Intellectual Property Strategy for Biotech Companies
Last updated on March 28, 2023 by
It takes a considerable amount of time and money to develop a healthcare-related product, whether it’s a medical device, diagnostic kit, or novel therapeutic. Sustaining R&D costs over multiple years, however, can be a lost investment if a competitor can simply launch a competing product or exact copy. Furthermore, it can be impossible to see a scientific idea or discovery through to execution if the idea isn’t protected somehow.
This reality makes intellectual property (IP) an essential component of biotechnology, pharma, and life sciences companies. Without IP, biotech startups have no way to shield their inventions against potential competition, other than the risky and uncertain process of maintaining secrecy.
Furthermore, when it comes to investing, many potential investors want to see that a company has a strong patent strategy. Otherwise, they will be worried their investment will be lost to the competition.
Considering all this, it’s easy to see why establishing and protecting IP have long been significant priorities for any biotech founder. Many businesses develop long-term intellectual property strategies almost as early as they come up with inventions that need protection.
With the right IP protection and well-crafted strategy, you will be able to protect your assets and safeguard the value of your inventions. This will enable you to gain market share, receive more investments, create a meaningful return on investment (ROI), and drive future dealmaking.
In this article, we will review:
- Types of IP (patents, copyrights, and trade secrets)
- IP’s role in biotechnology and how it affects investment and competition
- How to develop an intellectual property strategy and protect your IP
While this article focuses on biotechnology, every industry can benefit from a well-executed IP strategy. In this sense, the information provided here applies to companies across a wide spectrum of industries.
This article is informative. It is not meant to represent legal advice. When filing a patent application or other form of IP application, it is best to work with an intellectual property lawyer or law firm.
What Types of Intellectual Property Are There?
Intellectual property has long been enforced by law, with two government agencies, the US Patent and Trademark Office (USPTO) and US Copyright Office, overseeing IP laws. The four basic types of IP you should understand include:
- Trade Secrets
Each serves a specific purpose and is leveraged in various ways to protect inventors and rights holders. IP is leveraged in biotechnology, pharma, and the life sciences in different ways, with patents being the most relevant.
What Is a Patent?
A patent is a form of intellectual property that grants the inventor property rights for a limited time to prevent others from making, using, or selling the same invention without permission.
There are three types of patents available: utility, design, and plant patents. Each type has its own eligibility requirements and protects specific types of inventions or discoveries. It’s possible for a product, technology, process, or formula to have more than one type of patent available.
Patents and patent applications are reviewed by the US Patent and Trademark Office (USPTO) in the United States, and by various patent offices around the world. For example, patents in the European Union are overseen by the European Patent Office (EPO) and patents in China are reviewed by the China National Intellectual Property Administration (CNIPA).
What Is a Trade Secret?
A trade secret is a form of IP that includes a wide range of information that holds inherent economic value to a company or individual because the information is not publicly known or readily available.
The owner of business information or technology may maintain secrecy of the information or technology by restricting others from disclosing the information. Only by diligently preserving secrecy can a trade secret owner maintain the value of that information.
Information that qualifies as a trade secret includes many things, from practices and processes to formulas, designs, and patterns.
Because trade secrets aren’t monitored by an individual entity, it is up to the companies and individuals holding the trade secret rights to manage the IP themselves. There are certain federal and state laws that protect against theft of trade secrets.
What Is a Trademark?
Trademarks are IP that identifies your company’s products and services as uniquely associated with the company. For example, any sign, design, or expression that identifies your products or services and distinguishes them from others can be considered a trademark.
They are defined by the USPTO as a “word, phrase, symbol, design, or combination of these things that identifies your goods or services.” It is what distinguishes them from the goods or services of others.
What Is Copyright?
Copyright is a form of IP that grants its owner the exclusive right to copy, modify, display, and distribute creative works, for a limited time.
There are many different types of work that can be copyrighted, including photographs, songs, sound recordings, computer programs, books, paintings, illustrations, and movies.
In the United States, copyrights are administered by the US Copyright Office, which also provides copyright policy advice to Congress.
Which Type of IP Protects Your Invention Best?
In biotechnology, patents and trade secrets are the most common types of IP used and will typically act as the engine for protecting your inventions. Furthermore, potential investors and pharmaceutical partners will be interested in the strength and scope of the patents and trade secrets you hold.
With that in mind, let’s ask the question: Is your invention better protected as a trade secret or as a patent?
