There are few industries where the impact of IP management is as dramatic as it is in life science.
Pharmaceuticals, medical device manufacturing, bio-engineering and other science-based innovators live with billion dollar swings in valuations and revenues, depending on the status and success of their IP portfolios. The rise and “off-patent” revenue swoon of blockbuster products such as Lipitor, Plavix, Humira, Nexium and Crestor clearly illustrate the importance of getting IP right.
We recently spoke with the VP of Intellectual Property at one of our customers about his experience in the field, and what he does to get IP right. Due to the sensitive nature of his sector, we agreed not to identify him. He emphasized the importance of IP inside a life sciences company, and the particular challenges in an industry where your reward for success is frequently litigation. Life science IP management is clearly not a field for IP counsel with an aversion to stress.
Can you tell me about your company?
I work for the division of a large international company. Our head office is in the United States, and our parent company is overseas. We provide life science services and information.
Moving to the specifics of your role, can you give me some background?
Most of my previous experience had been as an outside patent attorney. I helped people get patents.
My colleagues and I never really thought that much about patent litigation. It was part of our law firm, of course, but there were others specialized in that. By moving in-house, patents started to mean much more beyond protecting inventions. I had to think about a whole range of activities, and even the use of patents just for doing business together. It was an interesting perspective change for me professionally. I hadn’t thought much, for example, about licensing.
Now, I have to evaluate joint venture opportunities where someone comes to us with a proposal to throw some of our technology into a pot, stir hard and do something gainful together. These are really fun intellectual exercises that focus a lot on contracts. That’s how I really honed my contract skills. I became a contract attorney when I went in-house for the first time and it’s been a big part of my professional life ever since.
Does your parent company have IP resources in the United States to help you?
They have some IP resources with whom I collaborate. Our parent company looks to me for IP strategy advice so I provide a lot of assistance, particularly related to our business interests outside their geographic base.
What internal resources do you have?
I currently don’t have any support staff reporting to me. Either I do the work myself or I work with outside counsel to do it for us. Our parent employs an IP group, which does some patent work, and we collaborate as needed. For example, I can use them to do patent research. Occasionally, business or market development projects will overlap, and I’ll be called on to provide IP expertise for contract negotiations, for example.
What are the IP strategy and objectives?
Like any company, IP strategy is part of an effort to advance the business goals of the company. Our inventions cover several areas, including hardware and software. My job is to protect all of it. I deal with IP matters, contracts, licensing and strategic collaboration opportunities involving our IP.
Let’s talk about the specific nature of life science IP management. What’s different about it?
There are a lot of things that make my IP life challenging and interesting:
First, I am the in-house attorney. What I really provide to the company is advice on how IP impacts the business. I have to understand the basics of the technology, otherwise I can’t be a very useful advisor to management.
I am constantly questioned about business impact. For example, how will the patents of our competitors affect our ability to do business in the US and Europe? I need to have a basic understanding of the technology as well as a basic understanding of the business because my advice is consumed by our business decision makers. I need to provide them with information that they can use. That’s the second challenge.
Third, life science is almost inherently global. I’m not concerned only with the patent law in the United States; I need to consider patent law in Europe, Asia, and the rest of the world. As a result, I have to learn a lot of languages.
I have to think about issues that are much broader than getting a patent allowed in the US Patent Office. I have to think about how IP can impact the ability of my company to do business and make money around the world.
How do you address those challenges?
This is where the PhD comes in handy. In other technology sectors, a bachelor’s degree or a master’s degree might be sufficient for an IP counsel to understand and keep up. In biotech, it is common for IP attorneys to have a PhD. It’s both very helpful and valuable because we’re in a fast moving area of science.
A PhD bestows some credibility and helps you talk to the other PhD holders in your company. You are not going to know everything but you have to know something to be able to hold a reasonable conversation and understand the nuances of the technology.
Aren’t life science company founders generally PhDs themselves?
Yes, they often are. In our company we not only have biotech but also engineers and software people. I think more than a quarter of our people are PhDs. So in almost every corner of the company I run into another PhD in one subject or another.
