Panel of Experts: Regulatory Requirements and Intellectual Property

The Buerk Center for Entrepreneurship created a series of expert panel discussions for winter quarter to offer additional guidance to student teams entering the Hollomon Health Innovation Challenge (March 1) and the Alaska Airlines Environmental Innovation Challenge (March 30). Below is a recap from the Buerk Center’s Terri Butler on the second panel’s discussion of Regulatory Requirements and Intellectual Property.

Students who are in the midst of preparing their 5-7 page business summaries they need to enter the HIC, EIC, or UW Business Plan Competition (BPC) will receive a great advantage  by incorporating the advice from the experts on the panel discussions the Buerk Center has been hosting. The January 19 panel, the second in the series, brought a discussion on “Regulatory Requirements and Intellectual Property.” Three experts joined us, including Lynn Rose, director of Scientific Administration at the Benaroya Research Institute and Institute for Translational Medicine (ITHS) advisor, Ryan Dodge, attorney at Christensen O’Connor Johnson Kindness, and Bill Wescott, Managing Partner of BrainOxygen. The panel was facilitated by Dionne Howe, a Foster School MBA candidate.

When should you start researching patent rights?

The panelists covered an incredible range of material important for challenge teams to consider. First was a discussion on intellectual property on when to start researching patent rights. The panelists responded unanimously and enthusiastically with “early!” Ryan directed people to the Google Advanced Patent Search site and to the US Patent and Trademark Office. He suggested searching by keywords and following links from one patent reference to another. Teams will be able to see if their idea is already covered under an existing patent. They can also check to see if the patents they are interested in are still active. Some patents may be expired meaning teams are able to work in that area without infringing on someone else’s intellectual property rights. “The patent databases are a treasure trove of technical information,” Ryan said. “You might find ideas for things you might want to improve upon. Make sure you’re not infringing, though.”

Lynn added an excellent point, saying “patents have tremendous amount of information about what competitors have done in the development process. You can see what animal models they have used, or what cell line, or how a device was tested.” Bill added, “I consider patents like barbed wire. Submitting a provisional application helps, it gives you some barbed wire, then if you follow up the provisional with a utility patent application and actually get a patent granted that’s more barbed wire. But if someone comes at you with a tank, that barbed wire may not hold up. When you submit a patent application what you end up with in the protection the claims offer may be limited. You may have invested a lot of your life and resources and then find out you have very narrow claims allowed. That may or may not be good enough for your business.”

Ryan dug a little deeper into the use of the provisional patent application. “A provisional is a disclosure to the patent office. It’s not going to turn into a patent by itself, but it you file a full application within 12 months you can get a patent and have the priority date of the provisional,” he said. “The other nice thing about a provisional is you don’t need an attorney to draft it. You can draft it, explaining your invention with drawings, pictures, etc., then use the 12 months you have before you need to file the full patent application to push your product idea to see if it will be worth a full application.”

Both Bill and Ryan suggested looking into other forms of intellectual property. Bill let us know, “IP does not equal patents or vice versa. Patents are a subset of the IP universe. Underutilized is another form of IP known as trademark. Trademarks can be granted now, and last forever. You can switch out your technology all you want to under your trademark. A lot of your business models may not be a technology, but a service. Patents that protect business models are very limited, so a trademark may be a better option.”

Ryan expanded by saying, “you can also use trade secrets. Trade secrets are anything you can keep secret. Not a bicycle, if that’s your product, because you can see it. But you may have a novel way of making your product or you may have a secret composition. To protect trade secrets in discussions with others or to protect patent-able technology before you have any patent coverage you may want to get them to sign a nondisclosure agreement. You want to be able to trust the people you are having the discussions with.”

“From a medical product perspective, you need to get feedback from the very beginning,” Lynn told us. “A lot of people come up with ideas, but many of those ideas don’t fit into the medical practice. Receiving early feedback about how doctors or other providers practice medicine and whether they actually need this thing you are thinking of is important.”

Those in attendance included an expert from the Institute of Translational Health Sciences. Kim Bruce of ITHS offered up her thoughts about IP’s, saying “you should be able to share your idea without disclosing the intellectual property. Use an elevator pitch with a description that doesn’t have the details in it. Almost everything can be shared without giving away the details.”

The devil is in the details

Once teams are in the process of working on their actual patent application some pointers made by Bill will prove helpful. “Your patent needs to be worded correctly and you need to be able to communicate well with your patent attorney. The devil is in the details. You kind of have to “eat your vegetables” and go step-by-step to make sure you are constructing your patent in a really thoughtful way. That is especially true if your company is really dependent on IP. Some investors give a whiff test and invest in the team itself without looking too closely at the early IP. But as you go down the line and look for more serious investment, investors will deep dive into your patents. Those investors may pass on your deal if your issued patent is not worthwhile.”

An audience member asked whether UW owns the patent rights on the teams’ ideas. “If you are a student coming up with your own ideas, then UW does not have rights,” the Buerk Center’s Terri Butler said. “But if you are working on something that’s coming out of the research labs, funded by your graduate student adviser, then, yes, it is going to be UW IP. You would need to work with CoMotion to license the IP. Of the ideas that come through our competitions, about half are student IP and half UW IP.”

For those students who are also employees, Bill had words of caution for them. “If you have a job, be careful, you may have signed something when you started that job that assigns all of your intellectual property to that company. It may be tied to what resources you use, like a company computer,” he said.

What about prize money for the EIC or other competitions?

