Author Archives: Jackie Hutter, IP Strategist

About Jackie Hutter, IP Strategist

Jackie Hutter, named one of the Top Global IP Strategists by IAM Magazine in each year since 2009, has almost 20 years experience advising innovation-driven corporations, investors and universities on how to maximize intangible asset value. As an IP Strategist, Jackie does not just "get" IP, she makes sure her clients only get IP that makes them money. Jackie has established this blog to provide forward-thinking business and legal professionals with strategic information to enable them to identify, capture, protect and exploit their organization's intangible asset value. As the CEO of a startup technology company, Jackie also understands the IP and legal needs of small and emerging companies and works frequently in an in-house counsel role for such clients. Jackie lives in Decatur, Georgia, in a groovy Mid-Century modern house with her husband, 2 daughters and far too many pets.

Startup Patent Strategy: Be Unbreakable

Several of my current clients are startup companies that understand that, to have real value, their patents must be seen by a third party as meaningful to the opportunity–be it customers, revenue stream, or any other business strategy–that this potential potential partner, licensor, or acquirer seeks to access. Put another way, patents generated by early stage companies that are developing innovative technology must “make it cheaper to go through them than around them.” For these types of patent owners, due diligence conducted by third parties is more than just “kicking the tires” of the patent portfolio; instead, their patents will be examined by an expert team to make sure they won’t “break” just when they’re needed most.

As an initial aspect of this discussion, it should be stressed that not all patents are equal in value. Some patents–and, in my view, this is the vast majority of patents—do not really matter much to the fortunes of their owner. For example, a patent obtained by an established organization likely won’t make or break the company. Sure, it will be disappointing if the company introduces a product that a competitor can knock off without incurring legal liability, but this likely means only that the expected revenues will not be achieved that motivated the expense and effort to introduce that product to the market. While profits may decline, the company will not typically go out of business. Moreover, in my 20 plus years as a patent professional, I have never seen anyone officially blame a failure to achieve revenue projections on the company’s obtaining of inadequate patent protection (even though I can see this occur frequently in my practice). It can therefore be said that most patents do not need to be (or appear to be) “unbreakable.”

In contrast, a startup has likely “bet the company” on developing a technology for a specific market or customer. For those few ventures that are successful in matching a product to customers in a scalable market, it can usually be expected that other companies will want a piece of the action. Those companies will then be faced with a Build vs. Buy decision: if it makes more sense to go it alone to acquire the customer they will invariably do so, especially if they are legally free to go this route. Strong patents—that is, patent coverage that protects the customer value proposition, as opposed to merely only protecting a specific product provided to the customer—therefore becomes a critical aspect of the incumbent’s Build vs. Buy decision for an early stage company seeking to gain the attention of the established company.

To this end, two of my clients have recently gone through due diligence with established companies that sought access to each of their innovative technologies, even though neither had yet generated many customers. My clients’ respective values to these incumbents was primarily their technology solutions, which we had endeavored to protect broadly with patent filings. Each of these incumbents saw value in being able to sell to the potential customers who were served by my clients, even though the customers are today only hypothetical. The incumbents saw future revenue streams from these customers as desirable, but first they needed to determine whether these would be sustainable in a way that justified the investment in my respective clients. A significant component of the sustainability question was embodied in the content and scope of the patent filings. If the patents could be “broken,” then the sustainability of the revenue streams would be in question.

In each of these client due diligence situations, the incumbents’ patent experts “stress tested” my clients’ patent filings. The crux of the evaluation looked at the content and scope of the filings to establish whether they would create a sustainable competitive advantage for them if they ended up owning the patents. The experts inquired as to the scope of our prior art reviews (extensive) and the strategy for generating claims that protected not only the “how” (e.g., the product), but also the “why” (e.g., the customer value). They also evaluated the skill with which we navigated the application through the Patent Office. Each of these elements can be crucial to the “breakability” of a patent in the future. Continue reading

Patentability Reviews for Innovations


Patent professionals can do a better job providing patentability review, or “opinion,” services for innovators. As most readers would recognize, a patentability review assesses whether the invention to be claimed will meet the legal requirements for patentability. In the US, this entails an assessment by a patent attorney, which can be based on a formal or informal search, whether the client’s invention is novel and non-obvious over the prior art. The rules by which a patent attorney makes a determination of patentability are well-established and would not be considered controversial by most experienced practitioners. Nonetheless, as an IP Strategist who works exclusively with clients engaged in developing and delivering meaningful innovations to consumers, I know that these entrenched patentability assessment practices deserve retooling for those clients who can be classified as “innovators.” To this end, I believe that the way the patent profession addresses the patentability of innovations fails to properly consider the non-standard nature of such products and technology when assessing the scope of patent protection available.

This disconnect was clearly on display as I spoke with a new client recently. The CEO of this company expressed frustration about an assessment by a patent lawyer that the company’s medical device innovation was not patentable. If successful, the company’s innovation would eliminate an expensive daily pill used to treat a chronic disease suffered by millions of people throughout the world. The elimination of medication has been a long-felt need, and the future of his company looked promising, at least until he heard the bad news that the medical device did not appear to be patentable. He asked: “How can this be? The users didn’t want to give the product back after the testing period was over! The doctors were shocked at the results. Everyone wanted the device to be available yesterday, and they were disappointed when I told them it would be a while before the device was available for sale. How can a product that could be life-transforming for so many people not be protectable!?”

