Intellectual Property for Digital Health Companies: How a Multi-Faceted Strategy Balances Patentability Barriers
When it comes to protecting intellectual property (IP), patents are typically viewed as the gold standard for protecting a company’s most important assets. However, digital health companies face significant hurdles in pursuing patent protection for their assets.
If you’re building a digital health company, it is especially important to develop a multi-faceted intellectual property protection strategy.
Here’s why: a strategy that includes multiple pathways for IP protection allows you to protect both tangible assets, like proprietary hardware, software, and documentation, as well as intangible assets, like branding, customer-facing website designs, pricing strategies, business models and projections. A multi-faceted IP protection strategy that covers the totality of your company’s assets is the best tool to cement market share and protect against infringement and encroachment from competitors.
Today you’ll discover:
An overview of the various types of IP protection (patent, trademark, trade secret, copyright) available to your healthcare or life sciences company and product; and
How to gauge what best fits your current and future needs.
Nixon Gwilt Law works with innovators across the healthcare spectrum every day, so when you’re ready to find the best route forward to protect your ideas and assets, we can show you the way. Until then, let’s cover some of the basics you need to know as an innovator in the digital health space.
Why Digital Health Patents Are Often Unsuccessful
Patent protection is one area of intellectual property that was specifically written into the Constitution. However, the technological landscape and patenting rules have changed considerably since the days when Thomas Jefferson was the first patent examiner.
The US Patent and Trademark Office (USPTO) has done its best to keep up with the rapidly developing technological challenges of the 21st century, but it is often the case that industry moves faster than government. Patent law, therefore, has yet to truly embrace and integrate emerging digital technology into its evaluation frameworks. The result is the frequent exclusion of digital technology from patentability.
Digital technology has often been interpreted by the USPTO to fall within something called the “abstract idea exclusion”, which prevents these products from qualifying as “eligible subject matter.” This is problematic for digital technology developers because subject matter eligibility is a prerequisite for patentability.
The USPTO uses a framework called the Alice/Mayo Two-Step Analysis (see Figure 1 below) to determine subject matter eligibility. If the patent examiner, using this framework, determines that a software or digital technology is an “abstract idea”, it will be excluded from patent eligibility UNLESS, taking into account the totality of the subject matter of the patent application, there appears to be enough of an “inventive concept” to overcome the hurdle for allowable subject matter.
Source: US Patent Office
Unfortunately, the threshold is not readily quantifiable for whether subject matter, taken in its totality, is an “inventive concept” for the purposes of patentability. It is defined by USPTO and case law. The key is to focus a patent application not just on the software, but on other more tangible elements of your product (e.g., hardware) or how it interacts with novel business processes, with special attention given to any market problems the additional claimed subject matter addresses. This broader framing may allow you to indirectly protect your otherwise non-patentable digital assets.
Your best path is to rely on an expert to properly frame your subject matter in a patent application. An experienced attorney can help analyze your technology and digital assets to determine how your invention fits within the Alice/Mayo Two-Step Analysis and whether and how you might best overcome the subject matter exclusion.
So, the patentability challenges are surmountable, but they can be difficult and expensive. And they’re just one layer of available protection for your company. Your digital health company should consider patent strategy, but also consider other facets of IP protection for your company’s assets and market share, which is what we’ll focus on in the remainder of this post.
Why Protecting Your Brand Name via Trademark is Pivotal to Maintaining Your Market Share
One of your most important assets in the digital health space is your brand name and the trust you establish with your clients; these lead to the goodwill you generate with your clients in the market. There are two types of trademarks: common law trademarks, which you obtain by merely selling your product on the market (or “placing it into commerce”), and federally registered trademarks, which you obtain by registering your trademark with the USPTO.
You automatically obtain a common law trademark by placing it into commerce. However, under common law (i.e., without registering your trademark through the USPTO) this protection is geographically limited. For tangible product companies, this may be sufficient protection, but for a digital health company that exists in an intangible marketplace, such as the internet, this is generally not the best type of protection. Thus, a federally registered trademark is a terrific asset for well-rounded intellectual property protection.
A federally registered trademark affords your company with the presumption of nationwide validity and allows you to protect your brand by excluding others from using your trademark and attempting to steal your market share.
