Boston Scientific v. Medtronic
2002
Settlement
$175,000,000
Boston Scientific v. Medtronic
2001
Arbitration
$169,000,000
Guidant v. Medtronic
2002
Lawsuit
$158,000,000
Guidant v. St. Jude Medical
2001
Lawsuit (rev)
$140,000,000
3M v. Johnson & Johnson
1992
Lawsuit
107,000,000
Stryker CorPatent v. Intermedics Orthopedics
1995
Lawsuit
$72,700,000
Schneider/BCSI v. Scimed (Yock Patent)
1995
Lawsuit
$64,000,000
Eli Lilly v. SciMed (Bonzel Patent)
1993
License
$48,000,000
AcroMed v. Sofamor Danek
1999
Lawsuit
$47,900,000
Angeion v. Guidant (small size ICD)
1999
License
$35,000,000
Source: Gregory Aharonian, Internet Patent News Service, September 2003, www.Patent ing-art.com/economic/awards.htm
I.P. Categories
PATENT
Devices, Apparatuses,
Machines, Systems,
Kits
Chemicals, Materials,
Compositions of
Matter
TRADE SECRET
All things listed under
Patents, but kept secret
instead of patented
(shouldn’t be
discoverable by
reverse enginering)
TRADEMARK
Product Names
Books, Articles, Brochures
Company Names
Poems, Music, Lyrics
Product and Company Logos
Movies, Dramatic Plays,
Scripts
Marketing Phrases
Business Plans
Electronic Parts, Circuits,
Networks, Hardware,
Software
Customer Lists
Vendor Lists
Methods of Use, Methods of
Manufacture, Methods
of Doing Business
Medical Methods (US Only)
COPYRIGHT
Anything else with
commercial value if
kept secret
Photos, images
Packaging Design (trade
dress)
Service Names (service
mark)
Paintings, sketches,
sculptures
Architectural Designs,
Artistic Designs
Software code, IC Chip
Layout
I.P. Comparison
PATENT
TRADE SECRET
TRADEMARK
COPYRIGHT
Subject Matter
Protected
See List
See List
See List
See List
Right to Exclude
Making, Using, Selling,
Importing
Unfairly Acquiring
Using Similar Mark on Similar Product
Copying (all or part), Making
Derivatives, Performing,
and Other Listed Acts.
Scope of Protection
Potentially Broad,
Defined by the Claims
Typically Narrow,
Limited to the Secret
Proportional to the Commercial
Strength of the Mark
Typically Narrow,
Limited to the Work,
Fair Use Exceptions
Duration of
Protection
20 Years from Priority Date
of Patent
Perpetual (until not secret)
Perpetual (until not used or abandoned)
Varies (usually 50+ years)
Protection Vests
Upon issuance of Patent
Immediately
Upon qualified use.
(enhanced by registration)
Upon fixation.
(enhanced by registration)
Cost
Expensive
Inexpensive (overhead)
Moderately Expensive
Inexpensive
Legal Requirements
New, Useful & NonObvious
Commercial Value & Secret
Source Indicating & Creative
Original Work & Fixation (on
tangible medium)
Registration
Required
None
Optional (registration advantages)
Optional (registration advantages)
Process for
Protection
and/or
Registration
File patent application,
examination and
amendment process
(2-4+ yrs on
average), patent
issues.
Maintain Secrecy
Use in commerce, ™ notice
recommended.
Registration requires: File trademark
application (actual or intent to
use) with samples, examination
and amendment process,
trademark registered.
Fixation (on tangible form), ©
notice recommended.
Registration requires: File
copyright application with
specimens, formalities
examined, copyright
registered.
Decision Drivers
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Determine what category it fits into
Consider standard industry practices
Weigh these factors:
Cost of protection
vs.
Product margin
Time to establish
protection
vs.
Product life cycle
Duration of protection
vs.
Product life cycle
Scope of protection
(e.g., claims)
vs.
Commercial value of
what’s protected
Examples – what type of protection?
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Pacemaker lead anchor design.
Examples – what type of protection?
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Manufacturing method for pacemaker
lead.
Examples – what type of protection?
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Software for pacemaker
Examples – what type of protection?
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Pacemaker name.
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
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What does a patent do?
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Right to exclude others from
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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?
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)
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What are the Parts of a Patent?
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Cover Page
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Bibliographic Data (note filing date)
Abstract (does NOT define scope)
Sample Drawing
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Drawings
 Specification
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Background
Summary of Invention
Detailed Description
Claims (define scope)
What are the Parts of a Patent?
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Cover Page
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Bibliographic Data
(note filing date)
Abstract (does NOT
define scope)
Sample drawing
What are the Parts of a Patent?
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Drawings
What are the Parts of a Patent?
Specification
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Background
Summary of Invention
Detailed Description
What are the Parts of a Patent?
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Claims (define scope)
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
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Compare claims in your patent to prior
art (e.g., prior patents & publications)
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Need one distinguishing feature in your
claim
Novel
 Non-obvious
 Described in specification
 Shown in drawings
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Patentability –
compare your claims to prior art
Prior art
Your Claim
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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.
