Joint inventorship presents one of the most challenging situations within patent law. It allows the ownership of a patent to reside with more than one person; and, as a result, it can create uncertainties over the patent’s chain of title when the inventors’ interests diverge. To avoid such problems, it is preferable to address joint inventorship issues upfront—before any discussions with investors or collaborators takes place. The fact pattern below highlights situations that commonly arise with joint inventors and it then proposes some solutions.
Alice and Dwayne are friends in upstate New York. They are both interested in magnetic resonance imaging (“MRI”) machines and they are trying to come up with a process that speeds up the time it takes to effectively use an MRI machine. They believe that their research—if successful—presents a tremendous opportunity to improve rural medicine due to the scarcity of MRI machines in these areas. Additionally, because the average MRI scan takes between 15 to 90 minutes, queues often plague the speed of administration that rural community hospitals are capable of.
Alice and Dwayne successfully develop a software that decreases the time of an MRI scan by a factor of ten. Realizing the unique and transformative nature of the software, the two file a patent with the United States Patent and Trademark Office (“USPTO”) and list themselves as the inventors of the patent. They do not form a company, nor do they have any intellectual property (“IP”) agreements in place to determine how any IP developed by them would be handled. For all intents and purposes, Alice and Dwayne own the intellectual property jointly.
Shortly after filing, Alice mentions the software to her Aunt—a top executive at a leading medical device company. Alice’s Aunt tells her that the company would likely buy the rights to the patent for $10 million. Alice rushes to tell Dwayne who expresses discontent with the offer. Dwayne prefers to provide the software for free through an open-source license to improve rural communities’ healthcare systems.
This hypothetical illustrates a particularly nascent problem within the intellectual property space. Absent any agreements to the contrary, patent ownership resides with the inventor or inventors of the patent. Inventorship, in turn, is determined by whether the person contributed to the “conception” of the idea, or “the formation in the mind of the inventor of a definite and permanent idea of the complete and operative invention as it is thereafter to be applied in practice.” Assuming that both Alice and Dwayne contributed to the conception of the new software, then both Alice and Dwayne are inventors on the patent and therefore jointly own the patent.
Ownership of a patent comes with benefits, one of which is the right to sell or license out the patent. When there are multiple owners of a patent, each one of those owners may sell or license out the patent without the permission of the other owners. In our fact pattern above, Alice’s desire to sell the patent to her Aunt may be hindered by Dwayne’s desire not to do so. In fact, if Dwayne starts providing the software for free, Alice’s Aunt’s company may no longer be interested in buying the patent when they learn that it is being provided at no cost.
Nevertheless, mechanisms exist that can mitigate such joint inventor problems. One rather simple solution is for the inventors to agree upfront on a contract that would govern rights and responsibilities to jointly held inventions. This would provide some guidance for the inventors for when to sell the joint work, when to bring suit, and so on.
Another more robust solution is for the inventors to form a separate corporate entity to which the inventors will assign their intellectual property. For instance, Alice and Dwayne could have formed a c-corporation and assigned all intellectual property related to fast MRI scans to the corporation. This process provides better protection for inventors because it removes the concerns about joint inventorship by placing ownership of the invention into a company, which would have the sole power to sell or license the patents to a third party.
To bolster the protection offered by using a company to hold title for the intellectual property, the founders can carve out what IP the inventor retains based on specific uses. For instance, the parties can agree to divide the interest to arising intellectual property into distinct fields of use, and each party would retain rights within its pre-defined field of use. In our fact pattern, for example, Alice could retain rights over MRI uses for epilepsy while Dwayne could retain rights for stroke. This allows each party to maintain some exclusivity to the arising inventions, preventing one party from potentially sabotaging the other party’s interests.
Using either of these devices helps contemplate the problem that joint ownership can present. By negotiating each inventor’s rights ahead of time, inventors avoid—or at least mitigate—disputes that may arise as interests diverge.
For many early stage inventors, the prospect of securing a patent represents a daunting next step. Cost concerns, complexity, insufficient data, or lack of foresight dissuade inventors from securing patent protection. However, delaying the filing of a patent can cost inventors tremendously.
The United States has a first-to-file patent system, which means that the first person to file a patent application receives priority to that application. It logically follows that if you wait to file then you can lose all rights to your invention; however, this is not the only concern. Failing to timely file a patent hamstrings an inventor in several other ways. This post details three key risks that follow from delaying a patent filing.
