MEDTECHSTRATEGIST.COM

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DECEMBER 6, 2016Vol. 3, No. 17

MARKET TRACK

Published by Innovation In Medtech, llc

START-UPS TO WATCH

LEVEL EX: A Virtual Simulator Transforms

Medical Education and Helps Device Companies

Mary Stuart, 46

ORTOWAY: A Gentle, Hydraulic Device

Achieves Vertebral Distraction for a Wide Range of Lumbar

Spine Procedures Mary Stuart, 48

PERSPECTIVE A Post-Election First Take for Device Manufacturers Wendy Diller, 4

DIGITAL HEALTH

THE “SMART HEALTHCARE” REVOLUTION:

Can Digital Tools, Advanced Biosensors, and Data Analytics

Transform Healthcare as We Know It? Mary Thompson, 8

Opportunities and Challenges in the Digital Health Arena: A Conversation with John Gardner of Nokia Growth Partners, 18

Israeli Start-Ups Exemplify Global Digital Health Effort, 22

SPINE

NASS 2016: Robotics, Safer Imaging

Take Center Stage Wendy Diller, 24

Putting ASCs on J&J’s Commercial Map, 30

OUTSIDE OPINION TEN SKILLSMedical Device Companies Need

from Their Patent Attorneys Paul Conover & Curtis Huffmire, 42

MEDTECH INVESTING

PEPPERMINT VENTURES: Making the Connection

Between Medtech and Digital David Cassak, 32

Digital Health Annual Global Financing History

THE MEDTECH STRATEGIST © 2016 Innovation In Medtech, LLC. All rights reserved.

42 OUTSIDE OPINION

There is nothing more important to a medtech company—nor more confusing and misunderstood—than its intellectual property. An effective patent counsel is essential to a company to help it clarify and protect its most valuable asset. Two medical device experts from the intellectual property law firm Knobbe Martens highlight what to look for in an IP attorney who understands and can negotiate the medtech patent jungle.

TEN SKILLS Medical Device Companies Need from Their Patent Attorneys

Let’s face it—for most people, pat-ent applications are painful to read. They seem repetitive and redundant, and use grammar and phrases that would make your high school English teacher scream. In some cases, this language implements very sophisti-cated and effective legal strategies, and in other cases, it is just poor writ-ing. If you are like most medical de-vice company executives, you have wondered at some point in your ca-reer how you can judge a good patent from a bad one, or, for that matter, a good patent attorney from a bad pat-ent attorney.

In a general sense, the patent pro-fession is no different from most oth-ers today. Our world has become very complex, requiring a high degree of training and specialization. In many situations, at home or at work, we have to trust professionals to use their skill and judgment to provide impor-tant services that are hard to evalu-ate. But there are usually clues along the way that can give us insight into their level of competence. In the prac-tice of patent law for medical device companies, there are many hallmarks of skillful patent counsel. As patent attorneys with extensive experience

working with medtech clients, we have come to learn what are the most important skills in handling intellec-tual property (IP) issues in the device industry, and will highlight here what we consider to be the top 10.

1 Intense focus on marketable medical

product featuresPatent attorneys love technology.

All registered patent attorneys must have a technical degree in addition to their law degree, in a field such as en-gineering, physics, chemistry, or biol-ogy. Patent attorneys need to discuss with their clients and understand the particular technical hurdles that in-vestors face and have to overcome in creating new products. However, in a patent application, fixating on the ini-tial technical problems can often lead to too much emphasis on one particu-lar engineering solution that can easi-ly be designed-around by competitors in different ways.

Skillful patent attorneys for medical device companies focus less on nar-row engineering solutions and more on what is marketable about a medi-

cal product, continually asking their clients questions like “Why will doc-tors and patients prefer this device?”; “What will make this therapy better than others on the market?”; “Why will medical investors or large medi-cal companies be attracted to your company?”; or “What features of this medical product will you be market-ing most intensely?” These questions elicit information that can help the patent attorney to focus the patent application on what really matters: protecting the market-distinguishing features from being copied, which will add substantial value to a medical de-vice company.