USPN 5,123,456
to Green et al.
USPN 4,123,456
to Red et al.
Infringement –
compare your product to other’s claim
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Compare your product to other’s claims
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To avoid infringement, at least one
element of claim must be absent from
your product
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May also try to invalidate claim
Infringement –
compare your product to other’s claim
U.S. Patent No. 5,123,456
to Green et al.
Your Product
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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.
Claim Summary
CLAIM
compare
“IT”
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Assume claim reads on “It”
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“It” Invalidates claim if before
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“It” Infringes claim if after
General I.P. Strategy
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Patent Portfolio (build assets)
 Protect Core Technology
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Protect Product Development & Extensions
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Early and Comprehensive Filings
Create Barriers to Entry
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Broad & Enforceable IP, 3-D Photocopier Protection
Portfolio Mining, Continuation Practice, Picket Fencing Tactics,
Feature Protection, Future Protection
Freedom to Operate (limit liabilities)
 Establish Clear Path
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Competitive Surveillance, Opinion of Counsel, Key Licenses, Patent
Bargaining Chips
IP Assets Effect Acquisition/Investment Value
Company Value
“In the medical device business, if a
company has a poor I.P. position, their
value starts approaching zero very
rapidly”
Michael Berman
I.P. Value
IP Liabilities Effect Acquisition/Investment Value
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Assume:
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$100M Sales Yr. 5
10X Acquisition Value in Yr. 5 = $1B
Present Value = Acquisition Value ÷ (1 + r) n
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n = Year = 5
r = discount factor or risk factor
Strong Freedom to
Operate Position
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r = 20%
Present Value =
$402M
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Weak Freedom to
Operate Position
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r = 40%
Present Value =
$186M
IP Liabilities Effect Acquisition/Investment Value
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The Good - Southbay Medical
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The Bad – Angeion Corporation
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Prostate Cancer Acquisition
ICD Startup
The Ugly - PharmaTarget
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Drug Pump Startup
Example of I.P. in Medical
Product Development Process
≤ 1 Year
Initial
Concepts
Patent Appl.
on Concepts
Concept
Development
Add’l Patent Appl(s).
& Foreign Filing
Narrow Design
Options
Initial Infringement
Search & Analysis
Product Development
Review / Update
Filings & Analysis
Design Freeze &
Clinical Testing
Oral Clearance
Opinion
FDA Submission
Patent Appl. on
Commercial Design
Patent Appl.
on Next Gen.
Written Clearance
Opinion
FDA Approval &
Launch
Filing Time Line & Options
1 year
Provisional
Application
1 year
1 year
Regular
Application
Foreign
Application
Prosecution 2 year avg.
Foreign
Application
Restriction
Requirement
Issued
Patent
Continuation
Application
Same Disclosure
New Claims
C.I.P.
Application
New Disclosure
New Claims
Divisional
Application
Same Disclosure
Claims not Elected
Typical U.S. Patent Prosecution Process
3 months
Prepare & File
Patent Application
Response or
Amendment
14 + months
Restriction
Requirement
File IDS
Election
Allowed
Office Action
Notice of Allowance
Amendment
After Final
Rejected Final Office Action
Allowed
Issue Fee Pmt.
Rejected
Advisory Action
Appealed
Notice of Appeal
& Appeal Brief
File Continuation,
Divisional or CIP
No Appeal
RCE &
Amendment
Allowed
Issued Patent
Rejected
Office Action
2 + years
Rejected Appeal Decision
Allowed
Domestic vs. Foreign
Considerations
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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)
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Cost and Time
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Int’l consolidated appl. process (PCT)
European consolidated appl. process (EPO)
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
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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
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Gauge Foreign IP Filing to US/OUS Market Share
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When you file Foreign IP, file in
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i.e. 70/30 US/OUS market split means 70%+ of IP budget
should be spent on US prosecution
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
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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)
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IP Goals for Different Stages
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Development Stage
Validate patent strategy with an attorney
 Develop patentability strategy
 Develop freedom to operate position
 Enhance portfolio with additional patent
filings
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IP Goals for Different Stages
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Clinical Stage
Revisit and refine IP strategies
 Plan for litigation (safe harbor during clinical
stage)
 Establish internal systems (staff, forms,
processes)
 Consider advanced strategies
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IP Goals for Different Stages
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Commercial Stage
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Consider written freedom to operate opinion
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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
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Continuation Practice
Portfolio Mining
Picket Fencing
To Do List – Concept Stage
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Prepare detailed invention disclosure
 Conduct patentability and infringement searches
 File provisional patent application
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Develop Business Plan
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Develop patent strategy – claim commercial differentiators
Develop freedom to operate strategy – distinguish from competitor’s claims or
invalidate
Use Confidential Disclosure Agreements (CDA)
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Recruit patent attorney if funds available
Filing fee < $100
Simple (not formal application)
Good for only one year
Don’t disclose invention unless necessary
File provisional first
VCs and physicians may not sign CDA
Establish funding within 9 months
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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
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Recruit patent attorney (if not already)
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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
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Re-visit and refine patent strategy
 File new patent applications on improvements
 Advanced initiatives
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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
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
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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.