Intellectual Property

Intellectual Property Primer for Healthcare Startups: A Discussion with Holland & Knight Experts

September 10, 2020 – By Jared Mueller, Director – Mayo Clinic Innovation Exchange

As part of Holland & Knight LLP’s relationship with the Mayo Clinic Innovation Exchange, H&K partners meet with Innovation Exchange members both one-on-one, and via presentations on topics of interest to healthcare startups. Holland & Knight has one of the largest healthcare and life sciences law practices in the U.S. In separate talks during a series this summer, intellectual property experts Robert S. Hill and Elizabeth R. Burkhard were among the H&K presenters who spoke with the Exchange members.

Q: How should entrepreneurs think about the distinction between a patent and a trade secret?

RH: In certain ways, patents and trade secrets are almost the “flip” of each other, but both play an important role in innovation and commerce. A trade secret is information that derives value by virtue of the fact that it’s not widely known or easily ascertainable. Trade secrets can potentially last in perpetuity. A classic example of a trade secret is the secret formula for Coca-Cola, which has been closely held for more than a century, far longer than a patent would have protected Coca-Cola’s recipe.

Patents, meanwhile, provide a period of exclusivity over the material set forth in a patent’s claims — in exchange for certain public disclosures. The idea here is that inventors have to make certain public disclosures of the underlying technologies in order to obtain those special exclusivity rights. Patents are created through a process called “patent prosecution,” in which an inventor (typically through her or his representative) and a patent examiner engage in dialogue to determine if an innovation is patentable. Assuming that at some point the examiner agrees that the proposed patent claims are novel, useful, and non-obvious, the inventor may be granted a patent. Patents are commonly used to protect pharmaceutical, medical device, and other innovations for commercial exploitation for a discrete period of time.

Q: How would you characterize patent litigation, from a startup’s perspective?

RH: Damages can be significant in patent litigation, but irrespective of damages, patent litigation is typically very expensive — even more than most other forms of litigation — because a significant reason for this expense is that each side in patent litigation usually engages both damages and specialist technical experts. Bringing on those experts is akin to hiring a consultancy in addition to each party’s law firm.

Another dimension of the cost is that litigation can be very “intrusive” and time-intensive for the core technical leaders and teams of a startup, so the indirect costs in terms of disrupting an organization’s work can also be very high. Skilled patent litigators know ways to minimize such indirect costs but, given the centrality of technical issues to patent litigation, some level of disruption is usually inevitable.

Q: What should healthcare entrepreneurs understand about trademarks, and how do they differ from patents?

EB: A core purpose of trademarks is to identify and distinguish the source of goods or services provided by a firm or entity, as compared to those provided by other parties. Unlike a patent, a trademark can last forever, and registrations are not always required to accrue trademark rights. Trademark rights accrue through use of the mark in connection with particular goods and/or services. Where trademark rights have accrued through use rather than registration — so-called “common law” trademark rights — then the protection for the mark is typically limited to the trademark owner’s scope of use, meaning the goods and services for which the mark is used and the geographical area where the goods or services are provided.

The main benefit of obtaining a registered trademark is that registered marks provide much broader protection than common law marks. Obtaining a trademark registration can provide a legal presumption of ownership of trademark rights for the specified goods and services nationwide (rather than only within a limited geographical region), as well as a legal presumption that the owner has exclusive rights to use the mark for relevant goods and services nationwide.

Q: How should entrepreneurs think about “in use” and “intent-to-use” marks in trademark law?

EB: Companies can apply for trademarks for goods and services that are already in use (for example, a mark for a service that a company is already providing to multiple paying customers) or for those which are not yet available on the marketplace. One important requirement for trademark registration in the United States is that, before the U.S. Patent and Trademark Office (USPTO) will formally grant a registration for the mark, the trademark holder must both begin offering those goods and services — and offer proof to USPTO that those goods and services are on the market. Where a trademark application is filed as “in use,” the proof of use is required in connection with filing the application. Where a trademark application is filed as “intent-to-use,” proof of use is not required for filing, but proof of use must be provided before the USPTO will issue a registration.

After a trademark has been granted, continuous use of the mark is required. After its initial registration, use of the trademark must be declared at six years following the registration date — and then use of the mark must again be declared and the registration must be renewed every 10 years thereafter. This allows the USPTO to weed out trademarks that have been abandoned or are otherwise no longer in use.

Q: What breakthrough innovations in healthcare delivery or technology excite you most?

EB: I am excited by the increased use and availability of telemedicine. My initial excitement stemmed from the fact that telemedicine has made obtaining medical consultation and care easier for people who either live far from or otherwise face challenges in traveling to a doctor’s office. Now, when faced with a global pandemic, telemedicine has made it possible to obtain care without risking exposure — keeping access to healthcare available when circumstances warranted a change in the manner in which we see our healthcare providers.

RH: I am especially excited about the intersection of artificial intelligence/machine learning, next-generation networking, and wearable sensor technologies. I frequently hear from machine learning experts that the key limiting factor in their work is obtaining high-quality data sets for use in training their systems. Advances in wearable sensors, combined with network improvements like 5G, promise to meet this need by creating unprecedented amounts of high-quality human health data. I believe this combination of better data with better analytics will be useful to a broad range of healthcare innovators.

Views expressed by guests are their own and do not necessarily reflect the views of Mayo Clinic. As a not-for-profit 501(c)(3) charitable organization, Mayo Clinic does not participate in political activities.