Top 10 Legal Issues Biotech Start-Ups Must Address - Intellectual property and regulatory compliance strategies must be scalable to the business realities of the company - BioPharm International

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Top 10 Legal Issues Biotech Start-Ups Must Address
Intellectual property and regulatory compliance strategies must be scalable to the business realities of the company


BioPharm International
Volume 21, Issue 11

4) DIVERSIFY

Most successful companies use an IP strategy that is proactive, rather than reactive, and that combines a diverse set of tools for acquiring IP. Such tactics include obtaining patents to protect the company's innovations, rather than relying on trade secret protection, which is too easily lost unless extensive internal protections and safeguards are put in place to maintain confidentiality. Layered IP protection using a combination of copyright, trade secrets, and patent protection for different aspects of innovations eligible for such protection is another way to diversify. Registering copyrights of original software and database works, for example, provides a relatively inexpensive means to obtain IP protection on the software program, while patents may protect the software's novel functionality. Developing patents with varying claim scope (e.g., claims to compositions, methods of making and using) also provides diversified IP protection. An IP strategy should also include licensing-in essential or useful IP and obtaining defensive patents in areas in which the company wishes to keep competitors at bay or to create a royalty stream. Defensive publications may also be useful in preventing competitors from obtaining patent protection for innovations that the company for one reason or another does not want to seek patent protection or does not feel confident that confidentiality can be maintained. Developing a mixed patent portfolio provides the company leverage in licensing deals, and positions the company for joint ventures or research collaborations. An IP portfolio is incomplete, however, if it does not protect the company's non-patent IP as well. A biotech start-up should register proprietary software with the US Copyright Office to obtain enhanced rights of enforcement of its software innovations. It should protect its company name and other names or symbols used to identify its products or services by filing intent to use trademark applications and domain name use early on in development. Protection of trade secrets is essential, particularly if the company's patent budget is not large enough to enable filing patents for all innovations. Protecting trademarks requires setting in place internal safeguards such as limited and secured access to information and confidentiality obligations.

5) CHECK IT TWICE

Periodically conducting internal due diligence of the company's patent portfolio is an effective way of verifying that innovations and product developments are covered by the portfolio and that the company is not maintaining IP of little or no value to it. Often, research and development evolve along unexpected lines and if care is not taken, new products or innovations may not be covered by existing patent claims, or the company may continue to seek and pay for patent protection for unsuccessful or abandoned research endeavors or product lines. It is highly recommended to have one person who is familiar with the company's research program and goals in charge of reviewing the company's patent portfolio to ensure that appropriate patent protection is maintained. That person should maintain a good relationship with any outside IP counsel involved in the company's patent prosecution and transaction work to ensure mutual understanding of the R&D achievements and aims and the goals of the business. Outside IP counsel should be apprised of any changes in the company's business plans or research and development endeavors that may affect the company's IP portfolio. The information obtained from conducting internal due diligence and the knowledge of competitors' IP is an invaluable tool to any company looking to form strategic alliances. Valuation of the deal often turns on the strength or potential strength and weakness of the IP assets. Internal due diligence helps to mitigate against a submarine issue surfacing during due diligence undertaken by a potential development partner or investor.

6) REGULATED ENVIRONMENT

The world of biomedical innovation is an intensely regulated environment. Start-up companies must rapidly familiarize themselves with applicable regulations issued under laws such as HIPAA and by regulatory authorities such as the FDA and OHRP. In certain cases, these regulations will not directly govern the actions of the company, but will govern the actions of the provider research sites that conduct the company's clinical trials. Biotech start-ups may also work with reference laboratories or other outside providers in connection with basic and animal research, and start-ups that involve genetic-based therapies may face additional federal and state law considerations. Start-ups waste valuable time and resources by including provisions in research study agreements that, while appearing to be commonsensical, stumble over tripwire regulations forcing protracted negotiations to modify the provisions. Legal assistance upfront in developing template agreements and in receiving compliance training can orient the start-up to the specifics of the regulatory environment and provide a roadmap for how these regulatory milestones affect the company's business.


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