In a panel at LSI USA ‘24, experts shared their insights on how companies can effectively utilize IP to promote their innovations and navigate the competitive medtech market. Here are six key takeaways from the discussion, highlighting the importance of IP strategy for innovators and medical device investors.

The Value of Patents in Attracting Investment

Patents are crucial for securing investments, especially for early-stage companies in the medtech market. A robust patent portfolio demonstrates the uniqueness and protectability of a company's innovations, significantly influencing investors' decisions.

Leah Brownlee, President and General Counsel at Lazurite, emphasized, "The reason why I influenced the patent portfolio to be continuously built out is because of what I experienced when I was sitting in the law firm in the General Counsel seat, what I saw time and time again was the value of the IP to the investors—especially when we got to this stage of the more professional-level investors coming in."

Importance of Comprehensive and Early Patent Filings

Early and comprehensive patent filings are essential for protecting evolving designs and securing investor confidence. Filing provisional patents early on helps establish a priority date and safeguards innovations as they develop.

"Early-stage companies need to have provisionals on file as they get a little bit further along. In my experience, investors want to know if you have something valuable that gives you the right to exclude competitors," noted Sabing Lee, Partner at Knobbe Martens.

He further explained, "What I like to promote is for companies to file early and often. As you go through the innovation process—doing animal studies, doing your prototypes, making changes to the product—you have to be very conscious of when things will be published. When are your patents going to be published? When are you going to conferences like LSI?"

Real-World Impact of IP Strategy on Company Success

Strong IP protection can be a decisive factor in a company's growth and market dominance. The example of Masimo demonstrates how the effective use of patents can transform a company's market position from a minor player to a leader.

"In the late 90s, Masimo had to sue Nellcor for patent infringement to make a dent in the market share. Masimo eventually won in 2004 and is now the market leader," shared Irfan Lateef, Partner at Knobbe Martens.

Leah Brownlee highlighted, "Having a well-thought-out IP portfolio that matched our technology played a critical role in getting good collaborators that would then do research studies with us."

Strategic Use of Trade Secrets

Trade secrets are an essential aspect of IP strategy, protecting proprietary processes and knowledge that cannot be patented. Companies must cultivate a culture of confidentiality to safeguard these assets.

"It comes back to the confidentiality and making IP and confidentiality a culture within a company," said Leah Brownlee.

Sabing Lee added, "If you don't know what your trade secrets are or don't know what you're going to say, then it's harder to protect them. Because to have valuable trade secret protection, you actually have to keep it secret."

The Role of Freedom to Operate (FTO) in Investment Decisions

Conducting thorough FTO analyses is critical to avoid potential IP conflicts and ensure the company can operate without infringing on existing patents. This analysis helps in mitigating risks for investors.

"We want the company to get one, and we don't want to see it because that will likely waive privilege. But we would like to know the analysis behind it," explained David Beylik.

Sabing Lee emphasized the importance of a detailed search, "The value of the FTO is only as good as the level of searching that was done."

Addressing Employee Mobility and IP Protection

Employee mobility poses challenges for maintaining IP integrity. Companies must have robust agreements and practices in place to prevent the unintentional transfer of trade secrets and confidential information.

Sabing Lee noted the increasing issues with employee mobility, "Companies hiring have to be very aware because I see this come up and diligence quite a bit now where you see employees leave one competitor for another competitor and start working on something very similar."

Conclusion

The full recording of the panel can be found in LSI’s resource hub at the link below:

• IP: Friend or Foe in Building Medtech Ventures?

Effectively managing IP is vital for the growth and sustainability of companies in the medtech market. Companies can attract significant investment and establish a strong market position by securing patents, safeguarding trade secrets, conducting thorough FTO analyses, and managing employee mobility. These strategies are essential for innovators and medical device investors looking to navigate the complex IP landscape. As discussed at the medtech conference, a well-thought-out IP strategy can make the difference between success and failure in this competitive industry.