Module 3 - Open and Closed Innovation, IPR and Legal Issues

Question 1

What does a patent do?

Answer 1

Negative right, prohibits other in producing your invention.

You cannot always produce it yourself

Question 2

Freedom to operate it?

Answer 2

Searching for limiting patents and seeing what space you can operate in.

Can operate within others IP with cross-licencing

Question 3

What are primary objectives of lundbecks IP?

Answer 3

• To ensure the best possible IP situation supporting Lundbeck’s business,
  research, development and commercial investments
• To secure protection of commercial products
• To serve the business needs in establishing Lundbeck as the originator, owner and/or rightful user of inventions and works
• To establish assets available for licensing to third parties such as in the context of research collaborations and public private partnerships
• To enhance Lundbeck’s business reputation

Question 4

Why is IPR extra important in Pharma?

Answer 4

The patent cliff –> generics enter and price drops. I.e. you have to make your money before this.

Question 5

What types of IP protection are there?

Answer 5

1) Patents
2) Patent term extensions/supplementary protection certificates (mainly in major countries/regions)
3) Regulatory data protection (mainly in major countries/regions)
4) Trademarks (lasts forever, granted for 10 years, but can be indefinitely renewed –> Lifetime protection if fees are paid)
5) Design protection
6) Copyrights
7) Trade secrets

Question 6

What makes something patentable?

Answer 6

1) Novelty - It must be new
2) Inventive step - The invention must not be obvious for a person skilled in the art. “Non-obvious” in US patent language,
3) Industrial application
4) Proper enablement/sufficient disclosure - Such as a person skilled in the art can reproduce the invention without problem solving
5) It must not be excluded from patenting

Question 7

What is data exclusivity

Answer 7

The data behind your drug/patent. Includes: How you produce it, how it behaves under stressful conditions, which animals your tested on with what dose, how many humans with what dose etc.
- The idea is, that generics can reference to your own data (it’s not public though), meaning they can produce a biosimilar and say “look at Lundbecks data” after simple tests.

Question 8

Why is the US market important?

Answer 8

The US supplies half the revenue of pharma because of their market dynamics (pricing, insurance payers etc.)

Question 9

What drugs can get data exclusivity?

Answer 9

1) Orphan drugs (10 years EU, 7 years US)
2) Pediatric drugs (6 months in EU and US)
3) NCE (new chemical entity) (8 data excusivity +2 EMA approval inhibition in EU and small molecules 5 years in the US or 12 for biologics)

Question 10

How could you get a supplementary protection/patent term extension?

Answer 10

If you get a patent and regulatory approval on the same compound/drug you can sometimes get a patent term extension on the exact drug for 5 years.

Could also be orphan drugs.

Question 11

Are domain names IP protected?

Answer 11

No, they are simple addresses and thus not IP protected

Question 12

Why are trademarks and branding important?

Answer 12

Because counterfeits are on the markets (especially online) and they can be deadly and at best, generics. So you have to protect your brand for the patients sake.

Question 13

Why are design trademarks important in pharma?

Answer 13

Avoid generics making the same shape on the pill/looks the same as the originator, to avoid having and identical product. Could also be taste or smell.

Question 14

What can be a trademark?

Answer 14

Trademark must consist of any distinctive sign serving to identify and distinguish our products and services from those of others.

Including: Symbols, colors, smells, app, logotypes, shape, design etc.

Question 15

Why pay attention to trademarks?

Answer 15

1) Life cycle management tool (strong trademarks = maybe less sales drop) “Little blue pill”
2) Global brand identity and visual identity protection
3) Cost efficient IP
4) Safeguards against infringements
5) Protects customers against counterfeits

Question 16

Is trademark creation straigth forward?

Answer 16

No! It’s a multi-step process with legal, linguistics, name, medication error testing and more!

Question 17

Short, what is the difference between open and closed innovation?

Answer 17

Open innovation, free collaborations, and innovation within and outside companies.

Closed innovation – innovation within the company.

Question 18

What is the rationale behind open and closed innovation?

Answer 18

Closed:
* The smart people in our field work for us
* To profit from R&D, we must discover, develop and ship it
ourselves
* If we discover it ourselves, we will get it to market first
* If we are the first to commercialize an innovation, we will win.
* If we create the most and the best ideas in the industry, we
will win
* We should control our IP so that our competitors don’t profit
from our ideas

Open:
* Good ideas are widely distributed today. We must find and tap into the knowledge and expertise of bright individuals outside our
company.
* External R&D can create significant value; internal R&D is needed to
claim some portion of that value
* We don’t have to originate the research in order to profit from it
* Building a better business model is better than getting to the market
first
* If we make the best use of internal and external ideas, we will win
* We must manage IP in order to manage research:
– need to access external IP to fuel our business model
– need to profit from our own IP in others’ business model

Question 19

Whaat made the comapnies change from closed to oppen innovation?