Losing Priority to your Invention. As previously stated, the first-to-file system provides an incentive to proactive inventors. By filing early, an inventor locks in their right to maintain a limited monopoly over the claimed invention. Thus, a first-to-file system differs from a system that bestows patent ownership to the person who first conceives the idea, in that the person who had the idea first nonetheless lacks any claim of right over the invention.
Suppose you invent a novel drug that can treat hair loss, but you do not wish to patent the invention until your data reflects 90% efficacy. Several years pass and the data you wish to include in the patent application reflects 100% efficacy. You go to your attorney on March 3rd, 2021 to help you with the patent application, and they let you know that they will begin a prior art search immediately. Unfortunately for you, the attorney’s prior art search uncovers the exact same drug formulation on a patent filed on March 2nd, 2021. Even if the data on this patent reflected a less effective formula your patent would still be excluded under the United States’ first-to-file system.
The above hypothetical reflects a near-catastrophic example of losing priority to your invention. Not only did delaying your patent put you second in line, but the inventor that filed first now maintains a twenty-year monopoly over the hair loss drug that you spent years of your life—and potentially a significant portion of you or your company’s finances—developing.
Inadvertent Disclosure. Another risk that inventors face when delaying a patent’s filing is the inadvertent disclosure of their invention. Suppose the drug developer mentioned above attended a conference for people working in the hair-loss treatment space, and that the inventor presented their preliminary findings for their drug formulation. After the conference, the inventor collects data for thirteen months before finally meeting with their attorney to start the drug’s patent application. During the prior art search, the attorney uncovers the inventor’s presentation at the conference. Here, the attorney would have to inform the inventor that their prior disclosure precludes the patent filing because the information already exists in the art—the inventor effectively became their own prior art.
Here, the risk is less dramatic than above, but it still impairs the inventor’s ability to market their drug unimpeded. Now the inventor will have to enter a market without the exclusivity protection that a patent offers. In short, the inventor exposes themselves to a potential flood of unfettered competition.
Under 35 U.S.C. § 102(b)(1), an inventor has one year from the time of an inadvertent or intentional disclosure to file a patent. The clock begins to toll immediately from the point of disclosure. In many instances, the risk would be another inventor beating you to the patent filing. However, if the patent application for this invention is particularly laborious, then one year might not be enough time to complete and file the application. At any rate, if you find yourself at a point where you are willing to disclose details of your invention, you should begin the patent-filing process to avoid these risks.
Impairing your ability to freely share information. For many inventors, the invention is but a subset over their overarching goal. The invention might be the foundation on which they plan to build their company around. To build a successful enterprise, an inventor will need to talk with potential employees, customers, and investors. Inventors that wish to delay their patent filing might take comfort in the use of non-disclosure agreements (“NDA”)—particularly with their employees. Here, the inventor might maintain that the invention is their company’s trade secret, and that a signed NDA prevents other companies from replicating the invention because the information is held confidentially. The problem here is that once a person discloses a trade secret, it is no longer a trade secret. The disclosure could thus prevent you from obtaining a patent either because the information became prior art, or a different company used the information to file its own patent.
Accordingly, the lack of patent protection could preclude you from disclosing all of your invention’s details with the parties that might enable your company to succeed. This may present a barrier that is too great for some to overcome, and they might avoid doing business with you or decline your employment offer. Additionally, the lack of patent protection might be a nonstarter for some investors who are worried that established companies could replicate your invention and force you out of the market.
In today’s first-to-file patent system, it has become increasing important to file timely patent applications. Failing to do so not only jeopardizes an inventor’s rights to that technology, but also hamstrings the inventor’s ability to promote that technology.
Companies generally have two options when deciding what product to pursue and patent: develop a novel product from scratch or find an existing one and repurpose it. Repurposing existing technologies can offer viable opportunities for companies looking to expand their product portfolios since it eliminates many of the costs, time, and risk associated with developing de novo products.
There are two main hurdles when it comes to IP issues involving a pre-existing technology: novelty under 35 U.S.C. Section 102 (“Section 102”) and obviousness under 35 U.S.C. Section 103 (“Section 103”). We will address these in turn.
Section 102: Novelty
One of the main hurdles to overcome when patenting a pre-existing technology is novelty, or Section 102. As applied to a pre-existing drug, Section 102 requires that it not be previously patented, described in a printed publication, in public use, on sale, or otherwise available to the public before the patent application is filed. In other words, a claim to the pre-existing drug must recite something not previously known to the public. For drug patents, most composition of matter claims reciting only the pre-existing drug will run afoul of Section 102 because the drug was previously known to the public, and thus, would be considered prior art to any subsequent patent application.
