Intellectual Property: What Investors Want to See Juliet Scullion European Patent Attorney


Intellectual Property: What Investors Want to See

Juliet Scullion European Patent Attorney

October 2012 © Murgitroyd & Company 2011

Types of intellectual property

Design Patents Copyright Trade Marks

© Murgitroyd & Company 2011

Reasons for protecting IP © © © © © © Attract investment © © © © © Prevent copying of innovative products Prevent competitors from accessing new markets Guarding / surrounding a base technology Confuse / delay competitors Retaliation / bargaining power Break into new markets / disruptive technology Technology transfer / licensing revenue Strategic alliances / cross-licensing Marketing tool Tax purposes (Patent Box!) © Murgitroyd & Company 2011

What are investors looking for?

© © © © © Financial return on investment Clever, unique technology Large target market and good marketing story Barriers to competition A credible team A question investors might ask… “What is your IP strategy for the business?” © Murgitroyd & Company 2011

What is IP strategy?

Identifying current assets, managing a portfolio and planning for the future 1.

IP identification 2.

Management of IP 3.

Developing and using IP © Murgitroyd & Company 2011

1. IP Identification

IP Due Diligence (including Freedom to Operate) © Murgitroyd & Company 2011

IP Due Diligence © Starting Point - IP Audit - patents, designs, trade marks, copyright, know-how (depends on type of business) © What is IP Due Diligence?

The process of obtaining and presenting information relating to IP to investors in a form that will help them decide whether or not they should invest.

© Can we prepare in advance to make IP Due Diligence a less stressful and successful experience?

© © © © © Determine what IP exists and how it is /can be protected Confirm ownership Confirm status and validity Define commercial importance of IP Freedom to operate (Examine 3 rd Party Rights) © Murgitroyd & Company 2011

Do your competitors hold IP that restricts the proposed activities of your business?

© Patent, trade mark and design searching © Distinction between patentability “prior art” search and freedom to operate search © Do you know what your competitors are doing?

Freedom to Operate © Murgitroyd & Company 2011

Medivate – A due diligence case study © Medivate is a new university spin out company that has identified and produced a new medical device useful in diagnosing TB © Currently only a prototype device is up and running, the company needs to obtaining further external funding to bring their product to market © Medivate have been advised that the first step in obtaining further funding is to identify and secure its IP position © Murgitroyd & Company 2011

Case study A new small TB diagnosis product for use in GP surgeries The “NuVu” scanner © Murgitroyd & Company 2011

Is patent protection appropriate?

© The NuVu scanner utilises a piezoelectric crystal containing wand to detect a low level frequency vibration emitted from a metal plate positioned under a patient © where a patient is infected by TB causing bacteria the low level vibrations are absorbed by the tubercule lesions in the lungs © the piezoelectric crystal does not produce electrons the presence of TB is detected by the negative response © Murgitroyd & Company 2011

Is ownership clear?

© The 2 founding members of staff were researching the utility of naturally occurring quartz piezoelectric crystals as post-doc researchers at their University, where the crystal used in the NuVu scanner was identified © A senior member of the university lecturer staff is involved as a consultant and sounding board © An MSc student designed the computer software involved in transferring the electronic energy received into a simple image displayed on a PC © Murgitroyd & Company 2011

© Medivate intends to copy the external design of a well known ultrasound product © Most cost effective to have the finished product manufactured in China © Planning to demonstrate a finished product an international medical device fair in November 2012 Any other considerations?

© Murgitroyd & Company 2011

Any other considerations?

