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IP Best Practices for Life Sciences Companies

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Introductory Remarks

An IP portfolio can be used in a variety of ways to provide a tangible asset for a company.

To be able to use your IP portfolio to carve out a niche, generate profit through royalties, or to attract potential investors, the patents must be well supported, provide coverage for any current or future commercial product/process and preferably also provide broad coverage.

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What Is Intellectual Property ?

•  Patent •  Trademark •  Copyright •  Industrial Designs •  Trade Secret

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Patents

•  Provides the right to exclude others from making, using, and selling a product or process during the term of the patent

•  In exchange for a fully enabling disclosure of the “best mode” of practicing the invention

•  Term of the issued patent is 20 years from date of filing

•  Patent rights are territorial •  An issued patent does not necessarily grant you

the right to practice your invention

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Why Patent?

Patents may be used to generate value for a company

•  Competitive advantage to prevent copying – gain market share •  Blocking patents as barrier to market entry - force competitors

from market •  Generate income via royalty stream •  Attract investment – increase value of a company •  Negotiating for possible cross-licensing

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Value of IP Portfolio

A viable start-up company usually has a small niche where they excel at a certain technology e. g. small molecules, medical devices.

Companies, usually start-up companies, adopt a strategy to use their IP as a tangible asset for evaluation to investors or purchasers for a potential acquisition.

Patents therefore form a large part of the value of the company.

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Deciding What to Patent

As a business asset, value depends on other factors beyond simply technical merit:

•  Is it so novel that broad claims are likely to issue?

• Can you block others - effectively preclude others from copying?

•  Is it difficult for competitors to “design around”?

• Can infringement be easily detected?

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Filing Strategy – what to think about

Value = Validity + Scope of Claims

•  Business Plan •  Vendible Product •  Claim Scope •  Market Analysis •  Patentability Analysis •  Ownership

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What is Involved?

•  Information gathering • Public disclosure? • Determine inventorship • Understand the invention

•  Drafting the patent application •  Prosecution of the application

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Determine Inventorship

•  Who contributed to the subject matter of the claims ? •  What is their relationship with the company/

institution, e.g. employee, contractor •  When was the invention created? •  Joint inventors – anyone who contributed to at least

one claim •  Naming the correct inventors is important – a patent

that fails to identify the true inventors may be held invalid and unenforceable

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Ownership

Increased value when IP is owned by a single entity

  Employment Agreements/Contracts in place before IP is generated

  Assignment Agreements when research is done by third party

  Joint Collaborations – IP considerations   Grants/funding for research – IP ownership by others

•  All ownership of IP should be determined before the research is conducted and before patents are filed.

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Be Aware of Potential “Bars” to Patenting

•  Public disclosure (e.g. publication, poster at a conference), public use or offer for sale may be a bar to obtaining a patent

•  1 -year grace period in US; Europe and most other jurisdictions require absolute novelty

•  Any of “bar” actions start the clock ticking •  Use Non-Disclosure Agreements with appropriate

description •  Using NDAs also avoids the potential for the other party

filing for a patent on the same or similar ideas •  File the patent application early, if possible

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Patentability Analysis – should you spend the money ?

•  Identification of potential novelty and inventiveness •  Areas for investment of R&D •  Identification of competing technology •  Patents that need to be circumvented •  Identification of possible collaborations/partners •  Identification of possible license/cross-license options

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Prior Art Searching?

•  No duty to search for prior art •  But must disclose relevant prior art of which you

are aware •  Searching patent publications prior art may have

implications related to willful infringement for patents found, since considered “on notice”

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Drafting the Patent Application

•  Understand the invention both technically and in its commercial context

•  Prepare a sufficient and enabling disclosure; beware of discussing the prior art

•  Provide claims of varying scope; less vulnerable to prior art cited during prosecution and even after issuance, and thereby highly enforceable

•  The claims of the issued patent define the legally enforceable scope of the patentee’s rights

•  Draft different types of claims (product, i.e. compound, medical device, method, use) as appropriate to the invention

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Obtaining the Desired Claim Scope

•  What is the vendible product? Support in the patent for the product itself, examples of synthesis of compounds, in vitro data, clinical trials, etc.

•  What are the variants? When possible, allow some time to research variants of the product so that the scope of the patent specification can be expanded.

•  What are your competitors doing? Ideally, the claims should both protect your product and exclude your competitors from working around the patent. This requires an expanded patent specification support by research.

•  What is your niche? Do the claims of your patent build on your portfolio to carve out a niche?

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Claim Scope

Claim Scope

Product

Variants

Competitors

Portfolio

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Scope of coverage - example

Broad Scope

Narrowing Scope for Group A

Narrowing Scope for Groups A, X, Y, W, R4

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Obtaining Desired Claim Scope

Filing of a full and complete disclosure

•  You can only get protection for what you have done and shown in the description and what you can soundly predict based on what you have done.

•  Disclosure of all contemplations of the invention.

•  Demonstration of utility through test results whenever possible.

•  Carrying out the right tests and trials to ensure broad coverage in the patent.

