Think of Patents as Products

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It's often difficult to decide what to patent, where to patent it, and how much to spend. This is particularly true for device companies that compete in rapidly changing technology because changes often invalidate assumptions behind decisions made just a few months back. What's more, without a strategy for developing a patent portfolio, companies risk losing market share and profitability.

The Business Plan

If a medical device company does not know its patent destination, it cannot develop a strategy to get there. Business plans should guide decisions on what to patent. Managers should know how widely the company intends to make or distribute its own devices rather than licensing those rights to others. More patents may be warranted when licensing, or treating patents as products, is part of the plan. Patents may concentrate on one or a few devices as opposed to scattering the same number of patents across a larger number of devices.

A potential licensee may view concentrated patents as effective device protection. These concentrated patents may stop other companies from making similar devices by the common tactic of omitting a single feature. Competitors may have to eliminate several features from their devices to design around your patents. And that can turn a potential infringer into a potential licensee, one willing to pay for a license when a design-around is too difficult.

Another part of the business plan identifies competitors. Doing so helps a company decide what patents should be in its portfolio. For instance, spending against a competitor with deep pockets can be justified for developing a family of patents covering several devices. This could force competitors to make devices significantly different from those of your company. Potential infringement claims could motivate the competitor to seek licenses.

The estimated life of a device should also be a factor in seeking patent protection. A short product life, for instance, means less justification for patent protection. A device that lasts two to three years may not warrant a patent because it may not issue before the end of its life. Conversely, devices with longer life spans can justify a larger patent budget.

Geography presents other considerations. Many companies plan to sell products domestically, as well as in Europe and Japan, but not elsewhere. So there is little reason to get patents in those other parts. It may, however, be useful to extend the time within which patents can be sought in those other parts of the world if it's possible you might one day try selling there.

Potential Infringers

When preparing patent applications, companies often focus on devices and disregard potential infringers. This can be a mistake. Potential infringers may not all be manufacturers or suppliers. If patent claims only cover devices (not how its used), competitors could escape the patent net while your company loses licensing payments.

For example, a device and a method for using it may both be patentable. This prompts questions as to whether the device, or method, or both should be patented. The answer is usually "both."

Patenting the device captures a special group of infringers — other makers of the device. In the same patent, the method of using the device or treating a medical condition, or both, should be patented because this heads off another group of potential infringers — users.

Patentable devices can also be part of larger systems. For example, a hand-held unit may include a foot controller and computer. So it would be beneficial to patent the entire system even though the controller and computer are not individually patentable. Such system-patent coverage prevents companies from selling the entire system, unless they pay your company royalties.

The unique components in some devices provide other opportunities. When these are replaceable, there may be an after market for supplying them. Consequently, it would be wise to patent just these components. This lets the company stop after-market sellers of those components, which could open another licensing revenue stream.

Crowded Technology

Crowded technologies are those in which patents cover a specific type of medical device. It's common with relatively simple designs such as hypodermic needles.

Such patents are often narrow in scope, such as covering a small and specific change over past designs. One strategy is to seek a broad-scope patent that covers potential product variations by competitors. When your company creates a new design in a crowded technology, ask: Can the patent be useful in such a field?

To answer that question, consider whether or not the device infringes a competitor's patent. This is possible because a patent on device does not mean it doesn't infringe on another's patent. If the device does infringe on a competitor's patent, it may be useful to obtain a patent on it anyway. Then, if both parties can assert infringement, they often hesitate to file claims of infringement.

Another factor is whether small changes over past designs are ones competitors would also like to add. As an offensive strategy, a company patents the small change to prevent competitors from using it, or better yet, licenses the change to competitors for royalties.

Another perspective on small changes is whether or not they are used in your company's product. Even if not, a patented change can force competitors to look for another approach which may be more costly or less effective, to accomplish what your patented small change does.

What to patent and how to develop patent portfolios for medical-device companies should be approached with a view of company needs. Deciding what steps to take should start with a business plan. Then, the device company should identify potential infringers, the patents its competitors hold, and determine how the company's patents can be used in an offensive and defensive fashion.

The cost of patents

Costs vary widely across the U.S. based on technology. A device company may spend $10,000 to $15,000 to file a U.S. patent application and perhaps another $5,000 to $10,000 to prosecute the application. Prosecution is what the patent office calls reviewing applications and quizzing inventors on them. Foreign protection may add another $5,000 to $10,000 per patent per country.
Royalties from licensed patents often depend on what the patent claims, and a good patent lawyer is trained in making the widest claims covering as much technology as possible. So paying more for a good lawyer may be justified. For example, paying a flat amount for attorney fees for all patent applications may limit the attorney's time. Similarly, a larger budget for filing fees may lead to more independent and dependent patent claims. And the more the independent and dependent claims, the better patent claim coverage, and thus higher filing fees.

After issuing a patent, the U.S. Patent Office requires annual maintenance fees over the next 12 years to keep the patent active. During this time, a company may spend about $7,000. So if a patent does not fit a company's business plan, it makes sense to let it expire by not paying maintenance fees.

Conversely, a company can justify spending more on patents on products with higher profit potentials. Otherwise, if competitors are selling an acceptable substitute because there are not blocking patents, then your company's sales and profit margins may fall.

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