In view of this highly enthusiastic response from testing of this medical device, it was surprising to the client when his previous patent attorney told him that a patent on the device was not possible because prior art devices ostensibly exhibited the same features and operating parameters. Notably, the attorney did not consider the clinical results to be pertinent to an assessment of whether and to what extent the device could be patented. The device looked and operated like other products in the market, so the conclusion was that no patent protection could be obtained.

Since investment in a new medical device company is largely dependent on whether broad patent protection is available, this advice could have been the death knell for this company. Even worse, patients who could benefit from this non-pharmaceutical treatment would be denied this improvement because there would be no assurance that a company bringing this medical device to the market would be able to recoup its investment. Fortunately, the CEO of this company did not accept this patent lawyer’s advice as definitive because, quite simply, it did not make sense, and he sought a second opinion from me. After few minutes discussing the medical device innovation and the clinical results, I was able to tell him that his product was not only patentable, but that it was possible that we could be able to obtain broad US patent rights for his company in a year or less, using the TrackOne process in conjunction with a robust patent development effort. Needless to say, the CEO was thrilled with this information, and we are now moving forward with defining a strategy for drafting comprehensive protection for the medical device. Continue reading

Startup Patent Licensing: Beating the Long Odds

Long odds for patent licensing

Achieving meaningful revenue through licensing by startup entrepreneurs can be for all intents and purposes a “unicorn event:” much discussed, but rarely achieved. Notwithstanding this reality, a significant number of startup entrepreneurs who seek to engage me for IP Strategy and patent development consulting assert confidently that their necessity for a patent is based on a business strategy of licensing (or selling) their protected product or technology to an established company.

This is not surprising because it is embedded in the DNA of much of society that “if you build a better mousetrap, the world will beat a path to your door.” Late night infomercials featuring famous people and entrepreneur “hero stories” in the press also bolster this conviction. It is certainly heartwarming and inspiring to believe that an “Average Josephine” can become rich solely on the basis of their patented idea. But, the truth is that few established companies license (or buy) patents from the general public.

And, why should they? Established companies maintain internal R&D and marketing organizations with the singular responsibility to develop successful new products that are desired by customers. Acquiring innovations from outside of the company means that employees, who are trained, credentialed, and paid for their technical, product, and market expertise, could not adequately do their jobs. In short, the decision to acquire externally developed technology could inherently mean that internal development efforts failed at that company. Continue reading

Startup Patent Strategy: US Patent Non-Publication

The TakeawayFor startups whose development efforts lag behind a looming US utility application filing deadline, use of the “Request for Non-Publication” in US patent filing can allow them to preserve the option of shoring up their patent protection for an extended period in the future, while still retaining the priority date of a provisional application filing. This can be valuable for startups that are still fleshing out their product/market fit in customer discovery, but that also have incorporated still relevant technical and functional subject matter in their provisional application.

As people even modestly familiar with patents are aware, the filing of a provisional patent application requires followup with a US or PCT utility application that “perfects,” the earlier application no later than one year from that filing date. When the covered technology is fairly well-developed or where the client has the resources to staff an robust development team, a deadline of one year will not be a problem. For these situations, a year is enough time to fully “bake out” the subject matter for the utility application. However, for some startups, the provisional to utility filing timeline can be too short.

This can be due to a combination of things such as, a lack of resources, team inexperience, and absence of focus on “low priority” tasks like intellectual property in the “drinking from a fire hose” environment that normally accompanies the life of a startup entrepreneur. A less obvious, but often significant, reason for uncertainty about a utility patent filing is that customer discovery conducted over the past year indicated that the product described in the provisional patent application is not of a form that any relevant portion of the buyer market finds interesting. This means that the provisional patent application, if perfected into a utility patent application, might cover a product that no one will buy. In turn, any issued patent will not cover a viable business model and will end up being worthless in the future. For example, the originally conceived product can turn out to be too expensive for the likely buyer. Or established distribution channels make product placement unlikely, and it would be too hard for a startup to create wholly new distribution channels for its product. These and many other potential insights garnered during effective customer discovery activities can result in a startup entrepreneur realizing that she has not yet identified a solid “product/market fit” when competently deploying the Lean Canvas Model of startup entrepreneurship.

For some startup entrepreneurs, the business or technology pivots made during the year between provisional filing and utility filing due dates makes the decision not to file for utility patent protection easy. Looking back, it may be obvious that what was filed almost a year ago is not relevant to where the company is today, and certainly not where it will be in the future. In short, these folks are “running a race they don’t want to run,” and the provisional application will properly be allowed to expire with few, if any, regrets.

For other startup entrepreneurs, like my medical device clients who currently face a utility filing deadline, the decision to let a provisional application expire is not so easy. Customer discovery has shown this client that the format of the product originally contemplated, and that is described in detail in the provisional filing, did not meet the needs of the market. In short, hospital purchasing models and billing requirements preclude ready adoption of the early product iteration. Fortunately, the same customer discovery has shown the functionality provided by the product would be highly desirable to address a significant unmet medical need for hospitals if they can find a product design that meets buyer demands.

