In today’s innovation economy, a medical device company’s success depends on the strength and value of its patent portfolio. Recent statistics from the U.S. Patent & Trademark Office (USPTO) show the issue rate for new medical device patents is exploding. In fact, the number of medical device patents issued by the USPTO has increased each year since 2009. While the number of issued patents is increasing across all technology sectors, the issuance of medical device patents is increasing at a much faster rate. According to Thomson Reuters, medical devices exhibited the strongest patent growth rate among 12 key technology areas. Indeed, medtech companies need to stake their claims in the medical device patent gold rush.
Patents Fuel Company Growth
A strategic patent portfolio is crucial to a medtech company’s growth and survival and can provide numerous business advantages. Patents are extremely important for medical device companies in all life stages. For earlystage companies, patents are often the only way for investors to place a value on a company’s technology, as sales usually cannot begin until after regulatory approval from the U.S. Food & Drug Administration (FDA) or the European Medicines Agency (EMA). In this way, patents make up a significantly greater portion of enterprise value for early-stage medical technology companies than other startups. As a medtech company grows, patents become the currency to secure financing through venture capital or private equity investment. Patents can also lead to collaborations, joint ventures, and licenses with strategic partners.
Patents are equally important for later-stage companies that are generating revenue. Experts estimate that the average medical device and drug patent can have a net present value of almost $200,000. Simply put, patents are a source of enterprise value that medical device companies cannot afford to ignore.
In addition to their monetary value, medical device patents also hold great strategic value. A strategic patent portfolio can be used both offensively as a sword to strike out at competitors, and defensively as a shield to avoid competitor attacks. Offensively, patents can prevent competitors from making, using, or selling the patented invention. Defensively, patents can serve as bargaining chips against a competitor who threatens to sue for patent infringement of one of the competitor’s patents.
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