Medical device partnership surge exacerbates patent negotiation and FTO challenges
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Medical device partnership surge exacerbates patent negotiation and FTO challenges

Medical device patent strategy

In-house counsel at Philips, Biotronik and elsewhere explain how their growing number of tech partnerships is affecting medical device patent negotiations, and how the surge of new players into the market is making freedom-to-operate harder to diagnose

The convergence of technologies in smart medical devices has led to inflated negotiation and freedom-to-operate (FTO) challenges in the medical device industry, according to in-house counsel.

Sources explain that they are increasingly looking to create smart devices by partnering with technology developers and incorporating artificial intelligence, cloud or telecommunications solutions into their products.

Maaike van Velzen


“Getting to that end result is not so difficult so long as all the partners agree on that. That means developing a level of trust in exchange of know-how and making inventions together”

Maaike van Velzen, Philips


But the growing number of partnerships means medical devices firms are faced with negotiating IP ownership, use and protection provisions on an enlarged scale.

“We have always done these sorts of contracts but never before at this volume,” says the senior IP counsel for a global medical device company. “It used to be a matter of negotiating one alliance per quarter and now it is more like one per week.”

The surge of new players into the sector and the use of unfamiliar technologies in medical devices is also expanding the prior art landscape and making infringement more difficult to detect for companies that do not necessarily have the right technological expertise in house.

The medical device tech-partnership trend began around five years ago, with notable collaborations such as the one between Philips and Amazon, who worked together to unite medical device, application and electronic medical record data in the cloud.

“Partnerships in the health continuum bring together an ecosystem of players who can contribute to a final healthcare solution for customers,” says Maaike van Velzen, head of IP portfolio management at Philips. “We innovate and co-create solutions with partners to improve health outcomes, patient experience and workflow.”

One source adds that his company is looking to develop a line of smart orthopaedic implants with various partners that will communicate data around how the implant is coping, whether it is experiencing unforeseen stresses and how a person is responding to it from inside a patient.

Ownership diagnosis

According to the senior IP counsel at the global device firm, IP ownership is a main cause of tension between medical device companies and third-party tech companies in smart device partnerships.

“Every negotiation is so fact specific,” he explains. “Broadly, the goal is to negotiate the best terms and work out some compromises.”

He points out that some negotiations are just a matter of setting out that each party in the partnership owns what it creates and puts into a new invention, which is often the case when the other business does something very different to medical devices.


“We have always done these sorts of contracts but never before at this volume. It used to be a matter of negotiating one alliance per quarter and now it is more like one per week”


The trouble, he adds, is when the companies working together have fairly similar business models and inventions are developed jointly.

“In those cases both parties have to ask, who will own the invention? Will it be jointly owned?” he says. “Does each party have the right to commercially exploit the invention without paying money to the other side?”

He adds that there is also the matter of whether one party should pay royalties if it licenses the invention to a third party or if its exploitation of the invention requires use of third-party IP or builds on it.

The patent counsel for the medical devices branch of a life sciences firm adds that, despite the increased number of partnerships, the negotiations themselves are not any more difficult than past ownership discussions. He says the key is to ensure that IP ownership matters are worked out before both companies spend thousands or millions on a project so that both parties can get a good deal out of it.

“Other parties come into the mix with certain ideas and it is important to have a meeting of the minds before proceeding on a mutually beneficial project,” he says.

Van Velzen at Philips says that the best strategy for these negotiations is to keep the end needs of the customer in mind and use that as a starting point.

“Getting to that end result is not so difficult so long as all the partners agree on that,” she says. “That means developing a level of trust in exchange of know-how and making inventions together. It is the corner stone of a good strategy in patent portfolio management for healthcare businesses.”

Franz Wittwer, senior innovation manager at medical device firm Biotronik, adds that successful negotiations are also about teaming up with the right partner – one that has a similar culture and shares a desire to innovate and improve the end-user experience.

Protection analysis

Another challenge for medical device companies is working with third parties to determine the best protection strategy for the jointly-made new inventions on an increased scale.

The patent counsel for the medical devices branch of a life sciences firm points out that some entities like to protect inventions with trade secrets, other with patents and others yet with a combination of the two. He adds that like IP ownership, working out protection preferences should be done ahead of time.

Franz Wittmer


“It is a question of time until the med-tech industry has a major infringement challenge because certain tech companies that are not the industry’s usual competitors are getting into the space”

Franz Wittwer, Biotronik


The senior IP counsel for a global medical device company adds that protection analysis with partners should be a matter of practicality as much as preference. His company, he says, has not traditionally relied on trade secrets, but has started using them more and more as it works with more software developers.

Software, of course, is notoriously difficult to patent and perhaps more difficult to enforce.

Companies must also work together to determine if an invention is likely to be seen as obvious by a patent office. The patent counsel at the medical devices branch points out that a lot of tech going into medical devices now, such as sensors, are already used in consumables and wearables.

“Many of the implants we’re creating are brand new, but have been out for years and the combination of the implant and these technologies could be seen by patent offices as fairly obvious,” he says.

“Perhaps it is not obvious and the tech is more difficult to create than meets the eye. But we should consider that some of the tech may be better protected by trade secrets, nonetheless.”

Pumping up FTO

The introduction of new tech players into the medical device market also means medical device firms have to expand their prior art searches to ensure that they have freedom to operate for their smart innovations.

“It is a question of time until the med-tech industry has a major infringement challenge because certain tech companies that are not the industry’s usual competitors are getting into the space,” says Wittwer at Biotronik. “The Apples and Googles of this world are moving into the industry and it may get crowded in regards to patents being filed.”

The senior IP counsel for a global medical device company argues that these entrants should only affect companies that operate more in the consumer space.

But he adds that as medical device companies incorporate tech into their products or build new tech-based innovations, they may need to consider whether they’re infringing patents in other industries. Certain advancements on the touch screen for an ultrasound machine, for example, could already have been developed and protected by another company for a driverless car. 

The senior IP counsel says that this fact will not alter his company’s FTO strategy, however.

“The FTO process gets too complicated if we start looking outside medical devices for infringement,” he says.  

“Could we be infringing on an Apple or Google patent? Absolutely. But it would not be worth their time to come after us even if they realised we were infringing and even though we're a big company.”

He explains that his company is diversified in terms of its products. The company will only sell a few thousand systems a year of a particular version of an ultrasound system, and the damages that could be sought for infringement of a particular component if that system would be quite small.

“It would not be worth their time if they're selling smartphones, for example, and selling millions of units a year or at least hundreds of thousands,” he says.

He adds that this business model is both a blessing and curse because it makes it difficult to go after competitors who might be infringing on a particular component in eight different types of ultrasound systems.

Technology is providing wonderful new opportunities for medical device companies to enhance their products, improve the end-user experience and generate revenues. But a lack of expertise in these new technologies makes multiple partnerships necessary. Unless medical device firms swallow up SME firms on mass to bring the knowledge in-house, the number of partnerships and associated IP challenges will keep escalating.

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