Patent Pending: Protecting Innovation Is Crucial

Within the health tech sector, it is a highly complex ­undertaking to come up with a balanced ­intellectual property (IP) ­strategy that protects innovation and  navigates third-party IP rights. Instead of disincentivising ­smaller companies and start-ups from laying out an IP strategy, this should become a recipe for their long-term business success.

Standing at the forefront of innovations, the new technologies coming out of Danish health tech and life science companies are built upon many years of research and expertise. Still, Danish companies are saddled with several obstacles that stop them from transforming a burning idea into a successful ­business, including the risk of copycats.

According to Rasmus Vang, director and attorney with the firm Lundgrens:

“Before bringing innovative products to the market, companies should protect their valuable IP (including inventions) from copying or illegal counterfeiting. First and foremost, protecting and securing your IP includes ensuring that relevant IP clauses are incorporated into employment, consultant, and collaboration agreements so that the company secures ownership of the IP that is developed.”

Among other areas, Lundgrens specialises in intellectual property law and counselling in the life science and ­healthcare sector. Through decades of combined expertise, their legal team helps clients turn ideas into sound ­businesses.

Offering guidance, Vang recommends that:

“Once the contractual work is in order, the company should consider whether one or more patent applications can be filed to protect the invention(s). In tandem, the company can strengthen its IP rights by registering key trademarks (i.e., company and product names) and designs. Finally, they should never forget to keep their trade secrets secret by using confidentiality agreements where appropriate. Because an effective IP strategy involves multiple initiatives, it should be carefully considered on a continuous basis.”

IP rights are key to securing funding

Often, the small businesses that focus on growth are one-product companies that dedicate their time and effort to that single product or service. While they must typically cope with limited human and financial resources, that is no excuse for taking an IP strategy lightly.

A solid IP strategy is key in terms of high ­valuations
Rasmus Vang

Despite their scarcity of resources, it is often critical for such companies to inject IP rights into their product ­pipelines at an early stage of development. Moreover, Vang points out that companies need to know whether other companies hold IP rights that may impose barriers on their market entry:

“The company simply cannot afford a costly development if – shortly after launch – the product is heavily copied due to inadequate protections or must be abandoned due to infringement of third-party IP rights. Investors are ­perfectly aware of this, just as they are aware of the fact that IP rights create monopolies and unique market positions. A solid IP strategy is key in terms of high valuations, when securing capital and receiving funding from potential investors.”

Viewing IP rights as a commercial tool

To get the most bang for their buck, start-ups and other companies need to become aware of how they can use their IP rights strategically and integrate them into their existing business models.

“By having a long-term vision and business strategy ­figured out, and by conducting a thorough IP landscape study (i.e., a “Freedom To Operate” analysis), a start-up company will often be able to work around third-party IP rights and identify market opportunities. Moreover, IP rights can be used for strategic commercial purposes in numerous ways. A simple example is applying for a patent solely because the application enables the company to state ‘­patent pending’ with respect to its product,” says Emilie Lerstrøm, attorney at Lundgrens.

Though obtaining a patent can take several years, the mere act of applying for one can positively influence customer and competitor behaviour. Another example is the more advanced strategy of putting legal strains on your competitors by applying for patents that interfere with their expected product development.

Regulatory interplay

When it comes to developing technology and software, getting your IP strategy right is a difficult task. Filing patents in medical technology is generally complex, as it is often more costly and there is more competition than in other domains. In fact, throughout 2019, medical technology was among the top five technologies to receive the largest number of patent filings.

Offering further insight, Lerstrøm explains: “Complying with the medical and healthcare sector’s regulatory land­scape further complicates matters. Companies must not only seek to develop an efficient IP strategy; they also need to align it with the regulatory boundaries set out by local law, EU regulations, as well as industry codes. For example, if a software solution incorporates personal data, they must comply with the General Data Protection Regulations (GDPR). And if the software is considered to be a medical device, a whole other set of regulatory boundaries must be considered.”