These startup entrepreneurs are motivated by the results of customer discovery and are diligently working toward redesigning the format of the device to make it more acceptable to the relevant buyers. However, success is still several months out, even while the utility filing deadline hits in just a few weeks. There may be still be some viable functionality disclosed in the provisional application that remains relevant to the operation of an acceptable medical device, and that will be included as a crucial aspect of the claims of a patent covering their medical innovation, so the provisional disclosure still holds considerable potential value. Notably, this is a very active area of medical research, and it is possible that others are working today in the same space and that these other innovators may file patent applications in this area. In today’s “first to file” world, it may be risky to walk away from an early priority date like this client’s. So, we collectively decided that this startup should file a utility application that claims priority to the provisional even though many modifications will be made to the medical device design over the next year and, possibly, beyond.

Filing a utility application on an innovation that is not “fully baked” for the market sets up another dilemma for this client, however. In the normal course of events, a US utility application will publish 18 months after the provisional filing date, which is just over 6 months from now. Given this client’s resources and the nature of the startup world, it is unlikely that the company’s medical device will be fully fleshed out in marketable form by that deadline. This means that their own application publication, which will not include the marketable design but will no doubt be very similar in function, can be used against them, especially in regard to combination with third party references.* Put simply, preservation of the early priority date could reduce the client’s ability to develop robust protection for a marketable medical device. Fortunately, I was able to provide this client with an option that allows them to preserve their provisional filing date, while still providing them with the flexibility to generate future patent protection that will align with their still-to-be-determined product/market fit.

In this regard, I recommended filing of a US utility application that claims priority to the provisional application, along with selection of the “Request for Non-Publication” in the filing documents. This will allow the startup’s team to continue conducting customer discovery directed toward development of the most commercially viable medical device design incorporating the necessary functionality and an associated business model, while making it possible to maintain their early priority date that will allow them to show invention (or “possession”) of the crucial functionality insights that are unambiguously present in the provisional application.

Selection of the “Request for Non-Publication” will mean that the soon-to-be-filed utility application will not publish any time before the issuance of the application which, given the average application pendency in the US Patent Office in normal processing, will be in no fewer than three to four years. The client can generally add new subject matter at a later date in a continuation-in-part (CIP) application that builds on the utility application, as long as they have not publicly disclosed it or offered that new matter for sale. Since this first utility application may not incorporate subject matter that aligns with the go-to-market product design, the client is prepared to abandon that application at a later date in favor of the CIP, which will be structured to align closely with the required product functionality and the go-to-market product.

Moreover, the utility application should not be a mere “roll over” of the provisional application. While the final product configuration has not yet been identified, the client nonetheless can add substantive disclosure to “beef up” the utility application, and generate additional priority in the utility filing. To this end, I have recommended that they build out the application disclosure to include the information that they have learned in the last year, especially in relation to “must have,” and “need to have” aspects that their past customer discovery processes have identified.

Notably, with this serial filing strategy will generate priority back to the provisional or the first utility filing (for anything that was not in the provisional application), and the priority date of the CIP for anything that is new in that application. Also, the likely future abandonment of this utility application means that we can expend less effort on the drafting process, which will allow this startup to preserve funds for crucial business activities, like continued customer discovery.

I really like this non-publication strategy for startup clients that have more work to do before they successful hit on a viable product/market fit. Surprisingly, however, I have seen very few patent lawyers who recommend this option. This can result in a loss of potential value for some clients. For example, I was recently asked to give a second opinion for a startup that has spent upwards of $30K to obtain patent protection for their computer technology-related product. Unfortunately, the claimed subject matter is not patentable under the Alice doctrine. While there is plenty of blame to go around for this, since the application published well over a year ago, the client’s ability to claim improvements to this technology, which now aligns with a highly successful business model, is now highly constrained. We are currently investigating new avenues for protection, and patents may still be possible for technology improvements that are suitably distinct from the previously published application. Nonetheless, in addition to the sunk costs expended for patent protection that did not result, considerable value has certainly been left on the table for this startup due to the patent filing strategy road not taken.

I should mention that selection of the non-publication option in US utility filing documents necessarily means that foreign (that is, outside of the US) protection, including PCT applications, will not be sought. But, for startups without “fully baked” business models likely attendant with limited financial resources, giving up this opportunity may be of little import. Moreover, integration of patent strategy into ongoing startup business strategy means that opportunities to create valuable protection will still exist in the future for startups, especially if care has been taken not to make the company’s innovations public.

I am sure that my more risk averse patent peers can name a litany of reasons why this approach is “risky.” Certainly, there is risk in this approach, at least because of the “unknown unknowns” associated with pushing a patent filing strategy into the future, as opposed to the clarity of deciding on a patent filing strategy today, and the certainty resulting from seeing something completed. But, being a startup entrepreneur means moving forward with a business idea usually in the face of incalculable risk. I find that my startup clients who are competent at the Lean Startup approach are sophisticated enough to evaluate the risks of this patent filing strategy in relation to their specific business situation, as long as they are fully informed of the suite of options available to them. Of course, this strategy is not for every startup innovator, but by writing this post, I want to make them aware of this option, as my experience shows that it may not be one made available to them by patent practitioners.