New indications: To overcome the novelty hurdle, composition claims including pre-existing drugs need to include new elements not anticipated by the earlier disclosure. Such new elements could be, for instance, reciting new uses, such as a new indication. If the original claims were directed to a cancer indication, for instance, a novel use would be to claim a cardiovascular one. Such method claims are often difficult for competitors to design around, and they are also available in many foreign jurisdictions, although in slightly different formats. Other uses could include new dosage amounts, different formulations, better safety, better tolerability, new way of administration, and so forth.
New dosage forms: Another way to claim a previously-known drug is to claim novel pharmaceutical dosage forms. Pharmaceutical dosage forms can be, for instance, gels, solids, liquids, or sustained or extended-release forms. Other examples of dosage forms can be for a specific type of administration including oral, parenteral, intramuscular, and the like. Many variations of pharmaceutical dosage forms are available and lend themselves to drafting novel claims that overcome Section 102 rejections.
New combinations: Yet another approach for overcoming a Section 102 hurdle is to combine two pre-existing technologies into one product. In the case of drugs, one can incorporate the pre-existing drug into a composition including one or more other compounds to form a novel combination. For instance, Pfizer’s drug, Caduet®, is the combination of the calcium channel blocker, Norvasc®, and the cholesterol-lowering agent, Lipitor®, which expired in 2007 and 2011, respectively. The combination product expired in 2018, about seven years after the expiration of one of its products.
While the repurposed technology can be any new use, new form, or even new combination that is novel for the purpose of overcoming Section 102, such modifications to the pre-existing technology may nevertheless encounter Section 103 obviousness hurdles as the modification may be obvious to one skilled in the art. Below we explore Section 103 and provide suggestions for overcoming rejections to pre-existing technologies.
Section 103: Obviousness
Obviousness rejections under Section 103 for pre-existing technologies can be based on a combination of several prior art references, each of them teaching one or more aspects of the rejected claims. Overcoming an obviousness rejection can, therefore, be complex. Overcoming obviousness rejections often turns on arguments that focus on the context for the inventive process rather than on the technical features of an invention. These arguments, which include the invention’s commercial success, satisfying a long felt but unsolved needs, failure of others where the invention succeeds, and the appearance of unexpected results are often referred to as “secondary considerations.”
Commercial success: Showing commercial success of an invention is one way of overcoming an obviousness rejection. In theory, if a product that is commercially successful was obvious to invent, then competitors likely would have already developed it. Therefore, if a product is commercially successful, one argument in overcoming obviousness is that others also recognized the product’s potential for commercial success but failed in their commercial attempts to develop a solution to the same problem. Including information showing a connection between the novel aspects of the patent claim(s) and the commercial success is often required in demonstrating non-obviousness based on commercial success.
Prior problems: Another possible argument against obviousness is disclosing a prior, unappreciated problem or complex hurdle the inventors overcame in a non-obvious manner. In this situation, the inventors could point to wide-spread skepticism that a hurdle could not be overcome using known methodologies. Showing that the methodology for overcoming the hurdle or problem was unique can be a successful strategy when overcoming an obviousness challenge.
Failure of others: Yet another possible argument in overcoming an obviousness rejection is to show that previous studies either failed at developing the claimed invention or indicated the claimed invention would not work. In this situation, it is necessary to have a clear understanding of research in the space and point to any shortcomings. Including such shortcomings in a patent application can greatly help overcome obviousness rejections down the road.
Unexpected results: Another strong argument in overcoming an obviousness rejection is by showing unexpected results. This can include data showing that the pre-existing drug has a surprising effect—that it works at the higher/lower dose used, that a combination of drugs demonstrates synergy when used together, or that it has a different mechanism of action for a new use—that would not have been expected based on what was known at the time. Such examples of unexpected results can greatly help to overcome obviousness rejections, and as such, designing experiments to help generate this data is important.
The most effective way of overcoming obviousness rejections employing these secondary considerations requires early planning and foresight. Before the patent application directed to the new use of the pre-existing technology is drafted and filed, one should think about possible obviousness rejections the application might face and, when possible, design and conduct experiments to generate data that will help overcome these rejections.
Overall, overcoming novelty and obviousness rejections for repurposed products is not only possible, it can also offer a faster and more efficient way of bringing potentially valuable products to the market. To successfully obtain patent protection for the new product, be prepared to provide a lot of information. The more information you have about how the repurposed product was generated and how it differs from the previously-known versions, the better the chances are of overcoming possible rejections.
BioPharma Law Blog posts updates and analyses on IP topics, FDA regulatory issues, emerging legal developments, and other news in the constantly evolving world of biotech, pharma, and medical devices.