Written by JHU Alumnus
As covered previously in part 1 and part 2 of this “hypothetical yet educational” intellectual property story, Jack and Jill have several criteria to consider when it comes to protecting their sequencing device built at BioBank Therapeutics. Given the significance of this device – i.e., to identify unique cancer targets for therapeutic purposes – Jack and Jill need to weigh their options to effectively present their strategy at the next board meeting for BioBank Therapeutics, which happens to be January 24th, 2019. Steve, who is the CEO of the company, is usually on the phone with investors, and due to his travels this Fall, doesn’t have a lot of time to help Jack and Jill prepare for the board meeting. Without taking the proper steps to protect the sequencing device, BioBank Therapeutics is at risk of losing their competitive advantage, and one of their most important assets.
Let’s assume that Jack and Jill decide that the sequencing device may be of such commercial value that they would want to either advertise the tool to attract new customers or eventually sell mass amounts of the invention in the marketplace. One key difference between patents and trade secrets is the way in which the owners of the intellectual property, BioBank Therapeutics, exclude others from making or using the device. If Jack and Jill were to decide that patenting the sequencing device was the best route for the company, then BioBank Therapeutics would take the steps that would hopefully lead to a granted patent (both in the US and in other countries), which would last about 20 years from the date the application filing. The granted patent, which is similar to a property right, would serve as a government issued a right to exclude others from making or using the sequencing device. In exchange for the patent, BioBank Therapeutics discloses the sequencing device to the public in a patent application. Furthermore, similar to a property right, the granted license would be readily transferable from one company to another, either in whole or in part, identical to the bundling of rights associated with ownership of a car or house.
Alternatively, Jack and Jill may decide the sequencing device best protected as a trade secret. As summarized in part 2, they believe the sequencing device is difficult to reverse-engineer, and think they can guard the core knowledge of the sequencing device while scaling up. However, unlike patents, trade secrets prevent others from making or using the sequencing device by keeping the sequencing device a secret. Also, unlike patents, trade secrets can last as long as the mystery maintains itself by BioBank Therapeutics. Thus, if BioBank Therapeutics thinks that this sequencing device will last a while, and no substitutes can readily make shortly, a trade secret might be the best route in this hypothetical scenario. However, since trade secrets are mainly under the control of the owners (i.e., BioBank Therapeutics), they are not as readily transferable as patents. For example, licensing of a trade secret results in loss of exclusive control over the trade secret information and may increase the risk that the secret becomes known (accidentally or otherwise).
Therefore, if BioBank Therapeutics desires to make, use, or sell the device in coordination with others (e.g., licensing, sub-contracting), patents offer an efficient legal instrument to enable such transfer of IP rights. Furthermore, a pending or granted patent can signal to a competitor, consumer, or investor, that the sequencing device is innovative and valuable. In this way, a pending or issued license can be useful for marketing or business development reasons unrelated to enforcement of IP rights. For example, advertising on the sequencing device, “patent-pending,” may enhance the device’s appeal to the public. Similarly, a portfolio of pending and issued patents may help leverage the patent BioBank Therapeutics’ position in business negotiations or in attracting investors.
But, without getting too far into the process, Jack asks Jill, “how can we know this sequencing device hasn’t already appeared somewhere? I only went to universities and conferences here in California and Texas. But, what if someone else is ahead of us already?” Jack is weighing the competitive risk. In the next part of this series, we’ll look at different ways to answer this question, as the answer may further impact the decision of whether to patent the sequencing device or keep it as a trade secret.
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