Welcome to Five Intellectual Property Considerations for Start-ups.
Intellectual property, or IP, is one of the most effective tools for companies to gain a
competitive advantage. In particular in the life sciences, IP is the cornerstone in the long term
strategy goals of a company. For life sciences start-ups the IP is often one of the most valuable
assets that must be understood and protected. Therefore every bio-tech company, even a start-up,
should have an IP strategy in place. When it comes to IP strategy and IP management there are
a variety of aspects a company needs to consider. My name is Sonia Ziesche and together with my
colleague, Edith Penty Geraets, we will talk you through some of the aspects a start-up should
take into consideration when developing their patent portfolio
and overall IP strategy. More specifically, we will touch on what we call IP housekeeping.
We will also talk about whether a company should consider in terms of IP and the employees.
While patent filing is pivotal to a start-up it is also very costly. We’ll give you an overview
of the costs and timeframe and the processes of putting actual patent application together,
before concluding with some general information about filing strategies.
Part of an effective IP management strategy includes some actions that we refer to as
IP housekeeping. An essential part of good IP housekeeping is an IP inventory.
To establish an IP inventory all IP owned and used by a company should be reviewed and listed.
This includes the review of all patent, trademark and copyright registrations and
pending applications, and noting of applicable deadlines. The inventory should not only include
IP assets but also IP related agreements, procedures and policies. Confidential
business information that gives a company a competitive advantage should also be documented.
You should consider every aspect of your business such as research and development,
manufacturing, marketing and sales. If there’s confidential technology, information or know-how
involved in any part of your business operation it should be documented. It should include a
description of the confidential information, a list of who has access to it and how,
and a description of all measurements taken to keep it confidential. Once the IP inventory
is established and the identified IP should be assessed on a regular basis.
Consider whether existing patent, trademark and copyright registrations and applications should
be maintained. If some are now less relevant to your business consider whether to sell,
licence or abandon them. Also consider whether new applications should be filed to protect technology
under development. We will come back to the idea of IP harvesting later in this presentation.
Also review, and update as needed, existing IP agreements and licence agreements,
joint development agreements, manufacturing supply agreements and employment agreements.
For confidential information that you intend to keep as a trade secret,
review and update as needed, existing protection protocols restricting access to
and documenting access by need to know individuals. A company should also
find out what is happening on the outside. Determine exactly what IP others are using
or may be attracted to. A critical analysis of the information gathered in this process will enable a
company to determine what it has, what it needs, what it doesn’t need and what others may want.
There are both rewards and risks associated with IP. IP risk can arise when competing with others,
when collaborating with others or within the business itself. Mitigating risk associated
with IP is about management and control. This requires an understanding of IP so potential
risks can be identified early, evaluated and proactively mitigated. The most obvious
IP related risk stems from a failure to know the existing IP landscape in a field.
This can lead to two problems. One, a company may infringe the IP rights of a third party, and two,
crucial information that covers aspects of the invention is already in the public domain.
In the patent layer or jargon this is referred to as prior art. It’s not uncommon for someone
to file a patent application and then later find older patent reference that covers something
similar. It is therefore important to do prior art searches before launching an entire IP strategy.
Risk may also arise in ongoing collaboration with other companies or universities that could
result in IP development. Commercial agreements that do not address IP issues appropriately,
or at all, might result in that the company has given too much away,
loses control or has taken on too much liability. Within the business
a lack of IP strategy, and internal IP procedures, may put a company at risk
by not filing for patent protection or not registering a trademark, by disclosing an
invention too early or by not keeping good records of how a product is developed.
The risk of missing out, or giving away a company’s IP, can be mitigated by having
proper internal procedures in place for invention harvesting to ensure your company
obtains the most ideas and best innovation from employees. Regardless of your company size
consider the following tips for developing your own formal IP harvesting procedures.
One, dedicate someone to be the designated IP officer or a designated IP team as a central
point of contact. Two, educate your R&D team to recognize potential patentable innovations and
understand implications of publicly disclosing such innovations before securing IP protection.
We, or other members of the Gowling WLG team, would be happy to pitch in and give a seminar
covering basic patent law concepts to your team. Three, incentivize your R&D team to
identify and internally disclose innovations. Four, engage your R&D team before and after
an invention disclosure. You shouldn’t just start and end your innovation harvesting
process with an invention disclosure meeting. Instead, engage your R&D team regularly to be
aware of possible new innovations and additional improvements to already disclosed inventions.
