Understanding Intellectual Property Rights for Biotechs

Understanding Intellectual Property Rights for Biotechs

Intellectual property (IP), in general, is a category of property that protects commercially valuable inventions, processes, and information.

Intellectual property rights (IPRs) are the rights given to an individual or company that provide rights over the use of the IP for a limited period of time.  For example, securing a patent for an invention is an essential step towards protecting your IP rights.

Biotechnology and pharmaceutical companies of all sizes are powered in large part by intellectual property, with IP and IPRs being major drivers of their value. This is due to the fact that sound IP protection safeguards your most important assets, positions your company to be financially rewarded, and attracts investors.

It’s possible for IPRs to have meaningful impacts on both upstream and downstream aspects of biotechnology innovation. However, IPRs are most applicable to downstream aspects, such as, commercialization, manufacturing, and market access/share.

Understanding and properly using IPRs, as well as implementing a well-designed IP strategy, can provide companies with protection for their most valuable assets, offer a competitive edge in a specific market, and increase their value in the eyes of investors. As a biotech startup founder and entrepreneur, IPRs should be on the top of your list from day one.

IP rights can differ from country to country, so it must be noted that the rights covered below pertain to the US.

In this article, we will review:

  • Types of IP used in biotechnology
  • The role of intellectual property rights in the biotech industry
  • The rights and protection granted by each type of IP

Despite controversy surrounding IP in biotechnology and Big Pharma, it remains an essential part of these industries and the development strategies used to increase the chances of return on investment (ROI).

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The Role of Intellectual Property Rights in Biotech

Biotechnology companies rely on intellectual property rights to gain exclusive use of various inventions, processes, and more by excluding others from using, making, or selling the same invention or process.

One of the most relevant types of IP in biotechnology is the patent, which provides IPRs that protect some of the most important assets a biotech company usually owns: new and useful inventions and processes.

The patent system has long been a tool for stimulating innovation in various sectors, and that applies to biotechnology. Often, a biotech’s IP portfolio can be used to define its position in the market and the commercialization landscape, not only showing the road ahead but also revealing the company’s overall value to those who run the company and to its potential investors.

Companies that have valuable IP—or at least have patentable inventions—and a strong IP position are more inviting to biotech investors, as patents can minimize the risks of reverse engineering or copying, provide a company with freedom to operate, and help ensure the company won’t infringe on the IPRs of other businesses.

While patents and trade secrets provide IPRs that biotechnology companies need right away, there are other times when specific rights are needed, such as when a drug is approved by the FDA.  In this case, trademarks and exclusivity rights come into play, protecting a company’s ability to sell and market a branded drug for a limited period of time in a specific region.

By protecting valuable IP assets, biotechs can turn their inventions and discoveries into money-makers. A well-crafted IP strategy can create competition-free space for commercialization, find opportunities for IP licensing, or inform a business when it’s time to sell off IP.

Common Biotechnology Intellectual Property & IPRs

In biotechnology, some IP is used more often than others. Patents, for example, make up a large portion of the IP in biotech, while copyrights aren’t nearly as relevant. That said, it’s important to know the four most common types of IP and the basic property rights each type grants. Let’s review.

Patent Rights

A patent grants the inventor the right to prevent others from making, using, or selling the same invention without permission for a limited time in the jurisdiction the patent was granted, thus protecting their invention. There are three different types of patents available: utility, design, and plant patents.

  • Utility patents: A utility patent is issued for a new, useful, and non-obvious product, device, or process, and allows the patent owner to prohibit others from using, making, or selling that invention for a limited time.
  • Design patents: A design patent is issued for a new and useful design of an “article of manufacture,” or something that has been manufactured to be used or consumed. It only protects the design of the product, but not any other features.
  • Plant patents:  A plant patent is granted to someone who has invented or discovered, and then asexually reproduced, a unique new variety of plant. (The plant cannot be a tuber propagated plant or a plant found in an uncultivated state.  New sexually reproduced plants can be protected under Certificates of Plant Variety Protection through the United States Department of Agriculture.)

You might file a provisional patent application, which establishes an early filing date, giving you 12 months to determine the commercial viability of your invention.  At the end of the 12 months, you may convert the application into a non-provisional application or abandon it.

Patent protection plays an important role in biotechnology. When a claim is granted, it provides biotechs with IPRs that they can use to protect their IP assets and create more value for the business.

US patent rights grant the licensee the right to exclude others from making, using, offering for sale or selling the invention covered by the claims in the patent within the United States. These rights don’t give you the right to do what is in your patent, just the right to exclude others.

United States patent law does not provide the right to prevent others from selling or using the invention in another jurisdiction, such as China, Europe, or any other country/geographic area.  You must file a patent in those areas to obtain those rights, but United States patent rights do allow you to prevent others from importing the invention from other jurisdictions into the United States.

Different types of patent rights last for different lengths of time, with utility and plant patents providing protection for 20 years from the date of the application filing.  The design patent term is 15 years.

If you do file a patent application in another country, and you are granted the patent, you will receive the same rights in that area—China, South Korea, Europe, and Japan are some examples—as you do in the US. An example of a foreign patent office is the European Patent Office (EPO), which handles all patent matters for members of the European Patent Convention (some of which are not European Union members).

