You manage an emerging life sciences company. With a commercial product
years away, the patent portfolio is a major asset of the business. You shopped
around for inexpensive patent counsel, but still had to authorize the
expenditure of thousands of dollars to develop a patent portfolio. Now the
company is about to enforce its patents against its most hated rival or is about
to enter into a financial deal for a necessary infusion of capital. However,
despite the seemingly large investment, the patents fall short of delivering the
protection and value they were purported to possess.
Another wrinkle is current Congressional and Patent Office debate on
sweeping reform to patent laws and procedures that could dramatically alter the
procurement and enforcement of a patent. What's a company to do?
Good fundamental practices followed from the beginning of an idea through
the creation and maintenance of patent rights should minimize any unwelcome
surprises. A strategy for establishing and developing a patent portfolio can
facilitate efficient use of the available resources and in the long term can
reduce costs without sacrificing protection. To that end, highlighted below are
a few thoughts that can increase the return on investment in creating a patent
estate no matter what lies ahead.
Divulgation of the invention. Although publication of scientific journal
articles and presentations at scientific conferences and business sales meetings
readily come to mind, many other disclosures can be problematic. For example,
transfer of materials such as cell line or protein outside of the company may be
a disclosure. Grant applications and mandatory reports associated with
government funding also can lead to an unintended public disclosure.
Although the United States permits a grace period for filing a patent
application following certain public activities of an inventor, most other
countries do not. Rather, any public divulgation of the invention prior to
filing a patent application is considered a novelty destroying event likely
precluding valuable patent protection. Accordingly, when a company's business
plan includes foreign markets, the company needs strongly to resist the
temptation to disclose publicly the invention prior to filing a patent
Moreover, even in the U.S., a patent application on file prior to any
disclosure outside of the company is the best prevention for creating prior art
against one's own invention. Short of that, a company should at least have a
policy that any disclosure outside of the company is done under a proper
Evaluation of the patentability of an idea. Although not
required to file a patent application, a search for "prior art," which generally
is state-of-the-art information publicly available prior to the application's
filing date, can be helpful in deciding whether to pursue patent protection. If
an idea is already known, a company can invest the money elsewhere. Further, the
likelihood of issuing a defensible patent can be enhanced by presenting claims
that are distinguishable from the known prior art.
One theory surprisingly suggests not searching for prior art as a duty
exists to submit the findings to the U.S. Patent Office. Although searches are
not always warranted, whether to conduct a patentability search should be a
question of financial resources and the potential value of the idea, not whether
the search will uncover damaging information. Knowledge of the prior art always
facilitates making a well informed business decision on whether to pursue
protection and its likely scope. In addition, to think that a defendant in a
patent infringement suit will not uncover the same damaging prior art is
Nexus of patent claims and the company's business. The claims of a patent
define the legal rights of the patent owner, similar to the metes and bounds of
a land deed permitting a land owner to know when another is trespassing.
Accordingly, the claims should cover the commercially significant applications
of the technology. Claims also should be evaluated with a view towards how
others might avoid infringement, i.e., "design around" them.
Consequently, claims should be drafted to encompass the full scope of
protection available in view of the prior art. Whether in a new space or a
crowded field, the objective is to identify and claim the essence of the
invention, i.e., include the least number of limitations necessary to describe
and distinguish the invention from the prior art. However, be careful that the
distinguishing limitations can be demonstrated to exist in an accused product or
process so that infringement can be proven at trial.
Provisional patent applications. Life sciences companies should
be filing provisional patent applications. The filing date of a provisional
application typically is not included in the calculation of the 20 year patent
term so the enforceable life of the patent is shifted one year into the future.
As a result, a company can reap a significant economic benefit as the end of the
patent term covering a drug or other medical product usually is the most
profitable time. Other benefits of a provisional application include the lower
cost to file and its less formal requirements.
That said, a provisional application should not be a hastily prepared
outline or description of a basic concept. A provisional application is only as
good as what it contains. To obtain the benefit of its filing date, a
provisional application must meet the statutory requirements for patentability,
e.g., teach how to make and use the claimed invention. There is no lower
standard for a provisional application. Thus, without a properly prepared
application, a patent is at risk of losing its earliest filing date and being
susceptible to an invalidity attack with intervening prior art.
