Patent Strategies for Making Your Startup Company
Attractive for an Acquisition/Investment
Medical Devices Summit
Boston, MA
February 19, 2015
Les Bookoff
202.808.3494
lbookoff@bookoffmcandrews.com
Dinesh N. Melwani
202.808.3497
dmelwani@bookoffmcandrews.com
Bill Shaw
617.914.4200
bill.shaw@biogenidec.com
A Critical Piece of the Puzzle
• What is a key factor that suitors of medical device companies are
interested in when evaluating a potential investment?
• Intellectual property
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Intellectual Property
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• Often the most valuable asset of a company, esp. a startup medical device
company
• IP is critical in corporate transactions involving medical device technologies
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Protects significant investments in R&D and FDA
High profit margins
Relative ease of copying
Large sizes of markets
Litigious industry, with large damages awards
What is Attractive to Investors/Acquirers?
• Awareness
• Prudent IP strategy
• Your portfolio
• Relative to others
• Competitive landscape
• Knowledge of problem areas
• Possession of defensible positions
• May thwart efforts to undervalue your company
• Organization/Administrative Issues
• Document retention procedures
• Assignments, licenses, opinions, lab notebooks, invention disclosures
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Two Aspects to the IP Component
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2.
The Target Company’s Portfolio
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Patents (typically most important)
Trademarks
Copyrights
Trade Secrets
Freedom-to-Operate (FTO)
• Freedom to market the target company’s technology without infringing the IP rights of a third
party
• Patent = Right to Exclude
• Suitors are sensitive to buying a lawsuit with their “deep pockets”
Your Portfolio – Keeping a Clean House
• Inventorship
• Improper inventorship can result in invalidity of a patent
• Could arise in collaborations
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• e.g., your patent claims are to a drug-eluting stent that an unnamed third party collaborator has co-invented
• Ownership
• Clear chain of title
• Assignments
• Employee agreements cover present/future inventions and improvements
• e.g., inventor leaves and improves on product
• Individual patents
• Recorded
Your Portfolio – Keeping a Clean House (cont.)
• Transferability
• Contractual restrictions (Rolls Royce example)
• Universities, joint ventures, securities, settlement
• USPTO Requirements
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Disclosed the required information?
Correctly claimed priority?
Claimed appropriate entity status (large or small (>500))?
Paid maintenance and annuity fees?
• Product Marking
• Potential damages
• False marking
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Your Portfolio – Substance of IP
Suitors are interested in scope:
1. Disclosures
• Broad disclosures and early filing dates highly valued
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Claims that cover:
• Your product/method and design-arounds
• Competitor’s activities (even if unrelated)
• Potential suitor (or its competitor’s activities)
Geographic
• Market size
• Ability to enforce
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Freedom-to-Operate
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• Are you free to sell your commercial or proposed commercial
product/method?
• Potential deal breaker if significant risk of suit exists
• Best to find out early in development, e.g., before design freeze or significant investment
• Perform FTO searches and opinions
• Be careful when getting things in writing: a favorable opinion for you now but adverse to
a future suitor may impact the deal
• If necessary, secure appropriate licenses
Your Portfolio – Substance of IP (cont.)
• Example 1
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• A cardiologist has new ideas while examining a patient. He contacts his patent
attorney and files broad disclosures for treating valvular defects.
• You are developing a device for treating valvular defects, have your own IP, and
are unaware of Dr.’s patent applications even after publication.
• Valve Co. may or may not have interest in treating valvular defects, and wants to
acquire some leverage relative to you. Valve Co. buys Dr.’s IP.
• Valve Co. owning blocking IP will affect investor/acquirer interest.
Your Portfolio – Substance of IP (cont.)
• Example 2
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• Valve Co. files disclosures on specific devices and related methods of treating
valvular defects.
• You are developing a device for treating valvular defects, have your own IP, and
are unaware of Valve Co.’s patent applications even after publication.
• You develop a device squarely within Valve Co.’s patent claims being prosecuted
and issuing.
• Valve Co. owning blocking IP will affect investor/acquirer interest.
Due Diligence Considerations
• Maintain Confidentiality
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• Appropriate confidentiality/nondisclosure agreements
• Protects your company against improper use by suitor
• Protects suitor from being tainted by sensitive information
• Limit distribution of sensitive information
• If deal sours, suitor may begin a competitive program and/or target you with their patent filings
• Avoid perception of something being hidden
• Minimize communications referring to patents
• Protect Attorney-Client Privilege
Thank you
Presenters
Bill Shaw
617.914.4200
billshaw@biogenidec.com
Bill Shaw is Patent Counsel at Biogen Idec, responsible for
medical devices and emerging technologies. Prior to Biogen, he
worked for over 20 years at Boston Scientific Corporation in
various roles from R&D Engineer to Patent Agent and IP
Counsel. He was responsible for numerous IP portfolios and
transactional work including the Endoscopy and Women’s
Health IP portfolios. As an engineer, he was responsible for
developing a post catheterization arterial hemostatic device.
Prior to Boston Scientific, Bill worked for Kendall Healthcare,
now Covidien, on their Sequential Compression Device used in
the treatment of deep venous thrombosis. His graduate work
was with the Artificial Heart Program at the University of Utah.
Les Bookoff
202.808.3494
lbookoff@bookoffmcandrews.com
Dinesh Melwani
202.808.3497
dmelwani@bookoffmcandrews.com
Les Bookoff is a founding member of Bookoff McAndrews.
He has worked with companies in numerous major medical
device fields, including bronchoscopy, cardiovascular, cardiac
surgery, congestive heart failure, diagnostics, endoscopy,
imaging, monitoring, neurosurgery, obesity, orthopedics,
urology, and women’s health. His knowledge of medical device
technology and the importance of patent protection in that
field are well established. He regularly presents at various
medical device industry meetings and is frequently quoted in
The Gray Sheet, a significant publication in the medical device
community.
Dinesh Melwani is a partner at Bookoff McAndrews. Mr.
Melwani has extensive experience working with medical devices
including surgical instruments, orthopedic implants, urological
treatments, implantable electrical stimulators, obesity
treatments, needle guards, diagnostic instruments, biopsy
devices, surgical simulators, ocular therapies, skin treatments,
brachytherapy devices, respiratory treatments, and numerous
cardiac therapies. He was recently recognized by LMG
Lifesciences for his work in the medical device industry.
Disclaimer
These materials are public information and have been prepared solely for educational purposes to contribute
to the understanding of U.S. intellectual property law. These materials reflect only the personal views of the
authors and are not individualized legal advice. It is understood that each case is fact-specific, and that the
appropriate solution in any case will vary. Therefore, these materials may or may not be relevant to any
particular situation. Thus, the authors, Bookoff McAndrews, PLLC, and Biogen Idec cannot be bound either
philosophically or as representatives of their various present and future clients to the comments expressed in
these materials. The presentation of these materials does not establish any form of attorney-client
relationship with the authors, Bookoff McAndrews, PLLC, or Biogen Idec. While every attempt was made to
ensure that these materials are accurate, errors or omissions may be contained therein, for which any liability
is disclaimed.