2 Coherent explanations of medical patent law

For most people, on the surface, patent law can seem very confusing and counterintuitive. Patent law for medical companies can be especially difficult because it involves some principles that are unusually compli-cated, including the patentability of computer-based diagnostic methods and patent coverage on devices with disposables.

by PAUL CONOVER & CURTIS HUFFMIRE

DECEMBER 6, 2016

43OUTSIDE OPINION

Skillful patent attorneys steeped in the patent law understand its logic and the policies behind it, but they recognize that their clients only need to know and understand the particu-lar principles of patent law that are needed to make important business decisions along the way. These at-torneys find ways, with straightfor-ward explanations and analogies, to clearly convey the necessary legal un-derstanding to their clients, without veering off into irrelevant legal nu-ances and without using legal jargon or terminology that is unhelpful and distracting. When a patent attorney’s explanations of the law or technology are clear to a client, they will prob-ably be clear to the patent office and to other attorneys and to potential in-vestors or acquirers as well.

3 Solid understanding of medical technology

and ability to communicate it simply

In the broadest sense, the job of medical device patent attorneys is to learn about and thoroughly under-stand the cutting-edge technology in a particular field of healthcare, deter-mine how their client has improved it, and then explain that technology and improvements in ways that are under-standable and persuasive. These skills play a very important role in drafting patent applications, convincing exam-iners to grant patents, negotiating and drafting licensing deals, and perform-ing or defending diligence in acquisi-tions and investments involving intel-lectual property.

Background knowledge in a field is always helpful, but it is not necessary for patent attorneys to have deep ex-perience in a particular medical tech-nology in order to be qualified to work in it. In fact, specialized knowledge of-ten comes from representing another company on the same type of prod-

ucts, which may create a conflict of interest that can sometimes block the most technically experienced patent attorneys from taking on new work in that specific area.

It is more critical for a patent attor-ney to have a broad general under-standing of medical technology and the ability to quickly and efficiently as-similate and understand the technical underpinnings, the market trends, and the improvements, and then, most im-portantly—the ability to explain all of these in understandable and relatable ways, without becoming bogged down in technical minutia.

4Frequent personal interactions with

medical device patent examiners

As with most things in business and in life, personal interactions are near-ly always more productive and more persuasive than written communica-tions. This is especially true in pros-ecuting patent applications. Patent examiners deal with a large amount of dry technical information in special-ized fields. Over time, the stream of different patent applications probably can run together in their minds. Per-sonal interactions can help to make a particular patent application stand out. But surprisingly, many patent at-torneys do not routinely conduct tele-phone or in-person interviews with patent examiners.

Personal interviews with patent ex-aminers can be especially helpful in medical device patent applications, since an effective explanation of the benefits of a medical invention can be very compelling, involving the qual-ity and longevity of life itself. Also, for medical inventions, demonstrations of prototypes interacting with diagrams or models of anatomy can very effec-tively dispel any misunderstandings

of the technology or refute an exam-iner’s erroneous positions.

Perhaps most importantly, a person-al interview creates personal account-ability on the part of a patent exam-iner to be reasonable. Skillful medical device patent attorneys conduct per-sonal interviews with patent examin-ers as often as possible and develop strategies for presenting the technol-ogy and legal arguments in a convinc-ing manner during the interviews. This practice helps to build rapport and credibility over time with the groups of medical device examiners who they work with on a continuing basis.

5 Familiarity with business stages of

medical companiesMedical device companies come in

all shapes and sizes. However, there are some consistent aspects and stag-es common to medical device com-panies that make the industry unique compared with other industries. Some medical device companies quickly advance from the start-up phase to the funding phase to the acquisition phase or, in rare cases these days, an IPO. Others may have already devel-oped into substantial companies with specialized divisions. Along the way, medical device companies are com-monly dealing with a myriad of issues including regulatory, reimbursement, safety, product liability, research and development, clinical trials, barriers to entry, US versus foreign development options, supply and distribution chan-nels, and many other challenges facing the medtech industry.