If your invention can be easily discovered or can be reverse engineered by a competitor, it might be best protected as a trade secret. Methods and processes often fall into this category, as long as the method or process has inherent economic value for your company, and you have adequate policies and procedures to maintain confidentiality. Additionally, often the disclosure of a patent application will enable other, non-infringing inventions, e.g., when substantial software code is disclosed in the patent application.
However, if you are operating in a crowded commercial space, it may be very difficult to maintain inventions as trade secrets. In these cases, your invention might be better protected by filing a patent application. If you’ve filed a patent application earlier than someone else within that crowded space that is able to recreate your product or technology or a very similar one, then you can create superior rights to that invention.
You not only have to consider how your invention fits into the IP landscape, you also have to consider what qualifies as a patent and what can be maintained as a trade secret.
What Role Does Intellectual Property Play in Biotechnology?
Drug discovery and development are not easy to bootstrap. This generally requires significant time and capital investment from founders and outside investors. It’s also quite a risky process, with difficult regulatory pathways. Because of that, founders and investors need to safeguard the company’s inventions and their investments in those inventions.
An invention in the life sciences sector can generally be defined as a new product, process, or method, however, there are specific requirements an invention must meet in order to be patentable.
Some examples of patentable products typically include amino acid sequences, plasmids, vectors, antibodies, antigens, epitopes, nucleic acids sequences, phages and bacteria, and more.
To protect their inventions, biotechs will file applications for various types of intellectual property, particularly patents. Market exclusivity, which refers to exclusive marketing rights a company is granted upon approval of a drug by the FDA, also plays a large role once product development reaches that stage. However, because exclusivity isn’t IP, we’ll skip over this for now.
With the right patent protection, a biotech can prevent an invention from being copied and sold by another company. Having this safeguard against competition helps to ensure that all of the time, effort, and capital invested in that asset isn’t for nothing.
In fact, considering the risk of failure, having your assets protected as IP can sometimes be a way to recoup a portion of the money lost in case your R&D does not produce usable results and must be abandoned. You will potentially be able to sell off some or all of your intellectual property and return money owed to shareholders.
Each year, countless deals between pharmaceutical companies and biotechs are inked, with most of them being driven by promising and patent protected novel therapeutics, medical devices, lab equipment, and diagnostic kits. Patents also act as catalysts to set a startup on a growth path by facilitating their access to capital.
While IP is typically a boon for biotechs, patent protection is costly, which can make it difficult for cash-strapped startups to secure patent protection.
What Is IP Strategy & How Can It Help?
Put simply, an intellectual property strategy manages a biotech’s IP portfolio, consisting of various patents, trademarks, copyrights, and trade secrets.
A company’s IP strategy should manage and protect its intellectual property in a way that aligns with its overall business goals and strategy, ensuring that the intellectual property is being effectively protected, optimized (for value), and monetized (when possible), maximizing the value of the protected assets and their potential commercial benefits.
Having a good IP strategy helps you plan for the future by keeping an eye on the things you can patent now as well as the things you will develop in the future. By focusing on filing patents for the future, you can potentially cover innovations that will be critical to your product development, as well as to your industry.
This means you will not only be well positioned against the competition, if you get your product to market, but that you will also have the ability to pivot into new products should the current product not succeed in the marketplace. A well-crafted strategy (and portfolio) can create ways for you to monetize and help you extract value beyond your own products.
Furthermore, with strategic filings, you can create the right balance of offensive and defensive goals (hedging against risk of litigation, for example) while positioning yourself to gain market share and increasing your company’s valuation and potential for funding.
How To Develop an IP Strategy
How can you create an effective IP and patent strategy? Developing one that aligns with your business goals and provides solid positioning within your industry’s IP landscape requires careful consideration and assessment. Your assessment should include questions like:
- What does your company look like now, and what IP do you currently have?
- What do you want to look like in three years, in terms of business and product development goals? In five years?
Do you want multiple patents? A patent covering your platform and another covering your lead drug candidate? Patents on other aspects of your company?
From there, you should be able to plan backwards. By looking at where you are now, then looking into the future, you can create a plan or IP strategy that will get you to where you want to be. Following these basic steps can help:
- Establish your IP goals
- Document extensively
- Identify what and what not to protect
- Research what patents already exist
- Get your timing right
- Identify where you should file
Establish Your IP Goals
First, establish your IP strategy goals. What do you want to protect, and how do you want to protect it going forward? Can you use your IP to build leverage? Will the IP portfolio you’ve built allow you the freedom to operate?
You want to protect your inventions to the best of your abilities. The goal of your IP strategy can be protecting your broad platforms and products as you build them out, as well as protecting your products after they’ve gotten to market using exclusivity.
