More AI-based innovation means start-ups can’t afford to ignore IP

More AI-based innovation means start-ups can’t afford to ignore IP

The number of patent filings made to the European Patent Office (EPO) in 2021 rose by 4.5%, with healthcare technology being one of the main areas of growth. Despite this, a lack of intellectual property (IP) awareness and understanding among medtech start-ups could mean they are missing out on opportunities to secure a stake in this fast-developing market.

The medtech sector is booming and growing investor interest is supporting the development of early-stage companies, including seed businesses and start-ups. With the funding in place to fast-track their innovation programmes and scale up quickly, there is a risk that intellectual property considerations are not being prioritised early enough. This could leave the door open for competitors to copy their innovations on route to market, potentially getting there first, and obtaining IP that jeopardises their freedom to operate.

There are many reasons why start-ups in the sector might be slow to pick up on the importance of patent protection. With so much interest in medtech innovation currently, there are plenty of opportunities for businesses in the sector to strike up conversations with third parties about potential collaborations or corporate deals, and the temptation is to talk first, and protect later. This could be a problem however, as it could lead to the ‘early disclosure’ of an innovation, which could then render it unpatentable. If it is not feasible to get a patent application on file before entering discussions with third parties, businesses should ensure there is a robust non-disclosure agreement in place and clearly mark all their communications as ‘private and confidential’.

Another common misconception shared by start-ups developing technologies that involve the use AI-enabled systems or machine learning, is that their innovations may not be patentable in the first place. This is not necessarily true and based on the latest guidance from the European Patent Office (EPO), it is clear that as long innovators can demonstrate that their invention provides a technical solution to a technical problem, it will be assessed and examined in much the same way as any other software-based application. Technologies that have medical applications are generally treated as technical, and thus patentable. Therefore, medtech start-ups developing AI-enabled systems that have a specific medical application are unlikely to face objections that their patent applications relate to unpatentable subject matter.

Research conducted recently by Withers & Rogers reveals that about two-thirds of European patent applications for AI based inventions are directed to the application of existing AI algorithms to solve problems outside of the field of AI. But a growing number of patent applications are being filed to protect novel AI algorithms and approaches. This is positive and suggests that clearer guidance from the EPO on the patentability of software and computer-based inventions may be having an effect. As such, it is important to seek professional advice from the outset to assess whether an innovation in this area qualifies for patent protection, before jumping to the conclusion that it does not.

With AI and machine learning playing an increasing role in the development of medtech devices, such as those involved in diagnostics, personalised medicine or preventative healthcare, innovators are reliant on large sums of upfront investment. This funding goes towards developing and training models, testing their use for specific applications and clinical trials. Securing patent protection will help to attract investors as they can be confident that, once market-ready, the innovation will benefit from a monopoly right that can be used to protect the commercial activities of the business, as well as generating income through means such as licensing agreements.

In a buoyant marketplace, investors are more likely to be drawn to businesses that have a strong IP portfolio, with high-quality patents spanning their core activities. A scientific research paper by Haeussler et al. in 2014 has confirmed that filing patent applications can help businesses to attract venture capital investment and there are many examples of medtech start-ups securing funding to further their innovation-led business models. Earlier this year, London-based start-up, GripAble, which delivers rehabilitation programmes to people with neurological and musculoskeletal conditions, raised £8.5 million from private equity firm, IP Group, to accelerate its business plan. In another example, C the Cancer, a start-up developing an AI-based cancer detection platform, has raised £5 million of funding from MMC, Ataraxia and Acequia Capital, along with some angel investors.

Regardless of how quickly a medtech business is developing its proposition, it is important to make intellectual property (IP) considerations part of its strategic plan. In a competitive market, it is often a good idea for the business to file a patent application for an innovation early on, as this will reduce the risk of a competitor stealing their idea or publishing information that could prevent the patent application from being granted. It is also important to be IP-aware when drawing up collaborative agreements with third parties, as the parties involved will need to be clear about who owns what IP at the outset, and who will own any IP they develop together. Patent applications can therefore help to outline the existing IP and act as a bargaining tool for deciding who should own any new IP resulting from the collaboration.

Filing early is not always the best strategy of course, particularly if the technology has not yet been fully developed, and it makes sense to seek professional advice. Most patent applications are published 18 months after filing, which means they become public knowledge. Businesses may therefore need to weigh up whether it is best to file some applications to protect their innovations now and hold on to others as ‘trade secrets’. However, any decision not to file will inevitably bring some risk, as there is always a chance that a competitor might be working on something similar and secure the monopoly rights to bring it to market. 

To avoid missing out on opportunities to fundraise and commercialise their innovations, medtech start-ups should ensure IP considerations are an integral part of their business strategy. For those using AI-enabled systems or machine learning to deliver solutions for medical or healthcare-related problems, it is especially important to understand that patent applications may be an important tool for protecting the invention on route to market.

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