May 2, 2018

Effective IP Habits for Early Stage Life Science Companies

Early Stage life science companies developing new therapeutics — both small molecule and biologic — know that having a clear patent strategy for each development program is one of the key drivers of valuation.

These are some of the effective, continuing actions companies take that drive IP success – and can smooth third-party IP diligence for financing, partnering or acquisition activities, with some real-life examples of things to avoid.

  1. Ownership. Assure all employees have employment agreements assigning all rights to company in place, (and make sure any consultants have a similar assignment clause in their consulting agreement) at the time of hiring (and before any inventing takes place). Make sure employees don’t have competing (i.e., concurrent agreements, or previous agreements that are still in force) with other companies or institutions.

  2. Ownership Redux. Pay special attention to university affiliates (e.g., university faculty) who are inventors — they almost always are required to assign their inventive rights to the university, especially in the United States. Early identification of this and resolution (e.g., with a license agreement) is usually the best course. For example,  if there is a university affiliate, having such a license in place can end up being a prerequisite for third-party investors — so understand and manage these situations early.

  3. Government funding and again, ownership. If the company uses or has used U.S. government grants (e.g., from the National Institute of Health), in developing the subject matter of a patent application, (or has in -licensed from university patents that used government rights) make sure the requirements to retain ownership are properly followed, including disclosing the invention to the federal agency within two months of learning of it; electing title to the invention by notifying the agency in writing within two years of disclosure; and filing a patent application on the invention within one year after election of title, or earlier if necessary to avoid forfeiture of patent rights. Even if years of noncompliance have passed there may still be opportunity to correct and elect title, but a recent change in U.S. law can make attention to timing important.

  4. Bigger is not necessarily better. When seeking patent coverage, keep an eye on what the company needs to protect as well as the larger scope of what the company wants to prevent others from using. While pursuing broad claims to e.g., a genus of compounds can keep competitors at bay, patent claims with “intermediate” coverage may be more likely patentable and defensible. Make sure there are also patent claims specifically to “lead” therapeutics or therapeutics designated as clinical candidate — if and/or when designated. Both company owned and in-licensed patents and patent applications can form part of good patent protection, and obtaining patent coverage that will hold up under third-party challenge and will maximize patent term are key.

  5. Provisional patent applications — don’t be deceived. Provisional patent applications should almost always be filed first as part of a life science company patent strategy — especially since they effectively provide a possible extra year of patent term. Don’t rely on a poor or minimally prepared provisional patent application. Such a filing may give a misguided sense of security (for example, when a filed provisional patent application does not cover a later public disclosure of new compounds or materials). Provisional patent applications should be prepared with the same care as “utility” patent applications that are examined by a patent examiner and can often be updated with new material before any such public disclosure.

  6. No accidental disclosure. Assure all company employees — both technical and non-technical —do not inadvertently disclose sensitive information before patent filing. This means no pictures of compounds on company websites and no public posting on social media before the relevant patent application is filed. Of course, any disclosure of new chemical structures, sequences, formulations, administration routes etc., (e.g., as part of a poster session or conference abstract submission) should not take place before filing a patent application. When sharing sensitive information with third parties, make sure an NDA is in place.

  7. Take an international approach. Obtaining patent rights in all countries where the company may seek approval, or where large sales, manufacturing, or clinical studies may occur, can be pivotal to protecting rights, and may also facilitate e.g., region-based partnerships.  In some jurisdictions a national patent office can require at least in-vitro and/or characterization data for compounds, together with detailed examples that include descriptions of e.g., specific synthesis/cloning/culturing procedures, in the filed patent application. Many jurisdictions can effectively require the scope of patent claims be limited to exemplified and characterized compounds — another good reason to have both intermediate coverage and specific coverage in a patent application (and a robust provisional patent application to which the application claims a priority/first to file date.)

  8. Patent rights may not be the complete picture. Understand the regulatory approval pathway and regulatory exclusivity (which usually runs in parallel with patent rights if any) for clinical candidates, and understand when a third party can challenge the company’s patents and/or seek approval from a regulatory agency. Regulatory exclusivities (typically characterized as marketing and/or data exclusivities) vary on a country-by-country basis, and can also vary on type of product and/or therapeutic indication. Patent term extension, again on a country-by-country basis, may also be available in certain countries (including the United States) once a new therapeutic product is approved.

  9. Patentability is not freedom to operate. Conduct regular freedom to operate searches on lead or clinical candidate therapeutics to consider possible third-party patent coverage, and to understand the third-party patent landscape. Freedom to operate searches and review are typically  different in scope than a “novelty” search but are an essential part of IP strategy.

  10. Organization. Designate an IP point person — either a scientific member of the company or an in-house attorney — to organize and keep track of IP; understand (together with outside patent counsel) how and where development candidates are covered within the IP portfolio, including possible regulatory exclusivities; and track any relevant third-party patents or patent applications. Consider regular (e.g., monthly) patent calls with patent counsel to keep all apprised of company upcoming actions and new developments. The designated IP person should also be charged with making sure assignment/ownership documents are timely executed by the inventors, and help abide by any reporting requirements, formalities, information disclosure obligations and the like imposed by licensing agreements and patent offices.