* Note: the minds of patent types will immediately go to “swearing behind” of references that still has relevance to US filings, but if you have to rely on an exception to publication, you’re not being strategic on the front end when you have the ability to do so.

Continue reading

Need Broad Patents Fast? Try This.

Sieze the day: take your patent allowance!That title got your attention, didn’t it? It was meant to. After another successful round of patent application examinations for several clients in the last year, I thought others would like access to my proven patent acquisition methodology. Certainly, there’s a lot more than I can include in this post, and what is presented here should be considered to be only a high level introduction to my process. Moreover, every client requires focused attention to generate the desired patent protection, and not every business scenario mandates this comprehensive approach. But, for those situations where company leadership determines that strong patent protection is a key to achieving the desired business outcomes from investment in innovative products and technology, this methodology is not only recommended, it is required for success. Put simply, if you do the hard work on the front end as outlined in this post, it is more likely that you will be able to obtain patent protection that “makes it cheaper to go through you than around you.”

1)     Forget about the Invention. Focus on the Customer

The first thing a patent attorney asks a client is “what did you invent?” You know who doesn’t care about your invention? Your customer. It follows that meaningful patent protection must focus on your customer, that is, the problem you are solving for them. Once you have validated that customers will pay for your product, you can expect that your competitors will try to pinch those customers if there is enough profit available to them. If your protection scheme focuses on only the features of your product, that is, “the invention”—as most patents do—your competitors could be able to provide a non-infringing product to your customers that provides the same benefits, likely at a lower price. If you focus protection on the benefits provided by your product–which is the reason your customers buy the product in the first place–your competitors will not be able to provide those same benefits to the consumer without infringing your patent claims. Certainly, the invention (or “product”) matters when confirming your entitlement to broad claims. Focus on obtaining claims that encompass the benefits can nonetheless ensure that the patent protection obtained will cover any and all product variations that provide the customer value proposition. (I write in detail about a highly effective execution of this claiming technique for a familiar consumer product here.) Continue reading

Value-Enhancing Patent Prosecution Strategies (Part 1 of 4)

easy pictureIn my role as the IP Strategist for a number of companies that do not employ in-house patent counsel, I am charged with making sure that my clients’ patenting efforts are in tune with their desired business outcomes. This means that instead of focusing on the drafting and prosecuting of patent applications that form the basis of most patent attorneys’ practices, I work at the front end of the patenting process to design patent strategies that will enhance my clients’ business value first and foremost. When alignment is created with business goals, subsequent patenting efforts will necessarily result in protection that matters to the value of the company. In this regard, I have a number of tools in my “Patent Strategy Toolbox” that I deploy regularly when developing patent prosecution recommendations. Notably, when I mention these tools to new clients, I find that few have been informed about these options by their regular patent counsel. This made me realize that these tools may not be used as often as I think is warranted in many situations. In the interest of spreading the word about these potentially value enhancing patent strategies, I will provide readers with a list of four available, but often infrequently used, patent procedures in this and subsequent posts.

Below is the first of these suggestions, with the rest to follow in coming weeks.

1.      TrackOne Prioritized Examination in US the Patent Office (aka “accelerated prosecution” to obtain issuance of US utility patent in 1 year or less)

Accelerated “TrackOne” prioritized examination for utility application filings in the US has been available for a few years. The limited knowledge my new clients have about this procedure makes it seem like it is a well-kept secret to many patent seekers. This option needs to be better publicized because, for many companies, quick patent issuance can greatly decrease the risks associated with launching a new product or technology innovation.

I first found out about the TrackOne procedure shortly after it was initiated by the US Patent Office from a group of very senior corporate IP lawyer peers with whom I regularly network. Uniformly, these practitioners were enthusiastic about the new responsiveness of the US patent examiner corps to their patent application filings. Of course, one has to pay extra in exchange for a speedy examination, but, for some of their cases, my peers thought the procedure was well worth the premium, which is currently an extra $4000 for large companies, and $2000 for small companies in addition to the usual government patent filing fees.

For established companies like the ones my peers work at, the ability to obtain an issued patent in less than 1 year after filing instead of the typical 2-4 years allowed them to delay utility filings until the product to be protected by patents was close to market introduction. This was in contrast to the usual procedure in which a patent application is filed early in the product development cycle and therefore well in advance of a product’s introduction, which often means that the claims of the resulting patent do not match the final product design. By strategically delaying filing until closer to product go-to-market, these IP counsel could improve the odds that their issued patents actually covered the products that their companies were selling which, in turn, allowed them to reduce the risks that their competitors would be able to knock off their successful product introductions.