There are two main requirements for either type of trademark: (1) it must be used in commerce and (2) it must be distinctive.
Used in Commerce
Use in commerce means that the mark must be an actual piece of your business with real and ongoing sales and not just an arbitrary good used to satisfy this requirement to obtain trademark protection. The sale of a digital health product into an intangible marketplace would generally qualify as a use in commerce. For early-stage companies still developing their product, there is the possibility to obtain a federally registered trademark early through an “intent-to-use” trademark, which allows you to obtain an earlier filing date, and then submit evidence of your trademark’s use in commerce at a later date. An earlier filing date can be beneficial in competitive landscapes where multiple companies may be vying for dominance.
Distinctive
Distinctiveness is the ability for a trademark to distinguish itself – the ability for a consumer in commerce to identify your brand and product. This is a somewhat more challenging requirement to satisfy. The more distinctive your trademark is, the more protection you will be afforded. This is the requirement that would be most beneficial for you to discuss with an experienced attorney to ensure that you are protecting the most useful assets for your company and product.
As you can see from the chart above, the better trademarks are the more “arbitrary” and “fanciful” ones that lead to easily recognizable brands and products – think Apple or Google. You must at least have a “suggestive” mark to be able to register your trademark with the USPTO. Again, the more distinctive your trademark is, the easier it will be to obtain registration through the USPTO, and the more protection you will be afforded to prevent others from encroaching on your market nationwide.
Why Trade Secret Protection May Assist in Protecting Your Underlying Technology
Trade secret protection, unlike patent or trademark protection, doesn’t require registering or applying for protection—rather, this is protection secured by contract and earned through good privacy hygiene. A trade secret is (1) something that is not known or readily accessible by your competitors, (2) gives your company commercial value or a competitive advantage, and (3) requires you to use reasonable efforts to protect against disclosure and maintain its secrecy. This third facet of trade secret protection requires that you consider how to maintain confidentiality of your IP assets. For instance, source code can be a trade secret. If you make your source code public or fail to take reasonable steps to maintain its confidentiality, it may lose its trade secret status. One method for protecting trade secrets is contractual. For instance, we recommend that digital health companies require any individual accessing trade secrets to, at minimum, sign confidentiality and assignment agreements. A well-crafted confidentiality provision might, for instance, prevent dissemination, distribution, and reverse engineering of your product.
NGL routinely works with digital health companies to audit documents and practices to determine compliance with these requirements. We also redraft any documents necessary in order to maintain robust trade secret protection for the most pivotal underlying pieces of your product.
Why Copyright Protection May Add Additional Protections
Copyright is another smart step towards achieving well-rounded IP protection. While a trade secret may protect your technology’s proprietary internal code, you can utilize copyright protection for your public-facing code. Copyright protection is usually reserved for artistic expressions that are reduced to a fixed and tangible form, but in the Copyright Act, software is considered a literary work.
As with trademark protection, you will receive automatic copyright protection from the moment it is created and fixed in its form, so long as you can show proof of your creation. Registering your copyright federally gives you more legal protection and is relatively inexpensive. The advantages for a federally registered copyright include establishing a public record of your copyright, allowing you to sue in federal court, allowing you to ask for additional damages, etc.
Creating a Well-Rounded Intellectual Property Protection Strategy
The first step in obtaining protection for your valuable assets is keeping whatever you can secret! Any disclosures made outside of a confidentiality agreement or an attorney-client relationship may present hurdles for protecting your assets.
An important step in structuring your portfolio of IP protections is consulting with an experienced attorney not only in digital health, but also in intellectual property in order to discuss what you feel are the most important pieces of your business and technology. During that discussion, it will also be clear how you might be able to pursue patent protection and satisfy the requirements of the other types of IP to move forward with acquiring those various types of IP protection. It will also be important to discuss confidentiality and employment agreements to ensure that you can claim robust trade secret protection.
Do you want to talk about your IP concerns?
Click here to schedule an introductory call. You’ll discover how we help digital health companies protect their assets. You’ll also learn about our innovative fee options, including fixed-fee services (for short projects) and flex-to-scale arrangements (to flex in price and service to your specific needs every 90 days).