Trade Secret Rights

A trade secret can be any type of information that holds inherent economic value to a company or individual because the information is not publicly known or readily available.

Defined by the Uniform Trade Secrets Act (UTSA), trade secrets include information such as a process, formula, pattern, technique, method, device, program, method, device, or compilation, and are protected under state and federal law.

Trade secret IPRs give a company the ability to protect valuable company information. Unlike patents, trade secrets are not registered with a government agency, and they can have an infinite lifespan, depending on whether the secret is maintained.

While patents can provide relatively comprehensive protection for certain IP, they cannot be obtained to protect all of the confidential information a biotech firm may want to keep from the hands of competitors. Not everything is patentable.

In addition, patents require disclosing the invention to the public. Trade secrets, by contrast, protect innovation within a company by keeping that innovation secret, as they do not need to be disclosed.  Unfortunately, trade secrets might be easily “stolen,” as the information can be memorized or noted down by an employee, developers, supplier, collaborator, or anyone who might have interest in the information.  Often a company’s trade secrets will enhance its patent rights.

If someone gets hold of the trade secret, the information can often be put to use immediately. Unlike “prior art,” a concept in patent law that determines patentability of an invention, once a trade secret becomes public, its status as a trade secret is lost. That all said, in some cases, trade secrets can represent a biotech’s most important IP assets, as the processes a company uses to manufacture a product can be entirely unique.

When a trade secret is used and managed correctly, it provides a meaningful advantage against competition. In fact, there might be a situation where it makes more sense to forgo filing a patent application and simply treating something as a trade secret.

Trademark Rights

A trademark protects any recognizable sign, design, or expression you use to identify your products or services and distinguish them from other sources in the marketplace. Having a trademark provides you with legal protection for your brand and helps you protect against fraud or counterfeiting.

However, not all trademarks are alike, and the uniqueness of your trademark, as well as whether you register it or not, affect how limited or broad your trademark rights are.

For example, a trademark can be weak or strong, depending on how distinct it is. If the trademark is highly distinct and can identify your goods or services easily and quickly, then you have a strong trademark on your hands. The stronger the trademark, the easier it is to protect.

In contrast, if the trademark is difficult to discern, generic, and purely descriptive, it will be considered weak and be more difficult or even impossible to protect.

You become the trademark owner as soon as you start using it together with your products or services in commerce. However, you only have rights in the geographical area in which you use it when you simply own a trademark without federal registration.

In order to secure broader and stronger trademark rights, you have to register your trademark by applying for a federal registration. This type of trademark is protected nationwide and makes it more difficult for others to use your trademark within your channel of commerce.

In biotechnology, trademarks are often overlooked, despite having real value later on when marketing becomes essential. They can be used to protect company names and branding/marketing terms and names for products, equipment, services and more.

Copyright Law

Copyright is a form of IP that grants its owner  the exclusive rights of publication/distribution, reproduction, adaptation, display, and performance of the copyrighted work  for a limited time.

Copyrights don’t protect an invention or process, they protect photographs, songs, sound recordings, computer programs, books, and paintings—almost anything considered an original work of authorship.

While it is easy to assume that copyrighted works and copyright law don’t play a large role in biotechnology, copyright protection has long been a point of discussion for many in the industry. Specifically, the idea that DNA sequences may be copyrightable works of authorship has been considered.

The comparison between a computer program and a DNA sequence is at the basis of this argument and, when you think about it that way, kind of makes sense. If a sequence of DNA is written by a scientist in a lab, isn’t it similar in authorship as to a developer writing a line of code? Furthermore, the argument included that copyrighting biotechnology could be a way to protect work that doesn’t qualify for patent protection.

Unfortunately, despite these discussions starting decades ago, there has been little progress made to copyright DNA sequences and other biotechnology work that could tentatively be considered an original work of authorship. And, it appears that the Copyright Office does not agree that DNA sequences are copyrightable.

Parting Thoughts

Although there is some debate as to whether or not Intellectual property and intellectual property rights are a good thing for the life sciences, healthcare, and the economy in general, there is much evidence that IP and IPRs play a major role in biotech and the value of biotech companies.

Not all patents are used, and increases in R&D can come down to innovation productivity rather than strategic patenting. However, patenting an invention can lead to more favorable product development and investment interest. In this sense, IP’s most valuable aspect is the protection provided through IPRs. Understanding this can provide the proper context for utilizing intellectual property, its rights, and a proper strategy to guide your biotech through its development stages.

Intellectual property law is a complex topic. However, it isn’t a topic you should avoid. While this article provides the basics regarding intellectual property protection and IPRs in biotechnology, you should continue to learn about the complexities of this legal topic. Furthermore, if you’re an early-stage biotech founder and plan to file a patent application, protect a trade secret, or create or refine an IP strategy, we recommend that you seek legal advice from a patent lawyer or law firm specializing in intellectual property.

This article is informative. It is not meant to represent legal advice. If you are filing a patent application, or considering it, the best thing you can do is work with a legal professional, such as a patent attorney or an IP law firm.