Since we who have been toiling in the US patent trenches for years are almost never pleased with the US Patent Office, my interest was piqued, and I decided to try the TrackOne procedure for a startup client where accelerated prosecution seemed warranted. This client, for which I work as part-time Chief IP Counsel, is developing disruptive imaging technology. While the company has obtained a good amount of seed funding, investors still view them as a risky proposition because the company is in technology development mode and is pre-revenue, and will be for some time. Typically, applications filed for startups like this client will sit awaiting examination for several years and, as such, the pending applications will have little influence on the startup’s valuation because any patent rights covering the subject technology will remain hypothetical until issuance. My client sought alternatives to the often-interminable wait times associated with obtaining patent protection in the US.

When filing the company’s “foundational” patent application—that is, the application intended to set out much of the ownership for this startup’s technical differentiation—I suggested that we choose TrackOne prioritized prosecution to speed up the examination process and, hopefully, the issuance of the company’s first patent. Using the TrackOne process, we indeed achieved a patent issuance in less than a year from the filing date of the utility application. Moreover, within about six months of initial application filing, we also could predict with good probability the scope of the issued patent, a fact that reduced uncertainty for my client, as well as for its investors. In short, our selection of the TrackOne process as a prosecution strategy paid off, and my client now holds broad patent protection to the technology on which its upcoming product offerings will be based. This issued patent will also now be incorporated into the company’s valuation, with the expected result being that upcoming investment terms will be more favorable to the company than could be expected for a pre-revenue technology startup.

The additional cost associated with seeking TrackOne examination can be a deterrent to selection of this procedure. Certainly, it would not make sense to go this route for all filings at most companies. I tell clients “most patents don’t matter to business, but when they matter, they matter a lot.” To this end, the TrackOne process should only be used strategically when the exclusivity provided by broad patent protection will add meaningfully to the bottom line. By “add meaningfully to the bottom line,” the issued patent claims should be directly aligned with a desired business outcome. For established companies, this desired business outcome may be to prevent competitors from providing consumers with a non-infringing substitute product. For startups that have not yet introduced a product (or that are in the early stages of doing so), the desired business outcome may be to obtain the higher valuation that is often associated with having an issued patent covering the company’s product or technology offering.

I also let clients know that the cost differential between TrackOne and regular utility patent prosecution may be overstated. Using the time-regulated TrackOne procedure, I have seen first office actions from examiners that appear better-reasoned, and directed toward concluding prosecution succinctly. This means that multiple back and forth communications between the patent attorney and examiner may be less likely, which will, in turn, reduce the overall cost of prosecution. The fee reductions resulting from lesser work for the attorney and fewer patent office post-filing costs (e.g., RCE, appeal, and continuation practice) could outweigh the initial extra TrackOne filing costs. Moreover, the “time value” of an issued patent versus a pending application may make it worthwhile to pay the extra filing costs.

Anecdotally, when reviewing various file histories for clients that hire me to evaluate prior art, I see that a number of startups engaging lawyers based in Silicon Valley and the Pacific Northwest appear to be selecting TrackOne prioritized examination more often than those companies that use lawyers located elsewhere. While this is certainly not a scientific sample, it may be that the accelerated TrackOne prosecution option is gaining traction in practice locations more known for being less conservative in approach. Of course, “your mileage may vary” with the value of TrackOne prosecution for your patents, and any company interested in this option should be fully apprised of the cost/benefit aspects for its own situations.

Continue reading

UPDATE: Lack of Patent Strategic Focus Results in $100’s Millions in Lost Value

invalid patentLast week, an en banc Federal Circuit (that is, the majority of the sitting judges, not just the usual three judge panel), rendered a decision that saved the patent that keeps the ANGIOMAX(R) product from generic competition. In short, the Federal Circuit saved this successful blood thinner medicine from generic competition and, in so doing, saved the proverbial “bacon” of The Medicines Company. Since I wrote about this case about a year ago when the ANGIOMAX patent was invalidated by a three judge Federal Circuit panel for violating the US “on sale bar,” I thought it prudent to update the post with this new information.

The purpose of this post is not to summarize the new “on sale bar” rule. Many law firms and commentators have already done so. A good summary can be found here. In short, the law is now more clear as to what activity can constitute an “on sale bar” that can prevent the underlying invention from being successfully patented.

Instead, this post is directed toward the fact that the ANGIOMAX story retains value for those seeking to generate best practices–or to avoid “worst practices–in formulating and executing their company’s IP Strategy. In this regard, the ruling is, no doubt, great for The Medicines Company, but, put simply, their management still should be held accountable for the royal screw up that resulted in the litigation being needed in the first place. The cost of the litigation was most probably in the $10’s of millions, and crucial employees likely spent considerable time on supporting the litigation, as opposed to generating revenue and creating new innovations. Moreover, the business uncertainties associated with such “bet the company” litigation unquestionably affected the overall value of the The Medicines Company, even though the crucial patent was ultimately upheld. If I was a shareholder, I would expect that someone would be taken to task for such managerial malfeasance. (This may indeed have been done because a new board chair was named shortly after last year’s invalidation decision was rendered, and it appears that, below the CEO level, several new persons were named to management or moved to new positions since earlier this year.)

The fact that the ANGIOMAX patent was upheld due to a clarification–and arguably a significant modification–in the law of patents, does not change the premise of the original post: if your company’s value is based in significant part on protection of innovative products with patents, you must have a strategic in-house IP lawyer minding the store.

