Monetizing Your Intellectual Property: Protecting Ideas that Generate Income

Monetizing Your Intellectual
Kathleen Mekjian, Ph.D., J.D.
Property: Protecting Ideas that
Brenden Gingrich, Ph.D., J.D.
Generate Income

The recipient may only view this work. No other right or license is granted.

Kathleen Mekjian, Ph.D., J.D.

©2012 Knobbe, Martens, Olson & all rights reserved.
©2012 Knobbe Martens, Olson & Bear, LLPBear, LLP all rights reserved. 2

Overview

• Patents – Value/Patentable Subject Matter
• Inventorship and Ownership
• Loss of Rights and Avoiding Pitfalls
• Sufficiency of Disclosure/Timing
• Freedom to Operate
• Procedural and Monetary Considerations
• The Prometheus v. Mayo Supreme Court Decision

© 2012 Knobbe, Martens, Olson & Bear, LLP all rights reserved. 3

The Value of Patents
• Bring Tremendous Value to Company
– Can be Critical to Obtaining Investment
– Can Provide Revenue
– Cross-Licensing
• Secure Market Position / Exclusivity
– They are Swords (Offensive)
• Can Exclude Competitors from your Business
• Can Protect your Products from Duplication
– They are Shields (Defensive)
• Demonstrates sophistication and professionalism
• Your Competitors (domestic and foreign) are Getting Them!


Patents - The Basics

• Patents protect (1) novel, (2) useful, and (3)
non-obvious processes, machines,
manufactures, or compositions of matter
• Gives the patent owner the exclusive right to
exclude others from selling/offering to sell,
using, making, or importing the invention
• Term is 20 years from filing date
• In exchange for this “legal monopoly,”
inventor must disclose how to practice the
invention

Value of Patents

• “Strong” versus “Weak(er)” Patents
– Value comes from excluding
• Lots of alternatives = weaker patents
– Antibody with a particular CDR
• Critical step = very valuable
– Growing antibodies in CHO cells
– Humanized antibodies


Deciding What to Claim
• Purpose of IP
– V.C. specific (clear/fast exit . . .fast approval)
– Your product (now or future)
– Competitor’s product (now or future)
– License or cross-license (scope v. fast allowance)
– Litigation (focused/validity)
• Protection for commercial embodiment
– Link between customer demand and claims
• Broad v. narrow= scope v. validity


How to Claim Strategically

• Seek protection with value
– Start with relevant market
• Cover your product
• Cover design-arounds


Block Competitive Alternatives

Patent
Scope

Commercial Product


Block Competitive Alternatives

Patent Relevant
Scope Market

Commercial Product


Multi-Faceted Approach

Patent 2
Scope

Patent 1
Scope Relevant
Market

Patent 3
Scope

Commercial Product


Directly Pursue Competition’s Space

Patent 2
Scope

Patent 1 Patent 4
Scope Relevant
Market Scope

Patent 3
Scope

Commercial Product


Inventorship
• Who is an “inventor”
– Conception = touchstone of inventorship
• Arriving at a definite and permanent idea of the
invention
– Laboratory hands v. Joint inventor
• A joint inventor must make a contribution to the
claimed invention that is not insignificant in
quality, when that contribution is measured
against the dimension of the full invention
– Improvements, etc. may lead to joint inventorship


Ownership
• Inventors own the invention – undivided interest in the
entire patent
• Types of agreements that affect ownership rights
– Employment Agreements
– Consulting Agreements
– Development Agreements
– Manufacturing Agreements
– Collaboration Agreements
– Visitor’s Confidentiality Agreements
– Government Interests
• U.S. laws “inventor friendly” in terms of presumption of
ownership

Inventorship & Ownership - Cautionary tips

• Beware of Unintended Co-Inventors
– Contractors, Manufacturers, Collaborators, etc.
– Co-Inventors Own Equally & Can Dispose
Unilaterally
• Leaving Off Inventor Can Render Patent
Unenforceable!
• Illustrations of the Importance of Ownership Rights
– The Google story – how Stanford was successful
– Roche v. Stanford – how Stanford was unsuccessful


Loss of Rights – “Loose Lips Sink Ships”

• Disclosure of your invention may preclude ability to
patent (novelty and obviousness provisions of the
patent laws)
• One year grace period in U.S. (but not many foreign
jurisdictions!)
• America Invents Act - changes in law relevant to
novelty take effect March 2013


Loss of Rights

• Abstracts
• Posters
• Oral Presentations
• Manuscripts v. Online Publication
• Grant Applications
• Theses/Dissertations
• Offer for Sale


Loss of Rights – Precautionary Measures
• Do Not Disclose Invention Outside of Confidentiality
– Use Confidential Disclosure Agreements (CDAs) for
discussions with potential collaborators, licensees, investors
(when possible), etc.
• Protect confidential information (e.g., mark it as “confidential” or
don’t disseminate it)
• File patent applications before presentations, talks, publishing,
meeting with collaborators, licensees, investors, etc.
• Maintain records of research and development (e.g., lab
notebooks)
• Use caution with content of submissions and reports (assume they
will be publicly available immediately)


Brenden Gingrich, Ph.D., J.D.

