So welcome to part 4 of intellectual property in health care. In this part, we're going to do some case studies in healthcare IP. In particular, we're going to do three case studies. First, we're going to go over the major forms of intellectual property and talk a little bit about how they relate to strategy. Then we're going to look at three different case studies in the healthcare context. First 23andMe, a startup company involved that's trying to create essentially a new industry surrounding genetic testing and using intellectual property in that area to try to protect itself. Then Novartis. Novartis is a large international drug company that uses intellectual property law, primarily, a transactional tool, is a mechanism for creating value around its business processes in transacting around intellectual property. Then Medtronic. Medtronic is the major medical devices manufacturer in the United States. But a lot of consumers don't even really know the name Medtronic but it's in every health care interaction you have, Medtronic is probably involved in some way. They make almost everything from high end surgical equipment to scalpels all the way down the line. They use patents very heavily in all of these areas and aggressive approach to patent litigation in order to protect and maintain their leadership in that area. So let's review quickly the major forms of intellectual property. The ones we're going ton primarily talk about in this part are copyright patents and trademarks. So copyright of course is directed to creative works of expression. Things like books, media products like songs, movies, TV shows, copyrighted software is an important component of copyright. Those are the things that copyright protects. Patents as you will recall is primarily focused towards inventions and innovations, things that are made that have innovative aspects [inaudible] and the subject matter can be very broad. Trademarks are related to the building of brands which creates goodwill and thereby investments in product quality. So a trademark system or a trademark strategy is based around this idea of creating consumer goodwill towards the underlying source of whatever the company or mark is. So there are advantages and disadvantages then to each of these approaches. So patent law is strongly enforceable. You can enforce patents in a variety of ways. You can get lots of damages from patents. You can get injunctive relief which is a order by a court to cease doing something that's a very powerful relief that you can get as a patent holder. The rights can be fairly broad, the way that patent law works is to give a fairly broad scope of rights for a particular invention. Then the rights are relatively clear as well, which means it's relatively easy to transact. People can generally understand what the topic of the patent is and therefore, you can make a deal, either a licensing deal or maybe even a sale of the patent. It can protect your investments in innovation. So if you are trying to do a research in development project, one of the things that you know, or that you can use patents for us to try to get some return on that innovation, gets some return on that investment by either licensing, maybe selling the patents, or maybe trying to enforce the patents against your competitors. The downsides of patents are that they're fairly expensive and time consuming to obtain. Typically, somewhere in the neighborhood of three years to obtain, they can cost anywhere from $8,000-$50,000 depending on how complex they are to obtain a single patent. The enforcement can also be quite costly. It can take years to litigate a patent. It's very time-consuming, costs a lot of money to litigate a patent, one of the most complex and costly areas of the US legal system. The process of screening that we have in the patent system, by which I mean the Patent Office means that obtaining rights is not clear. So even if you have an invention, it may well be that you can't get a patent on that invention because perhaps there's somebody else's already invented it, or there could be other defects in your application process that would cause you to not get the invention. So it's not a sure deal. Then the term is relatively limited in the patent context. Twenty years from the date of filing, which might be good enough for certain products, computer software, for example, maybe even computer hardware, but other products, for example, pharmaceutical drugs or chemicals, it may not be long enough to fully recoup the investment. So those are the pros and cons of patents. Trademarks have pros and cons as well. Trademarks are easy to obtain, you can register them in order to get greater protection. But in general, if you start using a mark, you can have it as a trademark. You can protect some specific types of investments. So intangible goodwill type assets, the good feelings that the consumers have towards you or your product are things that you can protect with a trademark. Trademarks are quite effective at protecting against the knock-offs. So the the straight copying of your goods and services that might otherwise be more costly or more difficult to protect under the other areas of IP. The downside to trademarks is that the rights are relatively narrow. They are limited to just what you have branded yourself as or what brands you're going to use. So some expansion of that. But really it's pretty focused on the types of things that you build your brand in and it doesn't go much further than that. Enforcement can also be pretty costly, less costly than patents. It doesn't require as much discovery the types of experts that you would have to hire aren't as costly, but it still can take quite a long time. The substantial outlay of resources in order to protect your trademack. Then again, the screening process here means that even if you have a brand or have a mark that you've been using, you are not entirely certain that you're going to get that trademark. There's a screening process and it may be that somebody else has used it or use something similar enough that you're not going to get it. So it's not entirely a sure thing. Copyrights like trademarks are very easy to obtain. You create a expressive work and you have a copyright essentially automatically. Now there are advantages to doing things like marking your copyright and registering your copyright in terms of your ability to enforce. But in terms of actually getting the underlying copyright, they are essentially free. If you make the good, make the creative work, you get a copyright. It's good at protecting creative work and particularly entertainment type works; TVs, movies, those things are well protected by copyright, and good at protecting against exact copying. The rights that you get as a copyright are at their strongest when what somebody has done is sorted directly copying some piece of creative expression that you have made. The rights however are pretty narrow, and there are a lot of defenses to copyright that would allow people who are even using your exact creative work to potentially not be liable for copyright infringement. So that means that it is not certain that you can always get the copyright enforcement that you might expect. Again, like the other areas of intellectual property rights, the enforcement scheme can be pretty costly. It can take years to litigate copyright cases that require expert witnesses to testify as to whether or not an associated good is close enough, is substantially similar, as we would say in the copyright context, to your good. All of that takes time and money and can diminish your ability to protect your rights. So if we lay all of this out into what I would call a strategy chart, this is the way that I think about it. So if you look at four categories that you might think about, if you're thinking about IP strategy, how long is the protection lasting. Once I get the right, how long does it last? How costly is it to actually get that protection? How broad are the rights once I get the protection? Then what kinds of things can I cover with that IP? So in patents you have a relatively short length of protection. It's expensive to obtain, the rights are quite broad, and the subject matter is quite broad, anything that you can characterized as an invention. Trademarks. Trademarks have a very long length that protection, potentially perpetual as long as you continue using the mark and people continue to associate the mark with the underlying good or service that you're providing. Not very costly to obtain, less so than patents. It's not as rigorous as screening process, but it is a screening process. So it costs some but not as much as patents. The breadth of rights is not particularly strong. It's really not as broad as patents anyway. It's really limited to what you have obtained and what types of investments you've made. Then the type of coverage is fairly narrows, it just marks is pretty much it. You can get some coverage for design as long as people understand the design to be distinctly related to the underlying good or service. But really you're just talking about marks and branding there. Copyrights, the length of protection is also very long life of the author plus 70 years, sometimes even more. If it's a corporate author, it's again almost free to obtain your automatically create a copyright. There is some expense involved if you want to register the copyright, but even then they expense is very low. The rights are not very broad, you have to pretty much show copying of your exact work of creative expression and even then there are lots of defenses. Then the type of coverage is pretty narrow because you're really are limited to those creative works of expression that you yourself have made and distributed. So if you think about your business model or your strategy for business and how the types of products or goods or services that you're offering fit into these categories, that may give you a guide for how to use these IP rights to the best available opportunities.