Lack of full disclosure can lead to unduly narrow claims and possible invalidity of the patent.

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First Filing

•  Typically, Canadians file first in US, many investors show preference to US filings

•  Can file a Provisional application for lower fees while preserving early “priority date”; convert to Regular application within next 12 months; delays examination, however: •  The Specification of the Provisional application as filed must

provide support for claims once converted

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Patent Applications – options for filing

•  U.S. Provisional Application To be filed when a disclosure is imminent Should be as detailed as possible or priority claim may be invalid Avoid unless necessary due to budget and publication constraints

•  PCT (Patent Cooperation Treaty) Application International Application holding a filing date and place in nearly every country in the world 30 month deadline for selecting jurisdictions in which to obtain protection

Search Report and Written Opinion/Report on Patentability issued •  European Application

Single Examination for EU Member Countries Validation in selected jurisdictions

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Prosecution

•  A well prepared specification and claims can make prosecution “cleaner” which can reduce costs

•  Be aware of File Wrapper Estoppel in US •  Duty of candor in US applies during entire

pendency of application

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Scope of Protection in all jurisdictions

Market Analysis

Value is increased if protection is obtained in all relevant jurisdictions

•  Where is the market for the product? •  20 year term •  Look to future markets and growing economies

•  Where is the product manufactured? •  Prevent manufacture of product by others in strategic locations •  Import/Export Regulations

•  Where are my competitors? Where is the R&D market? •  Which jurisdictions are more patent friendly?

•  Importation •  Policing •  Litigation/Damages

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Scope of Protection

Consumer Markets •  USA High Population, Disposable Income, Quality of Living •  Europe High Population, Disposable Income, Quality of Living •  Canada Disposable Income, Quality of Living •  Japan Disposable Income, Quality of Living •  China Highest Population, Increasing Disposable Income

Producer Markets •  China Low cost manufacturing

Competitors •  Russia/Eurasia Advanced Education, Natural resources •  Australia Advanced Education, Natural resources

Enforcement •  China Emerging policing and government backing regarding

enforcement

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Post-Filing Considerations

•  Event Timeline – for research and funding

•  Maximizing Niche Protection – cover your products

•  Maximizing Maneuverability

•  Freedom-to-Operate

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Post-Filing Timeline

First application filed

12 Months – PCT Application/Regular Application

18 Months – Publication of First application

30 Months – National Phase Entry of PCT Application

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Post-Filing Strategy

Timeline for selecting jurisdictions: •  1 year from priority date – regular filed application •  30 months from priority date – PCT application

Delay in time allows for: •  Funding •  Research/Test Results •  Partnering/Selling

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Maneuverability - Pending Applications

•  Pending applications allows for amendment to scope of claims, providing support in application as filed

•  Ability to amend claim scope may capture changes in research and/or product development

When looking to use IP to increase value for acquisition, keep patent applications pending as long as possible. Allows for new owner/licensee to amend the claim scope of the pending application. Amending claims of allowed patent much more difficult and restricted.

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U.S. Strategy

•  Consider continuation practice •  Obtain allowed claims to narrow scope and then file

continuation patent directed to broader claim scope. •  Pending application provides for possible adjustment to the

claims based on actions of competitors.

•  Terminal Disclaimers/Double Patenting.

•  Continuation-in-Part Applications for improvements.

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Canadian Strategy

•  No Continuation practice. •  No Terminal Disclaimers. •  Voluntary Divisional applications for broader

claims likely to invalidate divisional and even the parent on grounds of double patenting.

•  Forced Divisional applications. •  5 year delay for requesting examination. •  2 year backlog at Patent Office. •  Amendment after allowance. •  Reissue – 4 year deadline.

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Improvements

•  Expand IP niche by filing patent applications protecting related subject matter to fence out a greater area of protection.

•  Forces competitors to deal with a larger number of patents during licensing or possible litigation.

•  Parent application publishes 18 months after priority date.

•  If claiming priority to parent application subsequent application must be filed within 12 months.

•  If possible, file improvement patents before parent application publishes although it shortens extension of protection.

•  If improvement applications filed after parent publishes the parent application may be cited against the improvement patent during prosecution in rendering the improvement obvious.

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Freedom to Operate

•  Issue of a patent does not grant you the right to sell the product without potentially infringing another patent.

•  A patent issued on an improved device requires the licensing of the patent on the original device before sale of the improvement may be made.

•  A Freedom-to-Operate opinion is jurisdictional whereas a patentability opinion is based on references published worldwide.

•  Potential for cross-licensing.

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Final Comments

In view of the many pitfalls resulting in weak or invalid patents it is extremely important to invest in IP counsel as early as possible. Direction of research should be monitored and IP tailored to obtain a broad portfolio with strong patent protection.

Investment made early in IP can save money and time in the long run and add value to your portfolio.

montréal • ottawa • toronto • hamilton • waterloo region • calgary • vancouver • moscow • london

Thank You

Victoria Heppell Patent Agent Tel: 416 862 4312 Email: victoria.heppell@gowlings.com