At times it may be necessary to file a provisional application at the
eleventh hour before an unexpected impending public disclosure. In this
situation, the application should be revisited soon thereafter to ensure that
the commercial significance of the invention is captured in the claims and that
the application supports those claims. If not, another provisional application
including the additional description and information should be filed.
Continuation-in-part patent applications. A continuation-in-part
patent application ("continuation-in-part" or "cip") is unique to the U.S. as it
claims the benefit of an earlier filed application and contains new subject
matter. Continuations-in-part were common in the U.S. when the life of a patent
was measured from its issue date. In part, because the term of a U.S. patent now
is related to the earliest application's filing date, continuations-in-part
should be much less popular.
Furthermore, foreign countries do not permit subject matter to be added
to an application after it's been filed. Accordingly, filing an application
outside the U.S. based on a continuation-in-part usually was not justified. If
the newly added material constituted a new invention, then some rights might be
salvaged from the foreign filed continuation-in-part. However, if a new
invention is present in a continuation-in-part, to not file it as a new
application forfeits a portion of its potential 20 year life.
Patent protection outside the United States. Although everyone
dreams of world domination, the high cost of securing patents around the globe
is impractical and likely unnecessary. A company should have a plan that
provides adequate global protection, but within a realistic budgetary framework.
A few well placed patents in countries respectful of patent rights often can
secure exclusivity of a significant amount of the marketplace.
To that end, a company should focus its patent activities in countries
where it expects to have substantial sales and use of its products, e.g., the
U.S., Europe, China and Japan. A company should also consider where its
competitors are located, especially research and manufacturing facilities. With
a patent in a country of manufacture, an infringing product can be possibly
stopped at its source rather than needing to pursue the infringer in each
A further consideration should be the effectiveness of the patent.
Although a patent may be granted, will the courts of the country enforce the
patent and will the company bring suit there? If the answers are substantially
negative, then don't make the investment.
Ownership of patent rights. Although seemingly straightforward
and routine, issues surrounding the ownership of patent rights often lead to
devaluation of a portfolio. A company should obtain a written assignment of the
invention from each inventor of each application filed. When properly drafted,
an originally executed assignment often is sufficient for recording against
corresponding U.S., international, and foreign applications including continuing
applications, which is especially advantageous should an inventor leave the
To secure ownership, all employees of the company, including its
principals, should have an employment agreement in place that obligates
assignment of any discoveries to the company. When collaborating with third
parties, e.g., a consultant or another party to a joint development agreement, a
pre-existing agreement should be in place that defines how the rights to any
resulting discoveries will be distributed. Although co-ownership is commonly
suggested, co-owners of a U.S. patent can commercially exploit the patent
without any accounting to the other owner(s). Thus, with unrestricted co-owners,
the loss of exclusivity to the patent rights will negatively impact their
Government funding, e.g., grants from the National Institute of Health,
is common in life sciences research, especially at educational institutions. If
an invention was made using federal money, the government automatically
possesses an irrevocable, royalty-free license to any resulting patent(s).
Moreover, failure to recognize properly the funding and adhere to reporting
requirements could result in the government taking exclusive ownership of
patent. Therefore, prior to becoming entangled with the government, the use of
government funding to develop an invention should be carefully considered.
Patent portfolio management. To help manage its growing worldwide patent
portfolio, a company should compile and regularly update a status chart. Each of
the patent applications should be itemized including basic information such as
title, inventor names, attorney docket number, assignee, country, serial number,
filing date, patent number, issue date, current status including upcoming
deadlines, and the corresponding product. Organizing the patent properties into
families. i.e., grouping together those applications that are derived from a
common application, is helpful to track and visualize the relationship among the
various applications and related business interests.
A current status chart is an excellent format to review and evaluate a
patent portfolio. A patent committee, meeting at least quarterly, is an
effective vehicle to discuss and decide how best to proceed. The goal of the
patent committee is to keep the patent strategy aligned with the current
business objectives. Members typically include outside patent counsel and
management from research and development, marketing, sales, manufacturing, and
legal departments. Topics often include patent application filing and
prosecution strategy, new invention disclosures, budgetary concerns, new
products, marketing and sales trends, and collaborative and licensing
A patent portfolio is a business asset. Its development should be viewed
as an investment for the future. A company that appreciates and understands
basic patent principles and portfolio management should be able to spend wisely
its human and financial resources to realize a good return on that
Published March 1, 2006.