Answer 19

• Increasing mobility of trained engineers and scientists
• Increased quality of university research
• Greater dissemination of knowledge throughout the world
• Increased rivalry between companies in their product markets
  (EU market liberalization; competition policy)
• Increasing importance of Venture Capital

Question 20

What are open innovation examples in Pharma?

Answer 20

• Private public consortia pre defined intellectual property conditions
• Conferences free sharing
• Collaborations pre defined intellectual property conditions
• In and out licensing
• Crowd sourcing (getting a solution with the help of a crowd/group)

Question 21

What are tech transfer offices?

Answer 21

Offices at the university responsible for transferring the tech/innovation outside the university.

Question 22

What does the tech transfer process look like?

Answer 22

1) Scientist has idea
2) Disclosed to TTO
3) TTO decides to start patent process or not
4) External patent agent is assigned
5) Patent application
6) Licensing activities start

Question 23

Why do TTO from university side?

Answer 23

1) Establish economic output from basic research and discoveries

Question 24

Why do TTO from company side?

Answer 24

1) Access to new technology

Question 25

What are some challenges with TTO from company and university scientists side?

Answer 25

University:
* Technology transfer a necessity
* Finds communication and working with firms challenging
* Little time for engaging in the process
* Expects much of the TTO

Company:
* Interest closely linked to the individual scientist & knowledge embedded in the invention
* Often well trained in licensing (or has professionals)
* Finds the TTOs assessment of value of the science unreasonable
* Finds the TTOs understanding of future investments lacking

Question 26

What a some patent strategies?

Answer 26

1) Ad hoc blocking portfolio (“random” and not very efficient)
2) Blockbuster patent portfolio (one big patent to block competitors)
3) Blanketting (many small patents to block)
4) Fencing (making a line of smaller patents)
5) Sun-satellite (a big and a few smaller patents)

Question 27

What is appropriability?

Answer 27

Factors that govern the ability to profit from an innovation

Question 28

What two areas can you focus on when considering competition?

Answer 28

Consider whether you’re competing with similar products at the same price or the same product at different prices (generics)

Question 29

Why is IPR a great tool for Pharma LCM?

Answer 29

It can “soften” the blow of the patent cliff due to brand recognition.

Think: “The little blue pill” - Viagra still has strong sales due to a strong branding and trademark strategy.

Question 30

What is the goal of buildings a brand?

Answer 30

The goal is to secure the reputational aspects of the customer benefits *, resulting in customer preference of the brand

Question 31

What is the main value of Pharmaceuticals?

Answer 31

Value of Pharmaceuticals is mainly in intangibles (10% tangible and 90% intangible like trademarks, goodwill, customer relationships, contracts (manufacturing, distribution agreements), technology intangibles like tacit/non-codified knowledge etc.)

This one is important!

Question 32

What kind of IPR blocking is there?

Answer 32

1) Defensive
- Secure FTO

2) Offensive
- Prevent competitors from entering technology space

Question 33

What is substitution within IPR?

Answer 33

That technology covered by patent A can be substituted with technology covered by patent B

• Legal substitution vs economical substitution

Question 34

What is IPR complementarity?

Answer 34

Complementarity is access/ownership of two or more patents that are substitutes that both enable a commercialization of a product

Question 35

Why do innovating firms often fail to obtain significant economic returns from innovation?

Answer 35

Svar

Question 36

Who do innovating companies lose to?

Answer 36

Imitators, suppliers and customers

Question 37

What is meant by a tight appropriability regime?

Answer 37

Teece, 1986
1) Nature of the technology = Highly tacit knowledge
2) Efficacy of the legal mechanisms of protection = Highly protectable via IPR

Question 38

What is meant by a weak appropriability regime?

Answer 38

Teece, 1986
1) Nature of the technology = Highly codified knowledge
2) Efficacy of the legal mechanisms of protection = Low protection via IPR

Question 39

What influences a firm’s ability to obtain economic returns from innovation?

Answer 39

Teece, 1986
1) Appropriability
2) Life cycle phases (pre-paradigmatic vs. paradigmatic) (Competition on design vs. competition on prices after dominant design emerges)
3) Complementary assets (generic (no modification required easy to get), specialized (modified to fit innovation, unilateral dependence (dependency goes one way) or co-specialized (modified to fit innovation, bilateral dependence (container ships and shipping ports))

Question 40

What are the two most important factors in the appropriability regime?

