Young female tech or scientist loads liquid sample into test tube with plastic pipette. Shallow DOF, focus on the hand with the tube.

Dr Emma Longland and Craig Thomson

of HGF writing for the Chartered Institute of Patent Attorneys

Most companies in the Biotech space appreciate the need for patent protection; after all, no company wants to bring a product to market after years of hard work, only to have a competitor copy it and steal sales whilst by-passing all the time, money and effort they have put into bringing their innovative product to market. However, using a patent to stop such copying is only the most obvious way in which Intellectual Property can add value to your company. Are you making the most of the opportunities you have in Intellectual Property? Is your Intellectual Property aligned with your company’s strategy, both immediate and long-term? This article will explain the importance of a strong Intellectual Property strategy and how it can add value to your company.

Generally speaking, a Biotech company will be created to develop and commercialise a particular discovery or concept. Hopefully, at least one patent application will be filed to cover that discovery or concept. This application will be important. It could ultimately provide protection in many countries throughout the world, for up to 20 years. The extent of that protection, i.e. the extent to which it will allow you to stop competitor activities, will be dependent on the information in that application when it is filed, and how well the application is written. It can be tempting to spend minimal resources on preparing and filing that application, since by its nature it is filed at a time when money may be tight. But that can be a false economy when the exclusivity value of the eventual product (and, by extension, the value of the company) may be so dependent on the quality of the patent application.

With your help, a patent attorney can draft a patent application that should not only cover the product you are seeking to develop, but also products that you might end up developing, once the product is optimised and any kinks ironed out, as well as similar products that competitors might seek to market to take advantage of the same underlying inventive concept. The scope of the protection that the granted patent will provide will depend on a few factors, some of which will not be fully within your control, such as what other people have previously published in the field of your concept and how the patent offices will consider your concept in comparison. A carefully drafted complete application will have the best chance of having the ammunition you need built into it that will enable you and your patent attorney to defend the application and subsequent patent from the impact of those factors.

That initial application can give you some confidence that the company may be able to eventually provide a fair return on the investment required to develop your product and bring it to market; by virtue of the fact that you have reason to believe you will be able to bring your product to market in key territories under a monopoly. The initial application may provide the same confidence to investors, and so encourage them to invest in your company. But, the importance of developing an Intellectual Property strategy does not stop there.

As work is undertaken to develop the product, opportunities are likely to arise to file further patent applications. For example, there may be optimisations or improvements of the initial concept itself, there may be developments in associated production methods, and employees may even conceive of innovations that are actually only tangentially related to the development product(s). It is important that procedures are put in place to identify and analyse the commercial importance of these opportunities so that, where appropriate, you can work with your patent attorney to file additional patent applications for them.

Following this strategy, a successful company will find that, in due course, they have a portfolio of patent applications. Managing that expansion of the portfolio and keeping it commercially relevant is the next important step in the creation of a suitable Intellectual Property strategy. The costs of such a growing portfolio can quickly escalate as it expands and matures, and so can start to feel like more of a burden than an asset. It can be difficult to keep track of what each aspect of the portfolio is for and so see how the portfolio adds value to the company, particularly if you are a Board member not working on the patent portfolio on a regular basis. There can as a consequence be a temptation to simply leave the responsibility for overseeing the patent portfolio and its strategy to a sole individual in the company, such as the Chief Scientific Officer, with the only input from the other company executives being in the form of a limit on the budget that may be spent on it. Yet a strong and valuable patent portfolio will underpin the whole company, with implications for the decisions made by company management, and not just in terms of how much money is spent on it.

This is why it is important to know exactly why you have a particular application or patent, and what benefits it brings to the company. It should be possible to prioritise the relative importance of each application or patent, and allocate the amount of money and attention it receives, accordingly. Being able to communicate this to the Board of your company, and so being able to ensure that the portfolio best underpins the direction that the Board are taking the company, is vital. Your patent attorney can assist you with this.

The most important applications and patents will be those that directly cover your intended commercial products, and these should be identified and given the highest priority, so that you can make sure that solid, valuable protection is obtained in all the relevant countries. The next in order of importance might be those that cover the potential future plans of the company, for example likely future iterations of the products or related products that the company intends to develop as part of a longer-term strategy. Following this, it may be important to pursue applications or patents that, whilst not directly covering the company’s products or future plans, cover alternative products that competitors might want to market to compete with the company’s product(s), so that they can be used to prevent competitors eroding your market share (or for improving a negotiation position with competitors). Finally, and of probably least importance, will be those applications that do not directly support the business aims of the company, perhaps because the aims have changed since the applications were filed or because the applications, though potentially valuable, have always been tangential to those aims.

Once you have mapped your patent portfolio onto your company business aims in this way, you can use this knowledge to more effectively control the portfolio. For example, you may want to prioritise or accelerate prosecution of applications covering your key product(s), particularly if launch of product(s) is imminent, or you may want to match patents that cover potential competitor activity to that competitor activity as it arises, in terms of where the protection is obtained and what it covers. Additionally, you may want to consider the future of the least important applications – how much money are you spending on them, are they worth that much to you, would it make sense to try to leverage those applications as a source of revenue income by selling or licensing them, and if not then should you consider abandoning the applications altogether?

Of course, the assessment of your patent portfolio may serve another important function, because it may tell you that there is a gap in the cover it provides, so that one of the current or intended products of the company are not actually covered by any of your Intellectual Property. In this case you will want to see what you can do to strengthen your position, perhaps by seeking to acquire or license patents or applications owned by others, or by seeing if there is anything you can do with your current or future applications to fill the gap. Again, your patent attorney can assist you with this.

When discussing Intellectual Property protection in this article, the focus has been on patent protection because this can be so important for supporting value in the company products, particularly in the initial years of company growth. However, other Intellectual Property may also be important. For example, trade marks and design rights might provide protection for your branding and the shape of products and packaging, and there may be some aspects of your business that may benefit from trade secrets protection if reasonable steps can be taken to keep it secret. Together they can form the most robust Intellectual Property strategy for your business.

Knowing what Intellectual Property you have, and how it adds value to your company, is vital. It is vital because not only is this information needed to achieve maximum value from the Intellectual Property, and to achieve synergy with your business aims, but also because this is information that investors will want to have before investing in your company. A conscientious investor will want to see that you have strong Intellectual Property rights supporting your business activities and providing protection for the value of your products. Ideally, you will be able to succinctly and clearly explain to any such potential investors exactly what Intellectual Property you have and how it underpins the business. This will help reassure them that you are a savvy company that knows how to protect current and future interests, and that you will be able to protect their investment.