Have you found any differences between timeline considerations and revenue priorities in life science compared to other industries?
Yes, the lead time before you make money in our industry tends to be very long. You have to take a very long view. In the software industry for example, you can create a product and begin to sell it almost immediately.
The life cycle of our products is different. In biotech, for example, it can take years to develop one product. You have to take huge financial risks that last for many years before you will see the reward. We also operate in a very heavily regulated environment. We have to get approval by the FDA and other agencies in order to go to market. Talking to the FDA and similar bodies is a requirement.
Another potential consideration in life science is the role of personal information. If your business collects personal information, you need to be aware of the regulations that cover what you do with it and how you protect it.
What are the roles of infringement and litigation? Are they more common than in other industries?
I don’t know if they are more common, but certainly common enough to give us heartburn.
In the first presentation I gave to our parent company, I was asked to give a talk on IP strategy. One of the first things I told them – and it was shocking to many of them – was “if you are going to do business around the world, and you make money doing it, someone is going to sue you.”
The concept of an IP infringement lawsuit was not one with which they were familiar. I wanted everyone to understand that if we sold products and services in Europe and the USA, we were going to face lawsuits. This litigation risk was something they needed to think about as a business risk. I assumed we would be sued in Europe and the USA if we were successful.
That is just the cost of doing business in these places.
We have been sued twice in the United States by competitors. Part of it was related to IP infringement allegations and part of it was a business strategy to discourage investment in our stock. My advice is to focus on the business and don’t get distracted by the lawsuit, but understand how to factor this into financial planning and general business planning.
Let’s talk about your process and technology. What you are doing to ensure you’re making the most of a lean IP process.
When I started, we didn’t have a lot of systems in place to make my life easier. For a lot of patent-related documents and correspondence, I relied on my email inbox, folders, or tables, and Excel spreadsheets. This helped me get a snapshot of our IP portfolio, but there comes a point where it’s just not helpful anymore because it takes too much effort.
The volume can ultimately become overwhelming because you are dealing with too many different documents and files to really make that system workable. This is what happened.
Clearly, you didn’t have much technology. What was the tipping point?
We outgrew our ad hoc approach. We needed a much more organized and efficient system that connected us more quickly to information. The obvious solution was a software platform to handle both information and communication. Something where we, or outside counsel, could direct IP correspondence and IP-related documents, then provide mutual access and back-and-forth communication.
We also wanted to understand how our patent budget is spent, and improve patent department expense tracking. Finally, we wanted a platform to use both in the United States and in our parent company so the internal IP team there could improve coordination of IP planning and execution.
What did you prioritize as far as system functionality?
Our outside law firms handle our patent and trademark dockets, so docketing was not a requirement. We generated a feature set, and then looked for a system offering what we needed at a good price. We looked at a number of IP management service providers and selected IPfolio.
What made IPfolio stand out?
IPfolio had all the features we prioritized, the pricing fit our budget, and there are a lot of happy customers. IPfolio has a large user base in the Silicon Valley, and the feedback of my IP industry peers there was very helpful. It builds your confidence when the product under consideration clearly works for a large number of people at different stages in their implementation.
What was the implementation process?
We progressively transitioned from our old process to the new one. The first thing we did was to create folders for different patent files and then upload documents to those files. We added managers from our outside firms to handle a lot our backlog, which saved me a huge amount of time. Moving forward, when we create a new patent application or trademark, they can create a file in IPfolio and direct documents there.
The second step was to require our firms to include invoicing details so we could track our patent spend. I still haven’t really played very much with the financial analysis part of the software, so we’re still in the early stages.
When do you think you’ll be completely deployed?
By Q1 2016. The next step is launching our inventor portal and training our inventors about the simplicity and benefits of submitting invention disclosures within IPfolio. Part of the process is creating a workflow to manage disclosures, which I am currently doing. IPfolio has a lot of customers and a lot of “best practices” experience in many areas so Rupert and his team are a great resource to tap.