Editor’s Note: This article is written by Diane Dobrea, attorney, strategist and counselor in the Intellectual Property Group at McNees Wallace & Nurick LLC.
Patent lawyers enjoy a unique opportunity to preview what may be the next great thing in a field, often long before even the first prototype is made and tested. It is exciting and professionally satisfying, especially when working with inventors who create pioneering and sometimes life-altering solutions to human maladies.
Clinicians, particularly surgeons, are “engineers” of medicine, active problem solvers who know firsthand how and why the state-of-the-art medical technology in their field falls short. Whether the problem is fiddly instruments that make a surgeon’s job difficult, implants that “just don’t fit right,” or a delivery route that is hard to visualize or control, challenges in the operating room ultimately affect the quality of care and outcomes for patients.
So when a surgeon inventor believes she has a solution, she can be unrelenting in the quest to immediately and tangibly realize the invention, she wants it in her hands yesterday! But the path from idea to the operating room is typically long and arduous–much more so than for many nonmedical products–and involves a diverse skill set that exceeds the range of even the most ingenious and determined surgeon.
Most surgeon inventors are quick to engage a patent attorney, knowing that intellectual property (IP) can be crucial to the product’s success. Yet many if not most are slow to consider what other professionals are needed to realize their idea. And they can be so convinced of the brilliance of their idea that they simply don’t contemplate whether others will share their vision, or what it may cost to clear the product through the FDA, or even if the product can be manufactured and at what cost.
A patent attorney who is privileged to provide first counsel to a surgeon inventor can do much to optimize the chances for success by providing a perspective that goes beyond patent filing; we can offer a glimpse of the timeline, risks and costs associated with moving a medical device technology to market. And we can, if we have cultivated a strong network, introduce the inventor to experts who can help them make informed decisions about the feasibility of their idea, along with the services to propel the idea forward. Much of what happens along the path is well beyond the attorney’s control, and there are no guarantees of success. But by leveraging our professional networks to illuminate the path, we can help the surgeon inventor set realistic expectations and strategically commit resources to avoid surprises.
Where do I start?
I approach the first couple of meetings with surgeon inventors with two objectives in mind: establishing how we will work together to capture and reflect the essence of the invention in a well-crafted portfolio of patent applications; and determining how the surgeon inventor plans to make the ultimate product.
After learning the basics of an invention from the surgeon inventor, I ask who else is going to want the product and what problem it will solve for them. For example, does the innovation do something that was not possible before, or does it help a less experienced surgeon execute a difficult but known technique? This information is key to framing the context of the invention for the patent examiner. It is also the first prod in testing the surgeon inventor’s expectations: does she appreciate that appealing to others to believe in her product as much as she does will be crucial to realizing a viable product?
We then explore whether there is a predicate device or an analogous technology solution being used, perhaps one that is already reimbursed by insurance. Further, as applicable, I ask how the product compares to the predicate or analogous technology in terms of structure, clinical indications and benefits. Answers to these questions further help frame the invention and the problems it solves, which are important to differentiating from solutions that have come before, especially in crowded technical areas. And, importantly, I ask for the reasons why the new product would be desirable over the existing products and approaches, particularly to those who make the decision to purchase or reimburse for the product.
Discussion around these questions helps the surgeon inventor think critically about the viability of the product concept, how it needs to perform in comparison to existing options and how it may need to be tested if there is nothing against which it can be compared. And the discussion leads the conversation toward meeting the second objective: determining what the surgeon inventor expects she will need to do to commercialize the ultimate product.
How do I get there?
As our conversations segue from the invention, per se, to the vision of the commercial product, I am deliberate in bringing into the conversation specific points for the surgeon to consider regarding the concrete tasks ahead to make the product. We talk about the expertise, time and costs involved in getting to a prototype that can be tested for proof of concept. And about the iterations of design needed to ensure that it works and can be manufactured reliably and at a reasonable cost. And about additional expertise, time and cost required to properly test and validate the design for FDA clearance and compliance. And that there are even more experts (and more time and cost) to prepare the regulatory filings and the quality systems required to offer the product in the market.
There are many savvy surgeons who actually lead this part of the conversation; they have traveled this path before, and thus know what is coming in terms of design iterations and hurdles that will need to be cleared for their product to get to market. They know that the actual costs for design and engineering development typically end up being three times as much as originally estimated. And that obtaining clearance through the FDA with a 510k will likely involve hundreds of thousands of dollars, while the longer PMA route will well exceed $1 million.
For others less familiar with the commercialization path, discussion of the above listed points invariably leads to variations of “I just want to get the device,” “I don’t care about making a lot of money” and “If I get the patent, do I really need to worry about those things?” or “Can you refer me to someone who will take care of those things?” among others. This leads us to finally answering the crucial question: what are the surgeon inventor’s intentions after the patent application is filed?