Patent strategy needs to take into account the overall business objec-tives, the stage of company develop-ment, and the available IP budget in view of these other pressing matters. For example, at the start-up stage, the importance of adequately protecting key developments and establishing

THE MEDTECH STRATEGIST © 2016 Innovation In Medtech, LLC. All rights reserved.

44 OUTSIDE OPINION

clear ownership of the intellectual property is critical. As the company grows and begins to have significant product offerings and to attract in-vestors, there may be additional fo-cus on assessing the potential risk of infringing third party patents and minimizing those risks. As the com-pany moves toward acquisition or IPO, a strong patent portfolio and positions with respect to main com-petitors can be important during the diligence phase. An established com-pany may have more ability to rein-vest through research and develop-ment, patenting new developments, seeking licensing opportunities, and policing its IP. Skilled patent attor-neys will tailor patent strategy and priorities to the business needs be-ing addressed by the medical device company. Attorneys with experience advising medical device companies have greater insight and ability to navigate common issues. Skilled pat-ent attorneys should be key advisors and counselors for the company at all stages.

6 Diverse technical expertise in firm for

medical companies Products, systems and procedures

developed by medical device compa-nies can extend into multiple techni-cal areas. There may be new mechani-cal components or patient interfaces, computer software or hardware im-provements, and pharmaceutical or other chemical compositions involved in treating a patient or manufacturing a product. It is rare to find a patent attorney that has expertise across all technical fields that may be applicable to the company.

Sometimes patent attorneys who focus exclusively on a particular tech-nical area can get into the mindset of seeing the invention from their own technical perspective. That focus may carry over into drafting patent appli-

cations that are comfortably within their technical skill set without fully developing all aspects of the invention that may be important to the compa-ny. This may occur more frequently in firms where the patent practice group is smaller, or shares a common techni-cal focus, even if the overall firm itself may be large.

In contrast, firms that have larger numbers of patent attorneys and di-verse technical expertise can provide unique advantages to their clients. Skilled patent attorneys recognize when important developments are made by the company that may ex-tend beyond their specific area of ex-pertise. Those attorneys are comfort-able reaching out to and cooperating with others in their firm to provide the company with the best patent so-lutions across all technology areas. A hallmark of skilled patent attorneys is their ability to tap into the techni-cal resources within their firm when developments may extend beyond their core practice area. As skilled pat-ent attorneys take this approach, the company, over time, can expect to develop relationships with different attorneys within the firm that may be uniquely qualified to assist with de-veloping particular strategies for the company.

7 Some experience or training in the

courtroomIn general, most patent attorneys

focus their practices on either: (a) obtaining patents, licensing pat-ents, and evaluating patents for transactions or freedom-to-oper-ate or design-around efforts; or (b) litigating patents in infringement lawsuits. Even though this general division exists, it can be extreme-ly valuable for patent attorneys whose practices involve obtaining, licensing and evaluating patents to have some experience in litigation at some phase in their careers.

The process of litigating patents in court exposes common vulner-abilities in patents and highlights patent language that can create limitations or ambiguities. When patent attorneys understand the process of patent litigation first-hand, they become very sensitized to these issues and become much more effective in drafting and prosecuting effective patents, and in performing transactions involv-ing patents.

For medical device patent at-torneys, litigation experience can be especially helpful. In lawsuits involving medical device patents, the patent owner’s counsel must often strike a careful balance be-tween emphasizing the life-saving or life-improving benefits of the inventions, and justifying the po-tential market-access limitations created by patents and the likely increased cost of the patented technology as compared to a competitor’s products. Patent at-torneys who are involved in these cases learn how judges and juries respond to arguments regarding medical device patents, and how to create a better foundation to sup-port these arguments in the pat-ents that they draft.

