Freedom to Operate
The early planning of medical device startups often involves consideration of freedom to operate. Freedom to operate (FTO) is the ability of a company to make or sell products without legal liabilities to third parties based on IP. While consideration of FTO is important to any startup seeking commercialization, it is critical to medical device companies because research and development costs are so great and global competition so fierce. To assess risks to freedom to operate, a qualified IP attorney or firm will review patents, publications, and other literature to uncover any relevant IP rights. After analyzing the results, an IP attorney can provide a legal opinion as to whether the company’s product or process poses a risk of infringement. FTO search, analysis, and opinions are so instrumental to identifying barriers to commercialization that they are often required before additional investment.
If a FTO opinion suggests that there is likely freedom to operate, many medical device founders will choose to protect their innovations with patenting. A patent is a form of intellectual property that gives an inventor exclusive rights to their invention; competitors are excluded from making, using, or selling the patented invention without the patent owner’s consent for a set period of time. To be awarded a patent, technical information about the invention must be disclosed to the public in a patent application and the inventor must demonstrate that their product or process is novel.
In some scenarios, medical device founders may opt to keep their innovations private. Inventions that are not disclosed to the public through formal patent applications can be protected as trade secrets. The definition of a trade secret is not uniform but generally encompasses the proprietary information of a company, that is commercially valuable, subject to reasonable efforts to maintain its secrecy, and unknown to its competitors. This type of intellectual property may include practices and processes such as formulas, designs, patterns, compilations, methods, techniques, prototypes or devices, etc. Trade secrets must be kept secret; if a trade secret becomes public, its status may be lost. Because trade secrets are not registered with a government agency, they can be more easily subject to misappropriation.
Medical device founders may seek intellectual property protection in the form of trademarks. Trademarks are often used to protect brand names but they may include other recognizable words, phrases, symbols, or designs that can be used to identify a business’s goods and services. Trademark registration is a valuable way to protect a company’s marketing investment in its brand. A trademark strategy typically begins with a search to uncover potential barriers to trademark clearance, such as similar marks. This is important knowledge for medical device startups to obtain upfront to avoid wasting branding assets and posing unnecessary challenges to investment and commercialization. Ultimately, trademark registration can be effective at discouraging competitors from using a company’s products or services without permission and warding off copycats that may try to use its likeness for profit.
The legal right of the owner of intellectual property for original works of authorship fixed in a tangible medium of expression is referred to as copyright. Copyright ownership gives authors exclusive rights to reproduce, or copy, prepare derivative works, distribute, perform, and display their creative works for a given amount of time. Copyrights cover literary and artistic works such as art, poetry, graphic design, music, film, advertisements, maps, technical drawings, etc. In the medical device field, copyright protection most often applies to written materials like publications, manuals, drawings, product literature, and company announcements. Original works of authorship are automatically protected under copyright law, and copyright registration is voluntary. However, many founders of medical device startups pursue copyright registration to obtain a public record of their copyrights. Copyright registration is useful for disputes over ownership or creation; it is required for copyright infringement lawsuits in the United States.
Are you planning a BioTech, HealthTech, Medical Device or Life Science startup? Discover other helpful startup topics & resources at Y Combinator.