“What is your exit plan?” the answers differ, but quite often are some variant of “I don’t know what you mean” or “Is that important now?” Before getting into the answers, I let the surgeon inventor know that I want to help them get the most robust patent protection possible, and I don’t want them to be really angry with me someday because they spent a lot on pursuing a patent for a product that was never made.
I explain that “exit” is a way of referring to how the surgeon inventor will be able to have a product in hand that is legal to use on her patients and to realize commercial success and a return on her investment.
Since we already spoke realistically about how many versions of the design will likely be needed to get to an acceptable prototype, and how much it costs to make and test prototypes and to ultimately obtain the data needed to support FDA clearance, the surgeon inventor has a basic understanding of what it takes to get her product to market. Does she have a plan for where along that path to hand off the idea for someone else to take forward–early on, perhaps after the initial patent filing, or never–or whether she aspires to own her own company?
Considerations for early exit
In talking about an early exit, we identify the strengths and limitations of what the surgeon has to sell (perhaps to a big industry player or to a medical device development business). And how the upside to the early exit is cost avoidance, but the downside is discounted valuation of the surgeon inventor’s idea, since the cost and other risk is being shifted to the buyer.
It may be that the surgeon inventor aims to maintain focus on her clinical practice and minimize her commitment of financial resources. The surgeon inventor may seek to simply file a patent application and then shop it. Or perhaps the surgeon inventor is inclined to develop the product through proof of concept, then sell or license the idea along with the patent filing and initial engineering work. Not only will valuation depend on the relative strength of the idea as compared to existing competitor technologies and patents but there are many unknowns at this point – what is the right design, can it be manufactured, how will it compare to existing (predicate or analogous) technology, what is the path through the FDA (510k or PMA), how will reimbursement be achieved? These unknowns will reduce valuation of even the best idea.
Filing a patent application at this stage is essential because that may be the only thing to sell. But securing actual patent protection and confirming the freedom to practice (that the product won’t infringe other patents) will not likely be possible since the product design is not finalized. This brings the added risk that the patent application may not even cover the right thing. Only further development will identify whether all the crucial concepts are identified in the patent application. The surgeon inventor should expect that any initial investment can be lost simply because it is too early, unless she has the wherewithal to take the project further if an early deal cannot be struck. Testing the inventor’s openness to making deeper financial commitments beyond the patent filing will help drive the decision as to the go or no-go with the patent application filing.
Considerations for late(er) exit
At the other extreme, the surgeon inventor may be inclined to fund a development project from the point of initial patent filing through engineering, design, testing, validation and FDA clearance and into manufacturing and distribution. Whether the surgeon inventor goes all the way to market or seeks to exit somewhere along the way, the upside to this later exit is the opportunity for much higher valuation because the opportunity has been derisked; the buyer is getting a lot more certainty. Of course, the downside is that the surgeon must commit much more cash and time with no guarantee of commercial success.
While IP is by no means the only, or even the most important, factor for success along this longer path, the competitive strength of the product will be directly influenced by the robustness of the IP protection and by a concrete knowledge of freedom to practice. Attractiveness to an investor or acquirer will necessitate that the IP position is clearly understood and the protection strategy is well-developed. Thus, the surgeon inventor will also need to consider investing in a broader suite of IP services to augment the investment in the development project.
Alignment of expectations
Whatever exit plan the surgeon inventor contemplates, understanding the steps to commercialization and considering the risks specific to the opportunity can help influence how to proceed, and when to stop. I encourage the surgeon inventor to engage within a network of professionals–each with their own business and unique training–who understand design and engineering, testing, regulatory processes (FDA), manufacturing and reimbursement, among others. Even if the surgeon inventor’s plan is to exit early. Brief consultations with these experts can yield huge returns, which is why my practice includes maintaining a robust network of medical device experts among whom there is a shared philosophy to establish meaningful and realistic expectations. These conversations will reinforce the most important fundamental of medical device development: even with the most clever invention and best plan, there are no guarantees that a product will be made, or that it will make any money. In knowing the path, a surgeon inventor will be able to rationally gauge whether it even makes sense to file a patent application on an idea, much less commit what will be tens of thousands of dollars to start the design process.
If I have done a good job in these early conversations, the surgeon inventor’s point of view on patent filing will have changed a good deal, and she will know that the approach to patent filing is anything but static. By considering the path to market, the surgeon inventor will realize that the process is iterative, and her design will change over time. And a patent, no matter how strong, is only part of the equation for getting a medical device product to market. A few will thank me and walk away, deciding that the idea, no matter how good, is not the right investment for them at that time. Many more will say, “Thank you. Let’s do this!” In those instances, we proceed with filing the first patent application, prepared to shift and adapt to balance risks with the potential for success.
McNees Wallace & Nurick LLC