As the company moves toward

acquisition or IPO, a strong patent

portfolio and positions with

respect to main competitors can be

important during the diligence phase.

DECEMBER 6, 2016

45OUTSIDE OPINION

8 Provides you with updates in patent law

regarding medical devicesThe patent law in the US and for-

eign countries is in constant flux. The US Congress has implemented many wide-ranging changes to the patent statutes within the last few years, and the US Patent Office continually introduces new programs aimed at improving patent examination and speed that provide new options for expediting patent applications and interacting with patent examiners. In addition, the US patent-appeals court and Supreme Court issue nu-merous decisions each year that create binding legal precedents. It is therefore crucial for patent attorneys to continually study these changes in the law and to adjust their practices and strategies to achieve the maxi-mum benefits for their clients.

But how does a medical device company know whether its patent counsel is keeping up with the new developments in the law? In some sit-uations, it may be a good idea to ask your patent counsel about his or her approach to keeping up on the law, especially if any past experiences may suggest problems. However, in most cases, it is abundantly clear when pat-ent attorneys are diligent in learning about legal changes and implement-ing new strategies because they con-tinually provide updates on changes in the law to their clients in strategy discussions and discuss new ways of responding to those changes.

9 Stable team of qualified attorneys

Medical device companies are de-veloping cutting edge systems and products. Skilled patent attorneys need to develop a strong understand-ing of the prior art technologies and the unique aspects of the company’s offerings and strategies. It takes time

and effort to develop that level of familiarity with the company, the improvements, the prior art, and the business landscape. Over time, both senior and junior patent attor-neys will develop specialized tech-nical knowledge, experience with patent examiners, and a deeper un-derstanding of industry players that will be important to representation of the company. This institutional knowledge is a very valuable asset to the company, and increases effi-ciency and effectiveness in the rep-resentation.

Unfortunately, attorneys who be-come very familiar with the com-pany’s strategy and portfolio some-times leave their firm for various reasons. Life brings change, and some changes cannot be avoided. However, some firms have a dispro-portionately high degree of turnover in their attorney ranks. If turnover is high over an extended period of time, several new attorneys may have to be brought up to speed, which can reduce the efficiency and effectiveness of the representation, and some institutional knowledge can be lost.

Skilled patent attorneys seek to de-velop a stable team of qualified at-torneys to serve their clients. Using a team framework fosters the sharing of critical information among team members and allows for new attor-neys to be brought up to speed more quickly and efficiently. An experi-enced team will be able to handle turnover without losing critical insti-tutional knowledge and will be flex-ible to the needs of the company as they change over time. Skilled patent attorneys should be managing teams that have earned the company’s trust and be able to make adjustments in staffing matters that do not adverse-ly impact the company’s strategy.

10 Law firm highly regarded in medical

device communityThe reputation of a patent law firm

in the medical device community can be very important, especially for medical device companies in the start-up, investment or acquisition phases. When a well-regarded pat-ent law firm with long experience in the medical device field has been engaged to prosecute a company’s patents or to navigate around other patents in the field or to explain the company’s positions regarding intel-lectual property in due diligence, the level of credibility for the company increases and the natural skepticism on the part of those reviewing the company’s technology and assets decreases.

As noted, the intellectual property of a medical device company is usu-ally its most valuable asset, and it should be entrusted only to patent attorneys whose practices reveal a high level of skill and competence. When a medical device company’s intellectual property is solid and se-cure, the prospects for investment and market success for life-improv-ing and life-saving technologies are maximized. However, figuring out how to select an effective guide for this journey can be difficult, frustrat-ing and expensive. Hopefully the suggested skills outlined above will help ease this process.

Paul Conover Curtis Huffmire

Paul Conover (Paul.Conover@knobbe.com) and Curtis Huffmire (Curtis.Huffmire@knobbe.com) are partners at Knobbe Martens, an intellectual property law firm with a large medical device practice.