© Medivate intend to commission a design company to devise an operating manual to accompany each NuVu device sold © provide a service whereby they install the NuVu device in a surgery and train staff how to use the device and interpret data results © The regions where TB is most prevalent include Africa and South East Asia and the Asia Pacific Ring © Murgitroyd & Company 2011

Trade mark issues © The company staff don’t know of any other medical products with the name NuVu, however © The “Nu-Vu” baking machine exists and is owned by a US commercial catering company © The “nuvu” projection screen also exists, the company which marketed the product has now ceased trading © Murgitroyd & Company 2011

2. Management of IP

Developing a company IP strategy/policy Developing a patent strategy © Murgitroyd & Company 2011

Good Practice for IP Management

In-house processes/policies – linked to business strategy

© IP generation, evaluation and selection © Contracts - clear chain of title - employee derived IP, bought, licensed or commissioned IP © Key markets – sales and manufacture, spend vs revenue © Pending applications - investors may want to see search/exam reports or patentability opinions © Keep grant/registration certificates in central depository © Renewal fees – regular review © Murgitroyd & Company 2011

12 Months

File any corresponding foreign applications

18 Months 2 yrs 6 mths to 4 yrs UK Patent Application Procedure

File UK Application

12 Months

Continuation of UK Application

4 Months

Receive Search Report from Patent Office

2 Months

Application published by Patent Office

6 Months

Request Substantive Examination

10 Months

First Official Action Issued Further Official Actions Issued Action Required by Agents

Draft description of the invention and file at the Patent Office Add Abstracts, Claims and Formal Drawings to the Application (or file a new complete application claiming priority from original application).

Pay the search fee and complete other formalities.

Advise on the significance of any Prior Art cited in the Search Report Pay Substantive Examination Fee Analyse Examination Report and attempt to overcome any objections by argument and/or amendment of the application.

Deal with any further official objections.

Grant Formalities

© Murgitroyd & Company 2011

International patent application proced ure

File UK Application 12 Months File Individual Overseas Applications File International PCT Application File Individual Overseas Application File European Application 12 Months File European Application Granted European Patent Granted National Applications

© Murgitroyd & Company 2011

Typical Patent Filing Strategy

£ ££ £££

© © File BASE (priority) File PCT (“international”) (incl. claims) © © Published Examined © NATIONAL Phase GB to PCT 0 months 12 16 18 30 EU US © © More examination Grant © Murgitroyd & Company 2011

File Early and Delay Costs

Eg universities © © © Protect research efforts, potential spin outs and revenue generation.

Academics want to publish HEIF rankings © © © Lot of early first filings, review process – firm up and/or streamline at 12 months.

Not all first filings go PCT Strict budget, delay the costs Patent Strategy Example © Murgitroyd & Company 2011

Speedy Grant

Accelerated processing UK grant within 1 year Costs come earlier GB GB to PCT 0 months 12 16 18 Requires reason: Eg investment process “Green Channel”, “Patent Prosecution Highway” EU 30 US Patent Strategy Example © Murgitroyd & Company 2011

3. Developing and using IP

Use, licence or assign?

Example strategic uses of IP © Murgitroyd & Company 2011

How can IP be used to generate revenue?

© © © Sell the product/service yourself Assign – sale of all rights (usually in return for a lump sum) Licence – you retain ownership Licensing considerations © Rights © Term © Territory © Field © Royalty rate!

© Murgitroyd & Company 2011

Surround Core Products

Biogums eg gellan gum, xanthan gum Patent incremental improvements Go for the low-hanging fruit – and file divisionals Focus only on key markets Regular review and abandon Patent Strategy Example © Murgitroyd & Company 2011

Trolls, Thickets and Pools Some Patent Strategies © Murgitroyd & Company 2011

Take Home Points © © Consider which forms of IP appropriate KEEP CONFIDENTIAL if patent required © Conflicting rights – infringement risks © Ownership – collaborations, commissions, employees © © Reasons for protecting IP Key markets / potential markets © Ongoing improvements Apple iPad Samsung Galaxy Tab Don’t overlook registered designs © Murgitroyd & Company 2011

Juliet Scullion European Patent Attorney [email protected]

Murgitroyd & Company Collingwood House 3 Collingwood Street Newcastle NE1 1JW Tel: 0191 211 3550 Fax: 0191 211 3551 © Murgitroyd & Company 2011