Answer 40

Teece, 1986
1) Nature of the technology (codified vs. tacit knowledge)
2) Efficacy of the legal mechanisms of protection (Good IPR legal protection mechanisms or not)

Question 41

Mention the 5 main types of IPR protection

Answer 41

1) Patents
2) Trade secrets
3) Trade marks
4) Copyrights
5) Registered designs

Question 42

What is prior art?

Answer 42

Prior art is documentation that shows that a patent idea has already had public access. Can be anything from class books to research papers to even comic books and cartoons.

Question 43

What makes an invention patentable?

Answer 43

1) Novelty - It must be new
2) Inventive step - The invention must not be obvious for a person skilled in the art. “Non-obvious” in US patent language,
3) Industrial application
4) Proper enablement/sufficient disclosure - Such as a person skilled in the art can reproduce the invention without problem solving
5) It must not be excluded from patenting

Question 44

The effect of a patent:

Answer 44

Prohibits the commercial processes of:

1) Using your technology/products
2) Producing your technology/product
3) Selling your product/technology
4) Importing your technology/product (to countries where you have the patent)
5) Offering your technology/product for sale

Being in possession of your technology/product with the objective of doing any of the above

Question 45

Can you use patented technologies for R&D?

Answer 45

Yes! R&D is permitted to use previous patents – especially for academic research.

Question 46

What happens if you’ve been doing a process for 10 years as a trade secret that somebody then files a patent on?

Answer 46

You can keep using your process if you can prove that you have used it (in secret) before the patent.

Question 47

A typical patent timeline looks like?

Answer 47

Priority application (first filing of your application) – Day 0
(Paris convention kicking in here)

PCT (Patent Corporation Treaty) application – Month 12

Publication (if no previous patents overlap) - Month 18 (or later) – Always 18 months after first filing.

IPR report - Month 28

Need to file a national application or it dies - Month 30/31 (varies in countries)

(You need to file in all the countries you want a patent. You can’t do this again, because it is not novel anymore).

National patent application phase starts - 1-10 years (ish…. – it varies)

MEANING – we have a black box for 18 months where we don’t know what and who has filed a patent.

Question 48

What is an IPR report?

Answer 48

A report done by the authorities on your patent applications novelty, inventive step and industrial application etc.

Question 49

What is the PCT?

Answer 49

PCT (Patent Corporation Treaty) – by World Intellectual Property Organization (WIPO).

Makes it possible to file a patent application that is the same as filling in all the member states/countries (around 170 states). – Around 35.000DKK. No later than 12 months after priority filling (paris convention)

Question 50

What is post-grant opposition?

Answer 50

A competitor can oppose to the grant saying there is a problem with sufficient novelty, inventive step, disclosure etc. results in Limited, full or destroyed patent.

You can annoy the patent-filer on a European level for cheap. After patent, you have to challenge the patent in each country.

Question 51

Why patent from a company perspective?

Answer 51

1) To prevent competitors from copying your innovation
2) To enhance the Company’s reputation
3) To secure investment
4) To increase likelihood of collaboration (through x-license)
5) To increase likelihood of friendly acquisition
6) To tie knowledge to the company

Question 52

Duration of a trademark and copyright

Answer 52

Trademark: Indefinite as long as you pay the annual fee, renewal around every 10 years. Non-use invalidates the trademark.

Copyright: 70 years after last surviving author’s death. Typically art is copyrighted.

Question 53

What three phases do a patent usually have?

Answer 53

1) Priority year/Priority phase (0-12 months after filing)
2) PCT Phase (from PCT to 30/31. So often from 12-30/31)
3) National/regional phase (Applying in specific regions/countries)

Question 54

What is FTO (Freedom to operate)?

Answer 54

A freedom-to-operate analysis will show the number of patents on which your technology is dependent

Question 55

Star Scientist Entrepreneurs have what skillset?

Answer 55

1) The star-scientist entrepreneur can sense and shaped opportunities to seize opportunities pre-formation. Then through technology-market matching and this capability was passed on to his graduate students and through them to his co-founded ventures.

2) Targets projects which address significant unmet market needs.

3) Claims and protects the invention through patents

4) Mentoring the founding team

5) Nurtured business talents

Question 56

How to foster Open Service Innovation

Answer 56

1) Work closely with customers to develop new solutions (Could be through pilot-projects)
2) Focus offers on utility, rather than the product (Focus on “supplying copies, not copiers”)
3) Embed your company in the customer’s organization (UPS offers to take over the entire shipping function of it’s customers so that UPS handles all shipping no matter if they go UPS, Fedex or US Postal Service)

Question 57

What is Inside out in regards to Open Service Innovation?

Answer 57

Here a company allows some of it’s own ideas, technologies or processes to be used by other businesses.

Question 58

What is outside in regards to Open Service Innovation?

Answer 58

Here, a company makes greater use of external ideas and technologies in it’s own business.