A question that often comes up once an invention has been identified is inventorship and ownership.
Inventorship is important because it determines ownership of the eventual
path. The criteria for deciding who should be considered an inventor are quite different from
those normally applied to determining authorship of a scientific research paper. An inventor must
be, in some way, responsible for the inventive concept or provides an inventive contribution.
Even minor contributions to the inventive concept can be sufficient to qualify the
person as an inventor. As long as the work includes some inventive ingenuity,
however, merely sponsoring or supervising work may not provide an inventive concept.
The complete set of inventors may not be known until the patent is allowed.
In Canada it is generally presumed that the employee will have ownership of the invention
and any resulting patent for discovery made during the course of employment. There are, however,
two main exceptions to this presumption. One, there’s an expressed agreement to the contrary,
and two, the employee was hired for the express purpose of inventing or innovating. In both
these cases ownership rests with the employer. For grant contractors it is presumed that the
contractor owns all the rights to an invention they have made unless there’s an agreement,
expressed or implied, to the contrary. To avoid uncertainty the ownership of all intellectual
property should be clearly documented in writing with both employees and independent contractor.
Obtaining passive protection for invention can be a costly process and can be daunting for
any new start-up, particularly where budgets are constrained. Managing these costs, and forecasting
when they will arise, is an important part ensuring successful IP protection and avoiding
surprises. In general, patent protection is the most expensive form of IP protection.
On this slide we’ve presented a summary of the key costs involved in the patent process.
The process can be broken down into four different cost phases.
Cost phase one; drafting and filing. Cost phase two; prosecution. Cost phase three;
allowance and grant. Cost phase four; renewal fees. Some general ballpark figures
for a Canadian patent application are also shown as an example. In the first cost phase,
the costs for the drafting and filing stage are relatively easy to predict.
The cost required to draft a patent application is an initial hurdle that start-ups will need
to grapple with. Since having a patent pending status will often be a key part in negotiating
further investment, which may be necessary to fund the subsequent stages of prosecution.
The costs for phase three, the allowance and grant stage, and for phase four, renewal fees,
are also easy to forecast as the majority of costs relate to official fees that are set by the patent
office. However, the cost of these phases can vary quite significantly from country to country.
For example, some countries only require renewal fees after a patent has been granted,
whereas others require renewal fees while the application is still pending.
So cost phase four may, in fact, overlap with cost phases two and three. In cost phase two,
prosecution, this is the cost phase with the most uncertainty because it’s hard to predict how many
objections will be raised by the patent office, and how many official actions will be issued.
Since each official action that is issued by the patent office
will require a response and possibly amendment to the patent application.
Costs can vary significantly depending on the nature of these objections.
In general, for complex technical inventions or for technical fields where there’s a lot of
innovation in a crowded technical space, the costs for the prosecution phase will be much higher
since it’s likely that there’ll be more relevant prior art, and therefore more objections raised
by the patent office. Costs are also usually much higher when prosecuting patent applications
in countries where translations are required. However, there are usually ways to slow down
prosecution, if this is desired. For example, by applying for extensions of time for responding to
official actions, where available. On the other hand, it’s also possible to speed up prosecution,
if a faster grant is required. For example, to secure investment. Where cash is tight it
might be strategic to prioritize certain key patent applications in your portfolio
by accelerating that prosecution, while slowing down prosecution and the related costs on others.
As mentioned earlier by Edith, the first big investment for obtaining patent protection is
the drafting of the actual patent application. There are several considerations that should be
kept in mind for this process. The first is public disclosure. The patent must
satisfy certain time limits related to how long the invention was disclosed to the public,
if at all, prior to the filing of the patent application. Generally, patents
will be denied if the invention has been made public prior to the filing of the application.
Some countries have a grace period during which the application can still be filed,
however, in most countries a public disclosure of the invention before the application is filed is
typically enough to cause the patent application to be denied. Therefore a patent application
must be filed before publicly disclosing any important research results that may lead to a
value of a product or technology. This caution is especially applied to … institutions. As
discussed earlier, prior art refers to scientific or technical information that exists before the
effective date of a given patent application. Prior art may be found in any public document,
such as patents technical publications, conference papers, marketing brochures, web page product,
services, equipment, processes and materials. The inventor is not required to do a prior art search,
however, there may be advantages to performing a prior art search. A search may be conducted before
the filing of the patent application to coach the prospect of obtaining broad claim coverage.
