The rise of digital health is well documented. Ruth Wright, from intellectual property law firm Gill Jennings & Every LLP asks what makes a digital health business a medtech business?
Talking Tech
These days, with digital transformation and disruption on everyone’s lips, there is no shortage of companies across a range of sectors trying to claim to be a technology business as a badge of honour. It has never been more challenging to determine whether a company is genuinely a technology business or is simply ‘technology-enabled’.
This may seem like mere semantics, but the difference is significant when it comes to dictating a company’s ability to protect its ideas. For digital health start-ups trying to gain a foothold in an increasingly crowded market, self-definition is an exercise which can inform whether its intellectual property (IP) strategy should be patent or brand-focused.
Tech or tech-enabled?
The test for determining whether or not a business is a genuine technology company is, in theory, fairly straightforward: does it develop technology? Much of the work of traditional companies in the fields of engineering, chemistry, and life sciences results in the development of tangible technological processes or things. This work will usually qualify for research and development (R&D) tax relief, and the output will often be patentable. In the digital world though, the answer is not always so obvious.
In fact, the distinction can be harder to see if the business model being digitised is operating within a traditional tech field. In digital health for example, many start-ups are using off-the-shelf software or third-party designed ‘white label’ platforms to start generating revenue immediately and with minimum capital investment. So, just because an app sends you a notification to remind you to take some medication which resulted from years of rigorous research, does not make the app developer a medtech business.
Founders and investors who are driving the growth of digital health are often from a traditional medtech background, where the need to publish trial data to gain regulatory approval makes early patent filings and aggressive IP enforcement policies essential. However, the nuances of the law around protection of computer-implemented innovations can mean that an IP strategy built around gaining a blockbuster patent can be risky for some digital health businesses.
Patentability
For an invention to be eligible for patent protection, it must meet five key criteria: is it capable of industrial application; is it new; does it involve a non-obvious inventive step; is it described in sufficient detail to allow others to replicate it following expiry of the patent; and does it consist of patentable subject matter?
When it comes to what is considered patentable subject matter, there are specific limitations for computer programs. If the software merely implements a business method, it is generally not patentable in most jurisdictions. If it controls a technical process however, it may well be patentable, and innovations that solve technical problems in the real world are also likely to be patentable. To obtain a software patent it is necessary to show that the effect of that software goes beyond a mere operational advantage, and has some technical impact.
That said, the law itself, and more practically the way that patent offices implement that law, is still in flux, having yet to fully adapt to the digital world. Further, just because your patent was granted in the US does not mean that you will get the same result at the European Patent Office. Even within patent offices, different examiners can take different views, and challenging an unfavourable opinion, however unfair, can be expensive and time-consuming. It is therefore crucial to take the time to determine at an early stage whether patent applications will be valuable assets, or just a drain on resources.
IP strategy
Innovative businesses should always take the time to consider how best to protect their ideas, and thus their market share and valuation. For true tech companies, patents can provide robust legal protection for investment made in R&D. For technology-enabled businesses however, a focus on establishing a trusted brand, and protecting it using trademarks, may be more appropriate.
‘Tech’ is a label which has been too liberally applied by start-ups looking to ride the wave of the fourth industrial revolution. Calling practically any applications-based and technology-enabled business with a link to medicine, health or wellness a medtech company is about as useful as calling all the enterprises of the first industrial revolution ‘factory companies’. While these labels can accurately describe an aspect of what such businesses do or how they do it, when used so loosely they don’t help innovators to identify their USP, and form a coherent strategy around it.