Caution! The Dangers of Improperly Filed Medical Device Patents
It’s vital that you avoid the patenting mistakes of other medical device inventors, especially in highly regulated fields such as healthcare.
While all small, independent inventors may harbor the natural desire to be one day hailed as a “visionary medical tech innovator who changed the world,” CAUTION is advised, especially when it comes to crafting and securing the underlying intellectual property.
Self-Filing a Medical Device Patent
Let’s consider the fabled exploits of Elizabeth Holmes and her runaway medical startup, Theranos, that reached unicorn status in the venture capital community when her “revolutionary” blood testing device helped her company reach a $1 billion evaluation. While her rise and fall are well documented, issues related to the underlying patent have never been fully explored for the benefit of interested medical inventors.
Holmes was a Silicon Valley rebel, achieving rock star status for dropping out of Stanford to start the company the early 2000s. While still a student, she self-filed her first provisional patent under the older USPTO system known as the First to Invent model.
A Daring Medical Idea
It was a daring idea: An ingestible or wearable medical device that could analyze blood in real time and release therapeutic compounds as needed. She worded the medical device patent: “This (medical) invention relates to the fields of diagnosis and drug delivery. More particularly it relates to medical devices and methods capable of monitoring levels of a bodily fluid analyte and optionally releasing of appropriate therapeutic agents.”
She sneaked her non-operational (and highly rudimentary device) through the system, largely because patent examiners were at that point in time flooded with requests which exceeded around 500,000 applications annually.
Attracting Healthcare Investors
Her patent filing success drew gasps from fellow students and professors on the medical campus and laid the groundwork for attracting giant investors and illustrious board members such as Henry Kissinger and former Senator, Sam Nunn. She segued her idea into a simpler approach over time: A portable home device that could use a pin-prick of blood to analyze over 200 conditions including diabetes, cholesterol and an array of STDs.
She then used the original patent as a foundation for gaining hundreds of other patents, even securing a $100 million loan, solely based on the underlying intellectual property.
Devil in the Details
But as with all Do-It-Yourself-Patents, the details came back to bite her and Theranos, just as it seemed she may rival Steve Jobs in stature and success. There were not only flaws in the original utility patent but also highly damaging questions about whether her fledgling device actually worked at all. This drew the attention of regulatory bodies such as the FDA and eventually caused concern among investors and board members. For several years they had quite literally regarded her as the messiah of the medical device industry. For a decade, she could do no wrong.
Defensible Medical Patents: Watch Out For Copycats & Patent Trolls
The first patenting issue to emerge involved her failure to procure subsidiary patents or revisions around key technology that would protect her from copycats or “trolls” seeking to exploit her naivety. Because she did not initially use a board-certified patent attorney to minutely analyze the field and organize a defensive intellectual property portfolio, it opened the doors for more nefarious players to potentially profit.
The first troublemaker was actually a family friend, Richard Fuisz, who filed a technology patent describing a way to transmit blood analysis data from the medical device back to the doctor for review over a cellular and wireless network.
Exploiting Inventor Naivety
It was a genius move on his part because he knew that while Holmes was feverishly working to build her modified medical device, she would at some point need to integrate this technology and protect it.
The fact that he was part of her family circle of friends should come as no surprise to YOU, the small American medical inventor.
I constantly warn inventors that even well-meaning friends and families may inadvertently let slip your idea, or worse – steal it. In this case, Holmes’s family members mentioned the idea to Fuisz during social encounters. He then quietly went about researching her idea and pinpointing a path to profit from it.
In Defense of Patents
His clever patent drew the wrath of Holmes who noted that Fuisz’s son worked at a legal firm that handled Theranos’ patent work. While his son was an ethical and competent patent attorney (with no involvement in his father’s devious patent), the subsequent litigation dragged all parties into a messy, protracted and costly legal battle.
It would have dire consequences.
One of Holmes’s star chief scientists, Ian Gibbons, was thrown into the mix due to his role at Theranos and his previous success at BioTrack Laboratories. Here, he had patented a process for mixing and dilution of liquid samples which was later used in Theranos devices.
Fuisz, a canny operator with several patents to his name, noticed many similarities between Gibbons’ and Theranos’ medical patents. He was able to name Gibbons as a co-inventor, dragging him into the lawsuit.
It was in many ways a desperate move, but it did create a number of internal issues for Holmes’ team of engineers, scientists and laboratory technicians.
With Gibbons already under tremendous professional stress because he was not able to get the Theranos blood tests working, the lawsuit added to his personal stress of a cancer diagnosis, and Gibbons ended up committing suicide.
This tragic event highlights the gravity and importance of patents attached to successful medical startups. It creates stress and uncertain outcomes for all parties, when utility, design and plants patents are not worded and carefully constructed to prevent future doubt relating to novelty and authorship.
Without a defensible bulletproof patent in place the startup must not only deploy expensive litigation teams but must deal with the arcane and confusing details of patent law. This can drag key employees and staff members unnecessarily into the mix. Further, it also revealed that Holmes was in many respects careless and reckless, not only with regards crafting the IP but also in the way she managed and ran her company. Gibbons arguably became an indirect victim of her management style. While Fuisz eventually abandoned his patent under tremendous legal pressure from Theranos litigators, the damage to Holmes was crippling and helped accelerate the company’s demise.
An Inventor’s Limelight
For a decade, Theranos basked in the limelight of a “breakout medical device” that would forever change the world of blood testing. She was courted by Walgreens and other corporate heavyweights who hoped her devices would build unimaginable new revenue streams inside hundreds of retail outlets.
She appeared on TV shows explaining how patients would one day use her device at home. Her charismatic aura and powerful ability to explain and sell her product, made her highly attractive to large investors in silicon valley hungry for another Steve Jobs.
Smokes & Mirrors
Sadly, over time it became apparent the blood analysis technology simply did not work. Demonstrations were rigged, and rival systems were used to test blood samples. Correct operating procedure were not followed in her medical laboratories. Talented employees quit and or were hastily fired. The company’s cloak of secrecy gradually lifted until a Wall Street Journal article shocked the world with the extent of her lies and machinery of disinformation. It was clear that despite millions of dollars and thousands of man hours by talented scientists, Theranos could simply not get the device to work.
Ultimately, the medical patent gives the inventor exclusive rights to the technology but must disclose how the invention works to the public. Theranos never lived up to its end of the bargain. Despite this, many people bought into the story hook, line and sinker.
Learn from Theranos
The take-home message for medical device inventors is that it is important to file carefully crafted and worded medical patents AND seek professional patent attorneys to help protect your IP. This not only demonstrates an inventor’s deep understanding of how the idea may reshape the medical device sector but also protects you from questionable entities in the marketplace who simply want to profit off your hard work and intellectual labor.
Where She Was Right
While Holmes failed as a medical inventor, she was correct that there was a demand and need for the innovation which partly explains why patent examiners may have let her idea slip through the net. In later years, the USPTO would shift to the First to File patenting framework which would put the application process on a more secure footing.
A New Breed of Medical Device Inventors
It also helps clarify why other more ethical and enterprising medical inventors are succeeding where she failed, several of whom I profile on The Patent Professor. While their devices are less ambitious, they are infinitely more transparent and operationally sound.
Without doubt, it also illustrates the critical role that patents play in procuring seed capital and interested investors. The patents play a vital role in validating a startup and showing venture capitalists a roadmap of how the medical device could potentially succeed in the marketplace.
Learn from the mistakes of Theranos and make your medical device patent bulletproof, defensible, and sound.
Profits and success will surely follow!