ASKED & ANSWERED

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Compiled by Amber Lepage-Monette

Early stage biotechnology companies are characterized by little revenue and a significant demand for cash. They are aware that intellectual property is one of their key assets and devoting funds to the protection of this asset is a key strategic element. With limited resources in mind, how should an early stage biotechnology company effectively allocate its resources to the protection of intellectual property relative to other financial commitments?

There are many competing demands for company cash and resources in an early stage biotechnology company. Strong IP is an essential asset to attract financing and defend technology against pesky, copying competitors. Without IP, a biotechnology company will never recoup its R&D costs.
The issue for a company is not whether to protect IP, but how to do so cost-effectively. The following will focus on patents, but will also keep other important IP — such as trademarks, copyrights and trade secrets — in mind. Companies that proactively assess and protect IP using the tips described below will spend less than half as much time and money as competitors that are reactive.

Assess New Inventions Carefully
Patenting is expensive, so look closely before you leap. Much of the due diligence prior to filing a patent application can be done in-house by an experienced employee.
Conduct patent searches to assess patentability of inventions and determine the scope of patent protection. For example, is the new invention a broad platform technology or an incremental improvement? Make sure commercial value exists for either case. Is the invention a potential lead drug or a research tool? The latter is typically less valuable and makes it harder to police infringement. Some inventions are better protected as a trade secret.
Call upon external counsel where necessary and present them with a detailed first cull of information. Use experienced Canadian counsel who are registered to directly file patent applications with the U.S. patent office in order to minimize costs.
Evaluate freedom to operate through patent searches. It may not be worth proceeding if a competitor has blocked off key areas with patents that appear valid.
The above analysis determines whether the company can obtain a patent that will protect a valuable commercial product or process. If the patent will have inadequate value, it is usually not a good option.

Avoid Cost Accelerators
Lack of IP control increases cost by forcing IP owners to chase the horse after the barn door is open.
Public disclosures made before filing a patent application can increase costs because patent owners will have to argue with patent offices that the disclosure should not block patenting. If a public disclosure eliminates patent rights, the company faces a potentially huge loss of opportunity. Just say no to journal articles, abstracts, lectures, trade shows and non-confidential use prior to making the decision on whether to patent.
File patent applications early. Obtaining a place in line ahead of others at the patent office is critical. Lab book data should be witnessed in case the company has to prove first-to-invent in the U.S.
File complete patent applications that broadly protect the invention and its commercial products. Protection is only as strong as the information included in the patent application on its filing date. Trying to backfill later is costly, time-consuming and difficult.
Keep research and business partners on a need-to-know basis to avoid having costly arguments later about ownership or misappropriation of IP. Contracts with employees, contractors, and research and business partners should clearly ensure that the new IP is company-owned.

Keep IP Top-of-Mind
Once a patent application is filed, continue to assess it periodically to ensure that the commercial, patentability and freedom-to-operate criteria are still satisfied. If not, pull the plug and reallocate the time and money to more promising projects.
Try to generate a return on the patenting investment as early as possible in the process. Show off that shiny new patent application to help seek out commercial partners, investors and potential licensees. They may help pay patenting fees. Use a non-disclosure agreement during negotiations while the patent application is unpublished.
In summary, implementing good IP practices will be its own reward by reducing costs and providing stronger patent protection. Always conduct ongoing due diligence, patent only commercially valuable inventions and keep tight control of IP.

Noel Courage is a partner with the intellectual property law firm Bereskin & Parr (Toronto, ON).