First, as a former patent litigator, I can say with authority, if you are engaging in litigation to preserve a patent that is a significant source of your corporate value, you have already lost (unless, of course, you are a patent litigation professional). Indeed, this is like fighting a fire that is jeopardizing your house when the reason for the conflagration is that you did not fix the faulty wiring when you had the chance. Arguing that a patent is invalid is by definition defensive, and is the least best option for a company like The Medicines Company that has most of its value riding on strong patent coverage.

Second, the ANGIOMAX case is the exception that nonetheless proves the rule that IP Strategy should be a process embedded in regular corporate functions, as opposed to being a periodic event engaged in on occasion by management. The Medicines Company’s key patent was saved only by the exceedingly rare event of its lawyers’ successfully arguing before the Federal Circuit that the existing legal rule that rendered its patent invalid should be changed. This rare event was precipitated only by the even more rare event (i.e., about 0.1% of all cases disposed by the court) of an en banc ruling by the Federal Circuit. But for all of the stars aligning to provide this expensive and highly improbable result, ANGIOMAX would now be subject to generic competition.

Lastly, and this is a statement that is all-too-often relevant for those seeking patents, the fact that your patent lawyers have to parse the dates associated with your company’s sale-related activities means that you by definition not incorporating IP strategy into your corporate functions. As a result, you are likely to make an error that can affect patentability or, at a minimum, you will be wasting money and expending corporate human resources trying to save a patent having questionable validity. This is poor management. Full stop.

Congratulations are certainly in order for The Medicines Company, its lawyers, and its shareholders. Those seeking to create and maximize value from product innovations should nonetheless consider the litigation story of The Medicines Company to be a cautionary tale of what happens when a patent-centric company fails to mind its patent store.

ORIGINAL POST FOLLOWS BELOW (posted July 20, 2015)

As an IP Strategist, I am fascinated by stories from which declining business fortunes can be traced directly to failed patent strategies. Often, the failures can be traced to patent attorney errors that limit the effectiveness of a company’s patent to prevent competitive knock-offs, but, often, the problems can be traced to the lack of accountability for IP strategy within an organization. For those companies where IP is a primary driver of competitive advantage, the absence of someone who “owns” the job of making sure IP is properly captured and protected can result in unrecoverable errors that opens the innovator to unwelcome competition. In this regard, the recent loss of patent protection to a popular drug product should serve as a useful case study on why the C-suites of innovative companies should consider strategic in-house IP counseling to be a mandatory aspect of their business strategy.

Earlier this month, the Federal Circuit effectively eviscerated the revenue prospects for a successful pharmaceutical company when the court found the two patents covering the popular blood clotting treatment Angiomax(R) invalid. Angiomax, which had U.S. sales of $599.5 million for The Medicines Company in 2014, is the brand name of a drug called “bivalirudin” that is used to treat blood clots in people with severe chest pain or who are undergoing angioplasty to open blocked arteries. While the company has other drugs in the market, Angiomax is the lead product for the company, accounting for 80% of the company’s sales in 2013. Angiomax has been a blockbuster drug for the company and, prior to this month’s court decision, the company was expected to hold patent exclusivity for several more years. The Federal Circuit decision opened the way for generic equivalents to enter the market almost immediately after the decision, and it can be expected that The Medicines Company’s revenues from Angiomax will decline precipitously in the near future.

Those reviewing the court’s decision will likely be quickly lost in the weeds as to why the Angiomax patents were found invalid. Briefly, the issue addressed by the court was whether the facts showed that the methods and compositions claimed in the patents were “on sale” more than one year prior to the November 2008 filing date. The issue arose because The Medicines Company paid a contract manufacturer to prepare several batches of product as early as October 2006. Notably, the batches prepared by the contract manufacturer included a newly identified efficient mixing procedure that not only provided an improved manufacturing process, but which also generated a new composition. Both this method and the composition obtained from the method–a more pure form of the active ingredient of Angiomax–became the subject of the November 2008 patent applications. While the first patents for Angiomax were set to expire in June 2015, the later-filed patents covering the improvements to the method of making and the more pure product would extend patent exclusivity to The Medicines Company for several more years. However, in reviewing the circumstances of The Medicine Company’s commercial interplay with its contract manufacturer, the Federal Circuit found that the method and compounds claimed in the two patents had, indeed, been on sale prior to the “critical date.”

The Angiomax case gives rise to facts that patent lawyers find fascinating to relate to clients: there will no doubt be many “Urgent Practice Updates” from outside counsel cautioning their clients about the potential perils of dealing with contract manufacturers when patent filing is a possibility. However, this inevitable focus on legal issues misses the crux of the business issues that gave rise to the invalidity decision in the first place. Indeed, if a client and her outside counsel are parsing the details of whether she can file a patent by evaluating the activities conducted on more than one year prior to the patent application filing date, a mistake was already made because the patent filing issues were not kept visible while business was being conducted at the company. We can see this by further examining the facts of the Angiomax case.

