Cost-Effective IP Strategies for Biotech Startups

By: Pei Wu

A well-devised intellectual property (IP) portfolio can go a long way to ensure a startup biotech company’s business success in the marketplace. Patents allow a patent holder to exclude others from making, using, offering to sell, selling or importing a similar product based on what is claimed in the patent while the patent is in force (35 U.S.C. 154). Biotech startups generally invest in utility patents to protect core inventions and serve as barriers to entry against competitors. When faced with budget constraints, biotech startups can tap into less expensive IP protection options to boost market position, drive up value, attract venture capital funds and generate revenue, including cross-licensing and/or settlement agreements.

Design Patents

A valuable, yet often overlooked IP protection option is a design patent. Unlike a utility patent, which protects the way a product is used or works (35 U.S.C. 101), a design patent protects the way a product looks (35 U.S.C. 171). In other words, a design patent protects the ornamental appearance or visual characteristics beyond a product’s structure and function. Typically used in consumer products, where the aesthetic features of the products can augment the brand and breed customer loyalty, a design patent can be effectively used by biotech startups to protect a logo or catchphrase, a configuration, shape or surface ornamentation of a product, a product label, packaging or color scheme to improve their IP portfolio overall, in a cost-effective manner. For example, a biotech startup’s unique automated nucleic acid sequencing process, novel platform antibody design, special biologically produced fuels and chemicals, noninvasive detection method scheme, genetically modified crop graphics, electronic or robotic medical device designs, and novel diagnostics and therapeutics and the associated graphic user interphase can all be protected under the umbrella of design patents.

A design patent is usually restricted to one claim, and thus comes with reduced legal fees. Compared to a utility patent, a design patent can have less than a third of a utility patent’s cost, yet produces more than three times the allowance rate in less than a third of the processing time. Notably, there are no maintenance fees for design patents. Once granted, a design patent offers a lifespan of 14 years.  Importantly, a design patent is not subject to publication. Therefore, a company can “fly under the radar” while perfecting its product development until grant of the design patent. A design patent provides protection of the design of a product at an early stage when the product enters the marketplace. During the lifespan of the design patent, customer reliance and brand building develop, along with the secondary meaning. This secondary meaning may grease the wheels to trade dress protection later on, potentially prolonging the product’s IP protection.

Unique to design patents are the requirements for the filing of drawings or photographs that define the scope of design patent protection. The drawings or photographs need to demonstrate what is “new” of the invention against the prior art. Care needs to be taken to procure a broad scope of protection for design patents so that not only is a particular embodiment of the design protected, but also the design concept in general. Used strategically, design patents can successfully leverage an overall IP strategy to align with biotech startups’ business goals.

Trademarks

A trademark protects a symbol, name, word, logo, or design (15 U.S.C. § 1127). A registered trademark provides legal ownership of a mark that sets a startup apart from its competitors.

Trademarks are important for brand building and extremely valuable for distinguishing one’s product from the competition. With registered trademark protection, although more than one company can sell the same product, only one company can legally market that product under the trademarked name. An interesting example is the present day top-selling biologic drug, HUMIRA. Developed in the late ’90s by BASF Pharma and Cambridge Antibody Technology, this monoclonal antibody was simply called D2E7. Abbott subsequently acquired the drug and gave it the name Humira, an acronym for human monoclonal antibody in rheumatoid arthritis. Humira has since been approved in nearly 100 countries worldwide for treating multiple autoimmune diseases, generating billions in annual revenue. Although Humira’s U.S. patents expired in 2016, and its EU patents will follow suit in 2018, following the Abbott split, AbbVie is currently deriving branding revenues and able to market the drug under Humira despite the product’s looming expiration date.

Unlike utility and design patents, which have limited terms, a trademark can offer unlimited protection. The term of a trademark is 10 years and is renewable in 10-year increments so long as you keep using it. Both design patents and trademarks can be used to protect a design simultaneously. If design patent protection is used early on by biotech startups, the company can develop a product’s trademark rights without worrying about interference from competitors during the 14 years before the design patent expires. Additional protection can be extended via trademarks. In addition, trademarks can be important later on in infringement lawsuits. The standard is a “likelihood of confusion” for trademarks, which is lower than the design patent standard of a showing that an ordinary observer would find that the two designs in dispute are “substantially the same.”

Interestingly, trademarks tend to be industry specific. For example, the same or similar wording used within a logo for an automobile manufacturing company, which would protect from infringement another business in the automobile industry, may not prevent another company in a completely different industry from infringing on your trademark.

While there is no strict deadline to file a trademark, it is imperative to secure an early filing date to the extent possible because the filing date helps the U.S. Patent and Trademark Office determine who filed first when another entity tries to trademark something identical or similar to your mark. Waiting too long to file may render your business unable to use the mark. In that case, your customers may become confused about what products your company makes, ultimately losing their loyalty and suffering financial loss.

The average filing fee for a trademark is between $225 and $600. It usually takes between 6 and 16 months to process the application. You can use your mark on products during this time. However, if your mark isn’t unique enough to qualify for trademark protection, you may need to take it off your products. During the time that the application is pending, you can legally use the TM symbol with your mark. After your trademark application is approved by the USPTO, you can use the registered symbol.

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