Prior art searches are also a good way to get information on development in the field
of the invention. Prior art searches may sometimes reveal what competitors consider worth protecting.
Search results may be a critical factor in deciding whether to file a patent application.
Having decided to pursue a patent, the next step is to work with an agent to prepare
the application. A good way to work with an agent is to collect all of the information
together in a document called an invention disclosure form.
The patent application has different parts and is useful to understand the
parts and what is required for each part in order to obtain a strong and useful patent.
The background section sets the stage for what’s to come. The background section should
describe the prior art at a very high level. You may also include some brief statements
about the shortcomings of the prior art. The background may further describe the specific
problems you faced and the specific objectives you sought to achieve. The detailed description
section provides a sufficient explanation of the invention for an ordinary person, in your field,
to make and understand the invention. For inventions in the prior technology,
generally the results, material and method, similar to a scientific paper, should be included.
Specific disclosure requirements exist for certain inventions in bio-technology. In order for the
description of a bio-technology invention to be considered to be sufficient it may be necessary
for a sequence listing of a nucleotide or amino acid sequence to be included with the description,
or for a deposit of biological materials, such for example, bacteria to be made within
an international depository authority. The claims mark the boundaries of the protection
provided by a patent. The claims are a written approximation of the abstract inventive concept.
So, once a patent application has been drafted the next important decision is your filing strategy,
which involves deciding where to file your patent application. Questions that should
be answered to inform this decision are, one, where are my target markets
or maybe more relevant for a start-up, where would I like my target markets to be? And, two,
where are my competitors operating? IP rights are territorial in scope. So a patent that is granted
in Canada will only be enforceable against commercial activities taking place in Canada,
such as making, using or importing the product, or carrying out the process of the invention.
A typical filing strategy for a patent application is shown in this slide. Usually the first place an
applicant will file their patent application is as a US provisional patent application.
US provisionals are generally preferred by start-ups and small businesses as a first
place to file, since the official filing fees are low and the official requirements
are not as strict as other countries. Meaning that a filing date can be quickly obtained.
While a quick filing date can be an advantage, it can also bear some risks and disadvantages
later in prosecution, if the first application does not contain enough information to fully
support the invention that is being claimed. Once the first patent application has been filed, the
clock starts ticking and the applicant has 1 year to decide where in the world they want to file
their patent portfolio, claiming priority from the first patent application. Claiming priority means
that the later patent application will hold the same filing date as the first patent application,
and this date is important for determining which prior art is relevant to the invention.
If at the 1 year time point it’s still unknown which jurisdiction’s protection is required in,
it’s possible to file an international application.
The official fees for this international application are much higher than the provisional
but it effectively buys extra time to make the decision and delays the associated filing costs.
The international application provides a placeholder for the applicant to file in most
countries in the world, except for a few select countries such as Taiwan, Argentina and Pakistan.
So after a maximum of about 2.5 years, or 30 months from the initial provisional filing,
the decision must be made for which countries the applicant wishes to file in. Each patent
application that is filed will be examined separately by the patent office of each country.
So the cost phases one to four, discussed in the earlier slide, will apply in each country.
If protection is sought for European countries, a regional European application can be filed,
which similarly to the international application designates a number of European countries.
It’s not necessary to choose which individual countries are desired until the grant phase,
where the European application is then split into a bundle of patents,
by paying appropriate fees. We, or other members of the Gowling WLG team,
will be happy to discuss filing strategies suited to your commercial aims.
That concludes our overview of Five IP Considerations for Start-ups.
Thank you for joining us.
Intellectual property is pivotal to the life sciences industry.
In order to succeed, life sciences companies must distinguish themselves from their competitors
through their intellectual property portfolios.
A successful patent portfolio represents a well reasoned business strategy and reflects present
and future business objectives. To this end, IP can be managed as a tangible business asset.
Today we’ve covered five key areas that we believe start-ups should consider in their IP strategy,
which include good IP housekeeping, employee education, cost forecasting,
preparation for filing a patent application and patent filing strategies.
As always, we’re hear to answer all questions you might have on all aspects of your IP needs.
Our contact details are on the screen and we look forward to hearing from you.