In reviewing the trial court decision and various pleadings in addition to the Federal Circuit decision, it appears that The Medicines Company’s patent woes can be traced directly to the fact that it appears that no one in the company held responsibility for ensuring that IP protection followed along with other activities. Namely, when the manufacturing team needed to find out the reasons for batch failures in 2006, which were solved by bringing in a consultant, no mechanism existed for bringing the discovery of the improved process and composition to the attention of IP counsel who could then evaluate whether patent applications should be filed to protect these improvement. It was not until two or so years after this discovery did anyone at the company appear to realize the significance of the process improvement efforts to potentially extending the patent exclusivity for Angiomax. In short, it appears that everyone was focused on doing their respective jobs of getting salable product out the door in the face of critical manufacturing problems, but it was nobody’s job to review whether these efforts should be patented to enhance The Medicines Company’s patent exclusivity for its blockbuster product.

Notably, it likely would not have been enough for outside counsel to sit down with management on a regular basis to say something along the lines of “have you invented anything new?” because, at the time of the manufacturing process improvements, the focus was on meeting the supply demands for Angiomax.  In short, because no one “owned” the role of IP strategy within the company, it was the epitome of “out of sight, out of mind.” While I am, of course, speculating on what happened, I have seen this situation enough times to expect that only when The Medicines Company’s management realized that the 2006 improvement efforts could extend its patent exclusivity for Angiomax did they seek to obtain a patent as a reaction to a shortening patent term. And, as the Federal Circuit ruled, they waited too long to do so. If the team had included someone whose job it was to proactively address IP strategy on an ongoing basis, I contend that person would have either held the legal knowledge to recognize that patent protection was available or it would have been incumbent on her to raise the issue with outside counsel. In either circumstance, it is more probable that The Medicines Company would have filed for patent protection in a timely manner and the Angiomax patents would remain valid today.

It should be noted that this does not appear to be a situation where outside counsel failed to obtain adequate patent protection. To the contrary, once The Medicines Company decided to file for patent protection in late 2008, “the damage done been did,” and all outside counsel could do was “damage control” to try to convince the courts that its client was entitled to an “exception” to the rule that one has to file for patent protection within one year of the claimed invention being “on sale.” The Medicines Company hired excellent (and expensive) outside counsel to save it from its bad decisions, to no avail. (As an aside, the trial record indicates that The Medicines Company’s patent counsel did not disclose the sale activity to the Patent Office during prosecution of the Angiomax patents. Thus, I would expect that the company’s outside counsel did not know about the invalidating activity until litigation ensued.”) Even if the Angiomax patents had been upheld, at a minimum, it can be said that the vast expense and business uncertainty resulting from several years of patent litigation could have been avoided if The Medicines Company had prioritized IP strategy within the organization in 2006.

Again, while I am speculating, I expect that management of The Medicines Company did not think that the size of its patent portfolio justified hiring of a full-time in-house patent counsel, and they were probably correct.  However, the fact that the primary source of the company’s revenue could be directly attributed to that patent portfolio, mandated that an in-house resource be assigned to manage and be accountable for IP strategy, at least on a part-time basis.

Fortunately for small- and mid-sized companies, there are now innovative practice models where experienced in-house counsel can provide business-focused IP counsel on an as-needed basis. I represent several innovative companies that require strategic IP advice on an ongoing basis. Patent GC is another of these practice models. While this is certainly “the fox guarding the hen house” advice, I strongly recommend that management of companies where revenue is directly attributable to obtaining adequate patent protection investigate engagement of strategic in-house counsel advice like us to better ensure that their IP strategies are sufficient to create durable competitive advantage for their businesses. At a minimum, C-suite executives at small to mid-sized companies should look to the declining fortunes of The Medicines Company to develop actionable approaches to elevating the importance of IP strategy within their businesses.

(Note: This case is not the only problem that The Medicines Company has faced with Angiomax’s patent protection. While management now seeks to blame its previous counsel for its patent woes, certainly the lack of in-house IP strategy influenced these other situations, also.)

IP Strategy is Increasing Focus at Innovative Companies: Here’s Why

Introducing a new model for client focused IP legal services.

IP Strategy is increasingly adopted by innovative companies today.

After more than 8 years, I can report that IP Strategy is an increasing focus at innovative companies, and there is a solid reason why this is so. By way of background, for many years, I have been part of a small minority of IP experts who advocate that companies desiring to maximize the value of their IP investments re-think the way they seek and obtain patents. In short, I and my IP Strategist peers urge companies to wrest control of their “IP destiny” from their legal service providers who have traditionally been seen as the primary drivers of the patenting process for their clients. Of course, readers of my regular ruminations know that my strongly held view is that “the only person who needs a patent is a patent attorney,” and that, even for those companies for which patents are critically necessary, very few actually obtain patent protection that meaningfully protects their innovations. But, my view has remained muted by the vast marketing resources wielded by traditional IP law firms. Indeed, a fellow IP Strategist friend of mine at a large consumer hardware company calls these folks “the legal industrial complex.” This means that the “you need a patent” message remains the predominant framework for most potential patentees today today.

Fortunately, for those like me who believe that the traditional IP legal service model is broken and is ripe for disruption, there appears to be change emerging on the horizon. In my own IP Strategy consulting practice and in conversations with my IP Strategist peers, I have increasingly seen and heard of situations where innovative companies are seeking a second opinion over that of their primary patent counsel and, in some situations, are even seeking a first opinion from experts like me before they move forward with their IP procurement efforts. Continue reading

Product Companies Must Modify Patent Strategy When Adopting Innovation as Business Model


Product innovation requires a new patenting strategy.