Funds paid directly to students and do not give the University rights to their IP. Students can do whatever they want with it. In fact, Terri said teams should talk about how they will split the money if they win. She also added some final words of advice on intellectual property. “Most of you are very early with your ideas. Try to get customer feedback to find out if your idea really has customers out there without giving away your secret sauce,” she said. “You don’t want to go too far down the patent rabbit hole if you’re just searching for an idea that has traction. Once you see market potential and customer enthusiasm, if it’s something technical or patent-able I definitely recommend that you do a provisional before you submit your application into one of the challenges. We will take the 5-7 page submissions and distribute them online to judges who score them and that will essentially be public disclosure. We ask those judges not to share those ideas with others, but that’s still a lot of people we are sharing with. Think about submitting a provisional if it’s something that is patent-worthy.”

“How do you know if your product has compliance requirements?”

The discussion moved on to covering regulations that the FDA has for medical products. Lynn said, “you have the Code of Federal Regulations and it tells you what you need to have to market a drug or device in a particular space. You need to understand what the requirements for compliance are, but you are early in the process. What does the FDA require? Well, it depends. It’s down the road in terms of needing it, but it’s not down the road in terms of understanding what is needed. You should look into it early!”

Bill added, “I’m so happy there is an HIC and EIC. It’s what the world needs, but these are tough areas, not just because the problems are tough to solve, but from the technology side it’s tough because there a lot of laws oriented toward very large companies that have a lot of resources and systems. In a weird way, everybody’s happy that it’s difficult because it’s hard to disrupt that system. All these barriers mean you need time and money. It’s easier for a big company. The FDA is difficult, but an equivalent in the environmental space is if you wanted to treat hazardous waste. Boy, is that hard.”

Should you look into your regulatory path at such an early stage?

“I’m an advocate of finding out the regulatory path very early on because it informs a lot of things,” Lynn said. “If I’m presenting this to venture capital people, I need to have it nailed down and know exactly what I need to do. What will I need to have in my business? My manufacturing? I don’t want a vague plan. Finding out how it’s classified by the FDA, what the competitor products are, what they do is really important. There is so much information out there, not just in the Code of Federal Regulations, but in the labels on drugs and in the manuals of products where you can find out what studies they did. If you become well-informed, you can go to investors with a budget and a plan that says this is what I need to do to get to market. It’s never too early to find out your regulatory path!”

Terri followed up, “I would second that. A lot of you are in the very early-idea generation stage, but I would hope that if you are in the realm of FDA or environmental regulations that you know that and you’re are not just in la-la land thinking you don’t have to comply. The more you can use resources like Lynn, and the ITHS to find out where to look up information, and get on the right path, the better. From personal experience, sometimes you find out what the regulatory path is, and you decide to change your business model because your technology has a regulatory path that is such a pain in the neck and so expensive, it’s not worth tackling! It’s really important, especially in the case of medical devices and therapeutics, to understand what you’re going to need to do to get it on the market, because it literally may not be worth it.”

“It’s also a qualifier from an investor point of view,” Bill said. “They may think, if you’re not serious about your business, why should I be? If you didn’t do your homework, end of story.” Kim let everyone know, “At ITHS we meet with people and try to help them understand that they need to have an elevator pitch on the regulatory strategy. You don’t need to have a degree in regulatory affairs in order to speak to it, but you need to be able to say where you are going.”

Regulation of food, nutritional and environmental products, and cosmetics

“Food supplements have a different set of regulations,” Lynn said. “If you are using them to treat disease, they are treated like drugs. Off-label uses still require filing a protocol with the FDA to test whether it works for a new disease. But, you don’t have to re-do the safety or manufacturing unless the dose or mode of administration is different. If you’re increasing the risk to the patient or going to a more vulnerable population the FDA oversight is stronger.” Lynn also talked about herbs or botanicals and said there is FDA guidance on those as well. “If you are using them to make a claim for treating a disease, the requirements will be the same as for drugs. Manufacturing will be different because plants are manufactured differently,” she said. “If you claim the substance will make you feel better, but make no claims for a cure to a disease, then your product can be treated as a nutritional supplement. Those products have a lower bar. Look at the FDA website for warning letters on these types of things. People are tempted to overstep and make claims, then run into trouble with the FDA. You have to be cautious about this.”

To find out more about the regulations and requirements for environmental products, Bill shared some thoughts. He said, “There are two levels. If you are manufacturing there will be environmental regulations and occupational health and safety regulations. Whatever you are making will need to go through those permitting processes. That is what everybody has to do. If you are looking at technologies to do water treatment the bar is pretty high and there are more regulations. Ultimately, the EPA has to sign off. Wastewater versus drinking water quality have different requirements. The most difficult set of regulations that large companies have to go through is the Resource Conservation and Recovery Act Subtitle C for Hazardous Waste Treatment. This process takes decades. It’s like the FDA in terms of difficulty. In most cases, if you have air emissions or liquid effluent, those are more standard. If you have a drinking water technology, that will be more difficult. Once you overcome those regulatory barriers, they become barriers to entry for others, so that’s good for your business.”

Lastly, Terri mentioned the online MentorConnect database for students to access. Teams may find some good advisers who can help push teams in the right direction in regard to regulatory issues. Non-UW students need an ID to access the site so they should email the Buerk Center’s Amy Sallin at [email protected].

To find out about FDA requirements, teams should go to the ITHS website and to UW Biomedical Library resources. In addition, office hours with Kim Bruce of ITHS will be posted. Other questions can be directed to Terri Butler, [email protected].