Your goals can also include building leverage for your company by fencing off competitors in your space. You can use your portfolio to create blocking claims that cover competing technologies.
Furthermore, you can use your strategy to identify other’s IP that blocks your own progress and come up with solutions to get around the barrier.
Document, Document, Document
When filing a patent application, you might be asked to provide proof of creation. If you haven’t established proper procedures and documentation processes, there’s a chance proving your claims years after the research has started will be difficult, proving fatal to your patent claims.
Plan on documenting as much as possible, ensuring you accurately describe and log all important research data, storing it securely and using nondisclosure agreements (NDAs). Any signed agreements regarding disclosure, collaboration, or licensing of your IP should also be handled as important assets.
With the proper documentation, you will make the job of preparing and reviewing your application that much easier.
Identify What & What Not To Protect
It’s important to know what you should file a patent application for, and what you should not. If you are developing a medical device, diagnostic, or therapeutic, you’ll most likely want to file a patent application for the product.
In therapeutics, there are always going to be fast followers and copycats, so having multiple patents to mitigate against these competitors should be part of your strategy.
An assay, however, or a development process you use internally to create a product, might not be the best thing to try and patent due to the difficulty of showing infringement. These may be better maintained as trade secrets.
Research What Patents Already Exist
Conducting an IP survey is highly recommended, as you will want to know whether or not there are others who have already patented something similar to your invention(s), thus disclosing something similar or part of your product development and erasing your ability to protect your intellectual property.
You should conduct your survey across research and patent databases. Research databases you can use to conduct your survey can include websites and journals like Science and Nature, as well as ResearchGate and more.
The patent databases you should consider using include the USPTO, EPO, and World Intellectual Property Organization (WIPO).
Patent searches only provide information on granted patents and published patent applications, so you might find that the IP landscape changes as the years go by since your initial IP survey. This is because there is generally some lag time in the grant process. Since that’s the case, using a combination of research methods to complete a survey is recommended.
Get Your Timing Right
Should you file the patent application now, or later? The timing matters, and your IP strategy can help you identify when you should file.
You have to consider a number of things: the costs of patents and patent applications, the amount of funding you have available, and where you are in the development process.
Is now the right time, based on the amount of funding and data you have available? You also want to consider when you file because a public disclosure may prevent you from getting a patent. With that in mind, you will want to fully or partially disclose your ideas carefully, and balance the timing with what you have available, because if you don’t have the money to pay for the patent in the future, you could lose out on all your work.
Furthermore, you have a year to include improvements and supporting data, and 18 months before the patent’s publication. This means you might risk filing too early if you are working on improvements but are still too far out to add them within that time.
Lastly, you must consider the first to file system, where the first to file gets the patent priority. So all in all, you’re competing against money, publications, first to file, and filing too early. Get your timing right.
Identify Where You Should File
Knowing where you should file a patent application is just as important. You need to understand your market, know where it is, and file patent applications accordingly.
Ask yourself what your market is, and where your product will be most needed/useful. Does it fit into the broader worldwide market, or is it more suitable in one or two specific regions or countries? Knowing where your product has the best product-market-fit will inform you where you will want to file for a patent application.
In general, if you have a platform you want to protect, you might consider only filing in the three major markets: the US, China, and Europe. However, if you have a development candidate from which much of the world will benefit, you might consider filing applications in multiple jurisdictions.
Always Rely On the Experts
While developing an IP strategy on your own can be a good exercise, or makes sense because your team is only made up of you, your co-founders, and a key employee or two, the best thing you can do to line up IP strategies is work with someone who is an expert in intellectual property law and IP strategy.
Intellectual property law is incredibly complex, and trying to tackle it on your own might not always make the most business sense.
As is often the case with complicated legal matters, many biotechnology companies typically rely on a legal expert to help. In this case, that professional is a patent attorney or IP law firm who helps develop your IP strategy.
Parting Thoughts: Think Ahead, Stay Focused
Although IP protection is costly, it is incredibly important that early-stage biotech startups and pharma companies (companies of all sizes, frankly) protect their inventions and investments (time and money) using intellectual property and a well-designed IP strategy.
Not only do you protect your most valuable assets with a timely and strategic plan, you maximize the value of your IP and enable your company to capture interest from future investors, gain market share, and pivot into new markets or products.
Have a plan, and educate yourself on intellectual property, IP strategy, and IP rights. Furthermore, having intellectual property protection for your science can also help you secure future investments, or recoup lost money on a failed drug candidate.
If you’re creating new scientific inventions, right now is the best time to start thinking about IP and patents.