The impact of other people’s IP on you

This is the third in a series of four articles which aim to provide tips for creating and maintaining a patent portfolio that genuinely provides a biotech company with the hoped-for IP position and makes it an attractive choice for investors.

The first article focused on building a robust and investable patent portfolio. The second article focused on the question is your IP ready for due diligence.

Part 3: The impact of other people’s IP on you

As we noted at the start of this article series, the core of a biotech company is an innovative piece of science which it is hoped will lead to a new and beneficial healthcare product. A biotech company ought to be building a robust and defensible patent portfolio that helps provide market exclusivity and commercial advantage. However, it should be borne in mind that other people’s IP can affect your ability to go ahead and commercialise your new healthcare product.

Many technological developments build on and refine earlier work. This earlier work might have been patented in such a way that the scope of protection embraces your new development or refinement of the technology. Consequently, permission to use that earlier patented technology would be required. This concept often uncovers a frequently held misconception about the patent system. Having a granted patent does not provide a legal right to go ahead and commercialise the patented invention ignoring other IP rights. A patent is not a permissive right, but a negative right – it is a tool to use to stop someone else commercialising your invention. When patents are understood in this way, it can be seen that a patent protecting a new area of technology could embrace later developments and refinements of that technology.

Additionally in many areas, such as where there is a large, unmet clinical need, it is highly likely that competitors around the world will be working on creating solutions which will have similarities to your new healthcare product. Patents held by such competitors can also have an impact on your commercialisation plans.

Consequently, the question arises of what to do about third party (i.e. other people’s) IP.

If the new healthcare product is a further development of earlier research, it is likely that the scientists involved are well acquainted with that earlier research. The key then becomes analysing whether that earlier research was patented and who owns those patent rights because it may be appropriate to either licence or acquire those rights. An example of the above situation is when a biotech company is created as a spin-out from an academic institution. The new biotech company would need to ensure they obtain all the necessary rights or licences to use the technologies proposed. The timing for dealing with this type of third party IP should be as early as possible as the situation is readily identifiable. Delaying would be unwise since it could make the company less attractive to investors or be more difficult to resolve with passing time as individuals move on or want more from the agreements.

In certain technical fields it may be clear who the competitors are. Analysis of competitor IP can be performed by searching patent databases using applicant or inventor names. A more complete freedom to operate analysis usually involves extensive searching through patent databases using key words or classification codes to identify any potentially relevant third party IP.

In both of the above two situations, the identified patents and patent applications need to be carefully analysed to determine whether it creates a bar to commercialisation and, if so, what can be done about that identified problematic IP.

In the event that relevant or potentially problematic IP is identified, what can be done? One route would be to take a licence, if needed, to certain patents. But what happens between competitors who are unwilling to grant such licences? Also, you may not want to take a licence under a competitor’s patent which you believe isn’t claiming something new and so ought not to have been granted.

Patent systems provide a number of mechanisms to “attack” third party IP and each of these mechanisms might have a role to play in ensuring a clear path to commercialisation.

Before a patent is granted, the claims are generally amended during prosecution. A pending patent application that initially seems to be an issue, might not be after further prosecution. Therefore it is worth monitoring such patent applications. You may also want to affect the course of patent prosecution to increase the chances that the patent application will be amended away from being a problem to you. It is possible to submit third party observations during patent prosecution, which can be anonymous, providing pertinent information to the patent Examiner. There are no limits on the number of times third party observations can be submitted, but the Examiner has discretion over how much action is to be taken in view of them.

After a patent is granted there are options for more active and extensive involvement in arguing the case for a patent to be revoked. It is possible to oppose an European patent within nine months from grant attacking a patent for a range of issues. Since the opponent is an active party to the proceedings, they can be very effective to have a patent narrowed or revoked. Additionally, most countries provide a system to attack a patent and push for it to be revoked.

A challenging question is when is the correct time to perform a freedom to operate analysis or competitor analysis. Clearly, it is wise to do the analysis prior to product launch and to perform the analysis in each, or at least a representative sample of, the countries where the product is to be launched. However, there are a number of factors that indicate that such analyses should be performed much sooner in the R&D process. The extensive cost, time and effort of clinical trials directs that you would want some certainty about having a clear path to ultimate commercialisation before embarking on clinical trials. If problematic European patents are identified, there is only a nine month window in which an opposition can be filed. Furthermore, if the best course of action to deal with third party patents involves an opposition, with possible subsequent appeal proceedings, or a revocation action, the timescales involved can be several years.

 Finally, the patent landscape is continually shifting, and this is particularly so in crowded technology areas. Patent applications remain unpublished for the first 18 months so scouring a patents database at one time point may not pick up something identifiable as a potential issue later. Consequently, any analysis may need to be repeated at intervals.

In conclusion, your IP strategy should include building an awareness of other people’s IP and taking the required steps to ensure that it does not thwart the progress of new and much needed beneficial healthcare products.


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