As a patent attorney with over 20 years of experience who did the early work for Invisalign(R) patents, I have seen how patents provide a legal framework for the company to market and sell their products, which can increase their chances of success and attract more investors. Additionally, patents can also provide a financial incentive for companies to invest in the research and development of new medical devices, as they can protect the company’s investment in the technology. Patents can also be licensed or sold, which can provide a source of non-dilutive funding for the company.
If you are considering applying for a medical device patent, it is important to develop a strategy with small and micro entity status in mind. This is an area that is often overlooked, but it can have major effects on how your patent is viewed and protected. There are many factors to consider when choosing a strategy with small and micro entity status, including the size of your company, how you define your entity and what you should expect in terms of fees.
Why investors love medical device companies
Investors are often attracted to medical devices that have both FDA approval and patent status. Patents grant the company exclusive rights to the invention and prevent others from using it or selling it without permission. This can help companies recover development costs and FDA clearance. FDA approval also proves that the device meets the strict standards of safety and effectiveness set by the FDA and can legally be sold and marketed in the United States.
FDA approval can give a company an advantage in the marketplace because it provides a legal framework for marketing and selling their products. Potential investors have this assurance that the product is safe and has been properly vetted.
A patented, FDA-approved medical product can help a company stand apart in a competitive market. This can increase its chances for success and attract more investors.
FDA clearance allows the company to expand internationally and enter new markets. The device is already approved for use in the United States, where there are some of the strictest regulations in the world.
Medical devices that have received FDA and patent approvals are considered more attractive investments because they give you exclusive rights to the invention and legal framework to market it. They also provide a level of safety and security to use.
Role of Patents in Medical Device space
Patents are important for medical devices because they provide the inventor with exclusive rights to prevent others from making, using, or selling the invention without permission. This can be a critical form of protection for medical device companies, as it allows them to recoup the costs of development and FDA clearance, and to maintain a competitive edge in the market. Furthermore, patents can also have a significant impact on the medical field by promoting innovation, as it gives companies exclusive rights to use the patented technology for a period of time. This can encourage the development of new medical devices that can improve patient outcomes and healthcare overall.
Medical and biotech patents often have a large number of claims, which can add to the cost of filing the patent application. Each claim in a patent application represents a specific aspect of the invention that the inventor is seeking to protect. The more claims included in a patent application, the more expensive the filing fee will be. Additionally, the cost of preparing and prosecuting a patent application with a large number of claims can also be quite high, as it requires extensive research and drafting to ensure that the claims are properly supported and that they do not overlap with existing patents.
It’s also worth mentioning that the process of getting a patent granted is not cheap and quick. It could take several years and cost tens of thousands of dollars. And even after the patent is granted, the patent holder needs to enforce it and defend its validity in any infringement assertions.
Small and Micro Entity Discounts
The United States Patent and Trademark Office (USPTO) determines the filing fee for a patent application based on the type of applicant and the number of claims included in the application. The USPTO typically charges a higher fee for larger entities, such as corporations, than for small entities, such as individuals or small businesses.
The incremental cost per extra claim depends on the type of entity. For small entities, the cost per claim beyond 20 claims is $40 per claim in January 2023, for example. And for larger entities, the cost per claim beyond 20 claims is $100 per claim. The USPTO also charges additional fees for other services such as excess claims fees, excess sheets fees, and extension of time fees, which can add to the overall cost of obtaining a patent. Thus, for a case with 120 claims, the additional fees can be more than $10,000 on top of the base fee!
From that context, getting a discount from the patent office looks attractive. Small and micro entities are companies or individuals that qualify for reduced patent fees when filing a patent application. In order to qualify for small entity status, a company must have less than 500 employees. To qualify for micro entity status, the company must meet the requirements for small entity status and also have a gross income that does not exceed three times the median household income.
When claiming small or micro entity status in a medical device patent application, there are several considerations to keep in mind:
- Eligibility: It’s important to ensure that the company or individual meets the requirements for small or micro entity status. This includes considering the number of employees, gross income, and ownership structure of the company.
- Proof of status: The company or individual must provide documentation to the USPTO to prove that they meet the requirements for small or micro entity status. This may include tax returns, financial statements, or other documents that demonstrate the company’s gross income or number of employees.
- Maintenance of status: Once small or micro entity status is granted, it’s important to ensure that the company continues to meet the requirements for small or micro entity status throughout the life of the patent. If the company’s status changes, the company must notify the USPTO and may be required to pay additional fees.
- Reduced fees: Small and micro entities are eligible for reduced patent fees when filing a patent application. It’s important to ensure that the correct fees are paid when filing the application.
It’s important to note that small and micro entity status may also affect the patent prosecution process, including the time it takes for the patent to be granted, so it’s important to consider the pros and cons of claiming small or micro entity status before filing the patent application.
Potential issues with claiming these discounts
Claiming small and micro-entity discounts in a patent application can cause problems for a company if the company is not eligible for small or micro entity status, or if the company’s status changes during the life of the patent.
- Eligibility: Claiming small or micro entity status when the company is not eligible can result in the invalidation of your patent application.
- Maintenance of Status: If a company’s status changes after it has claimed small or micro entity status, the company is required to notify the USPTO and may be required to pay additional fees.
Claiming small or micro entity status when a company is not eligible can be considered fraud and can result in penalties that include invalidation of the patent due to claims of fraud on the USPTO. It’s important for companies to ensure that they are eligible for small or micro entity status before claiming it in a patent application and at all times when fee payments to the USPTO are due.
The USPTO takes fraud very seriously and has the authority to investigate and impose penalties on companies that make false statements or representations to the USPTO. Penalties can include fines, imprisonment, or even invalidation of the patent.
Claiming small or micro entity status when the company is not eligible can also damage the company’s reputation, which can be detrimental to the company’s long-term success.
It’s worth noting that the cost of obtaining a patent is not only limited to the filing fee but also includes attorney’s fees, which can be significant. Hiring a patent attorney or agent can help to ensure that the patent application is properly prepared and prosecuted, but it can also add to the overall cost of obtaining a patent.
It’s important for companies to be transparent and accurate when providing information to the USPTO, to avoid any potential fraud. It’s also recommended to consult with a patent attorney or agent for guidance on whether a company or individual is eligible for small or micro entity status and how to claim it in the patent application. Given that the PTO fee is a small part of the overall cost of an issued patent when taking the long-term view, requesting a small or micro entity discount may not be worth the potential downside on patent validity if the company no longer qualifies for the small or micro entity discount and inadvertently pay the wrong amount because the USPTO sent them the wrong fee determination based on the discount claimed at the filing date.
In short, patents are important for medical devices because they provide exclusive rights to prevent others from making, using, or selling the invention without permission, provide a legal framework for the company to market and sell their products, provide a financial incentive for companies to invest in research and development of new medical devices, and promote innovation in the medical field. Due to the importance of patents to the success of a medical device company, founders may want to reconsider the cost savings associated with small entity and micro entity discounts are given the risk of invalidation due to minor mistakes in not reporting any changes in entity status to the USPTO.