MDDI_Medical Device & Diagnostic Industry

MDDI, June 2014

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40 | JUNE 2014 Image courtesy of DAMIANPALUS/iSTOCKPHOTO.COM Intellectual Property A medical device company's success depends, in large part, on the strength and value of its patent portfolio. And as companies are becoming acutely aware of this fact, the issue rate for new medical device patents is exploding. According to the most recent U.S. Patent and Trademark Office (USPTO) Patent Technology Monitoring Team Report, 16,537 U.S. patents for medical devices were issued in 2012, shattering the previ- ous record of 13,699 medical device patents in 2011. In fact, the num- ber of medical device patents issued by the USPTO has increased each year since 2009, and more than 50,000 U.S. patents for medical devices were issued between 2009 and 2012. In 2012, the five-year running average annual growth rate for issued medical device pat- ents was 21%, a 6% increase from 2011. This is more than double the five-year running average growth rate for utility patents across all industries, which stood at 9% in 2012, up 4% from 2011. Medi- cal devices exhibited the strongest patent growth rate among 12 key technology areas, according to Thomson Reuters. With competitors hurrying to get a USPTO stamp of approval on their concepts, it has never been more vital for companies to stake their claims in the medical device patent gold rush. Medical Device Patent Explosion Many forces have been pushing the medical device patent explo- sion, including the growth of the medical device industry itself, the increasing strategic and monetary value of patents to both startup and established medical device companies, and the changing patent landscape for medical devices. As the medical device industry continues to grow, so do medical device patent filings. Frost and Sullivan pegged 2011 medical device industry revenues at $102.1 billion for the U.S. market. This is ex- pected to increase by more than half, to $156.8 billion, in 2018. The aging population and increasing rate of obesity was already driving up demand for medical care in the coming years when the increased access to healthcare provided by the Affordable Care Act pushed growth curves out even further. The hottest patent areas match the medical device subsectors that are expected to see the greatest growth in the coming years. In 2012, the surgery subsector claimed more than one-third of all newly issued medical device patents, and the sterilizing, syringes, and elec- trotherapy subsector claimed another 30% of all newly issued medi- cal device patents. Strong long-term growth forecasts for these areas should continue to be reflected in new patents issued by the USPTO. Patents Fuel Company Growth In today's challenging economic climate, a strategic patent portfolio is crucial to a company's growth and survival, and can provide numerous business advantages. Patents are extremely important for medical device companies in all life stages. For early-stage companies, patents are often the only way for investors to place a value on a company's technology, as sales often cannot begin until after FDA approval. In this way, patents make up a significantly greater portion of enterprise value for early-stage medical device companies than other startups. As a company grows, patents become the currency to secure financing through venture capital or Amid record medtech patent issuances and changes in patent law, companies would be wise to rethink their patenting goals and strategies. DAVID J. DYKEMAN AND MICHAEL A. COHEN Stake Your Claim in the PATENT GOLD RUSH ES450971_MD1406_040.pgs 06.03.2014 02:40 UBM black yellow magenta cyan

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