©2012 Knobbe, Martens, Olson & all rights reserved.
©2012 Knobbe Martens, Olson & Bear, LLPBear, LLP all rights reserved. 19

When to File – do I have enough data?
• Major issue for patents in the “unpredictable” arts
• Must describe the invention
– Demonstrate “possession” of the invention
– Genus claims require:
• Structure / Function relationship
• Representative number of species
• Must enable invention
– Make and use without undue experimentation
– In vivo treatments need in vivo data
• Data from well-accepted animal model is sufficient

When to File – do I have enough data?
• Scope of protection needed is a consideration
– What is the purpose for the IP?
• Protection of product
– Narrower patent may be sufficient
– Therapeutic, diagnostic, research tool
• Blocking competitors
– Broader patent may be needed
– In which countries is protection needed?
• Different standards in different countries

When to File – now or later?
• Purpose of protection is a consideration
– Your product today
• Accelerate allowance
• Parallel filings
– Your product in the future
• Serial filings
• Maximize PTA / PTE
– Funding – exit strategy items first
– Litigation / Licensing


Patentability / FTO Searching

• Patentability Searching
– Optional step to gain understanding of prior art
• Patents and published applications
• Non-patent literature
– Most useful for narrow, targeted applications
• Prosecution costs reduced by focusing claims



• Freedom to Operate / Right to Practice Searching
– Evaluate patent landscape
• Who are potential partners / threats
– Develop strategy for blocking patents
• License
• Design around
• Invalidity / Non-infringement opinion
• Wait for expiration



• §271(e)(1) “safe harbor”
– “It shall not be an act of infringement to make, use,
offer to sell, or sell within the United States or
import into the United States a patented invention …
solely for uses reasonably related to the
development and submission of information” to the
FDA
– Created as part of balance between brand-name
and generic drug companies
– Courts have extended the “safe harbor” to early
product research and development


Filing Procedures – impact of the AIA

• America Invents Act (Patent Reform)
– File Early, File Often
– “First to File”: increases importance of filing early
• Effective March 16, 2013
Invention Invention
Conception Reduction to Practice File Application

1 day
3rd Party Disclosure
or Patent Filing

“swear behind”

Filing Procedures

• Provisional Applications
– Official fees: $250 / $150 for small entity
– Establishes priority date for disclosed material
– One-year pendency, no examination
– Can file numerous provisional applications
– Does not publish, can re-file if more time is needed


Filing Procedures

• U.S. Utility Application
– Official fees:$1250 / $530 small entity
– Can claim priority to one or more provisional
applications within 1 year of filing
– Examined in ~18-24 months
– Issues 2-5 years


Filing Procedures

• PCT Application
– Official fees: $4154 (no small entity discount)
– “International” application
• Provides priority in 144 member countries
• No such thing as “International Patent”
– Searched and provisionally examined (non-binding)
– Enter “National Phase” within 30 months of priority


Timeline for Filing

• Typical Filing Strategy

12 Months 18 Months

1st Provisional Utility / PCT National Phase
2nd Provisional
(optional)

3rd Provisional
(optional)


Timeline for Filing – AIA strategy

• Strategy to provide extra year of patent term in U.S.

12 Months 18 Months

12 Months 12 Months

1st Provisional PCT National Phase

Voluntarily Publish Re-file Provisional U.S. Utility
Application


Supreme Court’s Prometheus Decision
• Discovered correlation between specific drug
metabolite levels and safety / efficacy
• Patentable subject matter
– Exceptions: natural laws / phenomena, products of
nature, abstract ideas
– “Specific applications” of natural laws are patentable
• Holding: administering, measuring, and then
correlating metabolite level to need alter drug dose is
not patentable
• Implications for diagnostics
– e.g., inflammation as diagnostic for heart disease


Kathleen Mekjian, Ph.D., J.D. kathleen.mekjian@knobbe.com
Brenden Gingrich, Ph.D., J.D. brenden.gingrich@knobbe.com

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