I recently finished an IP Strategy engagement with major consumer products corporation, where I interfaced with the head of New Product Development and Innovation Strategy. This company is embarking on a major shift in the way it brings products to market. In short, the company is transitioning from one that introduces new products with incremental improvements into the market on a regular basis, to one that focuses more on innovation. For this client, this strategy will mean that a significant portion of its product development efforts will be focused on solving unmet and identifying emerging customer needs, with the ultimate goal of introducing truly innovative consumer products that will be successful in the marketplace.

I am sure that my client’s new products will be found to be highly desirable to their consumers: the team is highly competent in the processes that need to be implemented in order to successfully execute innovation-based product development. The missing piece, and the reason that I was brought in, is for the team to possess actionable steps for bringing the company’s patent strategy into alignment with its new innovative product development strategy. That is, the innovation lead realizes that the shift to from products that include incremental changes to ones that incorporate truly innovative features will also require substantial modifications to the way the company generates patent protection.

Notably, this company has hundreds of patents in its portfolio, the result of its filing of several dozen patents a year for over recent years. Management currently has a continued expectation is that the IP team will continue to crank out patent applications at the same rate. Certainly, generating a high volume of patents is much easier when a company creates a high volume of new products on a regular basis. As long as the new product is novel and unobvious, a patent can be obtained. Creating new products from innovation programs is a much different process, however. This means that, in conjunction with adoption of innovation as a business strategy, my client must rethink its understanding that more patents equal more value: patents resulting from innovation efforts are likely to be fewer, but, if done correctly, they will be more “meaningful.” Continue reading

10 Key IP Strategy Insights for Innovative Companies for 2016 and Beyond

different-1163255-1278x903As 2016 begins, I am entering my 8th year(!) of writing about IP strategy insights from a business value creation perspective, both here on my and, more recently, on LinkedIn. While there were quite a few IP lawyers writing blogs in 2008, no one else was then writing about IP strategy. Today, there are even more IP lawyers writing blogs about IP law, but still almost none writing that address IP strategy topics that are meaningful outside of the IP monetization and large IP portfolio context. Over the years, it has sometimes seemed like I was the proverbial “lone voice in the wilderness” who speaks frankly (or as one of my regular readers said to me last year “bravely”) about how innovators can take charge of their IP strategy to create value and reduce risk. But I don’t feel this way any longer: in the last year, the growth of my consulting practice, as well as the much larger audience for my periodic online ruminations, has demonstrated that my message about how IP strategy can not only protect, but also maximize, the fortunes of innovative organizations is becoming embedded in business culture.

Since there is probably no one (other than my Mother) who has read all of my posts, I thought the New Year signaled a good time to consolidate some of the key principles under-girding my process of using IP Strategy to create and maximize business value in innovative organizations. I’d also like to hear comments from readers about whether it would be valuable for me to expand these concepts into an e-book format for those seeking to learn more. So, without further ado, here’s my 10 Key IP Strategy Insights for Innovative Companies Seeking to Maximize Business Value in 2016 and Beyond:

1)Rethink what patents should “protect:”  If you are an innovator, the customer solution you provide is far more important than the product you are making. Full stop. This means that if you call a patent attorney before you have defined your invention in terms of the value you are providing to customers, the patent you obtain will likely be too narrow to protect your company’s value proposition from pinching by your competitors. This not only wastes resources, a false sense of security will arise. I can’t tell you the number of times I have had to tell people that the patent upon which good money was spent actually did not provide adequate protection. One example of this situation is discussed in this post. Critically, your competitors do not care about your product, they care about your customers. Your investment in technology and customer development may largely be for the benefit of competitors if your patent rights cover only your product. In short, you must ensure that your patent covers not just yourinvention, but also your innovation.

2) Rethink the people driving your company’s patenting efforts: The typical situation where the technical staff is the primary contact with the patent attorney is almost certainly guaranteed to result in a patent that covers the invention, but misses all or part of the innovation. By “innovation,” I mean the customer solution addressed by the that drives customers to buy your product. It is often forgotten that a patent is nothing more than the government’s acknowledgement that the invention claimed meets the legal requirements for patentability. The grant of a patent is undoubtedly a validation of skill for a technical person, as I can attest to as a named inventor on a patent that was granted from my work as a chemist many years ago. (I got a nice check, too!) But, a granted patent says nothing about the underlying business value of the claimed invention. The only way to ensure that a granted patent holds business value is to incorporate the business team into the patenting process at all stages. Alternatively, companies that are “best in class” in IP Strategy have IP specialists (who may or may not be IP attorneys) who report directly into the business group to ensure that any patenting decisions are made with a proper emphasis on business value, not just technical merit. The technical team certainly holds a significant role in any company’s patenting, but business relevance of their technical insights must lead their efforts. This means that the business team must actively engage with the patenting process at every stage. Heck, that’s why they call it “IP Strategy“, right?! Continue reading