Licensing Agreements & IP Protection

Protecting and safeguarding intellectual property is at the heart of the healthcare business’s strategic plan.

When we represent a start-up or inventor (for example, of a medical device), our client may wish to assign or license the technology to a third-party. Or our client may wish to provide access to services through a subscription arrangement.

Protecting the Intellectual Property of a Healthcare Business or Practice

We advise clients about protecting their intellectual property through:

  • Confidentiality clauses in agreements
  • Copyright law
  • Patent law
  • Trademark law
  • Trade Secret Law

We also draft various agreements such as:

  • Licensing Agreements
  • Publishing arrangements and book deals, co-author agreements
  • Royalty-Sharing Agreements
  • Other Agreements Involving Sharing of Technology

The terms of the agreement often get worked out by the parties in a letter of intent prior to the formal, longer document.

When to Get Intellectual Property Advice

Our advice includes intellectual property protection both at the inception of the business, and when marketing or distributing strategic IP assets through licensing and other transactions.

In addition to providing legal guidance regarding IP protection, our healthcare intellectual property attorneys guide clients regarding issues including:

  • Federal Copyright Registration Service
  • Federal Trademark Registration
  • State Trademark Registration
  • Copyright and Trademark Disputes and Infringement Actions, including: Sending Cease-and-Desist Letters
  • Responding to Cease-and-Desist Letters

Our intellectual property attorneys help clients identify when they have trade secret information and develop procedures and contracts enabling them to keep it secret. The Uniform Trade Secrets Act (“UTSA defines “trade secret” as:

information, including a formula, pattern, compilation, program device, method, technique, or process, that: (i) derives independent economic value, actual or potential, from no being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use, and (ii) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

The law of trade secrets is complex.  Employers should seek legal counsel on ways to protect trade secrets from subsequent disclosure following employment, while employees should seek legal counsel to understand the breadth of the employer’s trade secret language, and find ways to minimize miscommunication and mitigate potential later legal exposure.

Hidden IP Issues in Healthcare Contracts

Many healthcare companies and practitioners are unaware of the extent to which the agreements they sign—with or without the benefit of review by legal counsel—contain IP issues.

For example, the “work for hire” provision mentioned earlier, gives ownership of the IP to the employer.  Often, employees may think that the intellectual property they have developed ‘in their spare time’ belongs to them; however, strong work for hire provisions, together with provisions in Confidentiality & Proprietary Invention Agreements, can move ownership away from the employee and into the hands of the employer.

Intellectual property issues are often tucked inside the agreement and not always easily understandable. For example, consider the following language from an Independent Sales Representative (ISR) Agreement:

Trademarks. The ISR shall have the right hereunder to represent that it is “an Authorized ISR” or “an Authorized Independent Sales Representative” of the Company or its Products, and to use the Trademarks in all advertisements and other activities conducted by the ISR to promote the sale of the Products. Any other use by the ISR of the Trademarks must be in a form and format approved by the Company in advance of such usage. ISR shall not, pursuant to this Agreement or otherwise, have or acquire any right, title or interest in or to the Trademarks. The ISR shall represent, market, and bill for sales of, the Products only under the Trademarks, and not any other trademark or logo.

Other Intellectual Property Rights. The ISR shall refrain from copying, reverse engineering, disassembling, decompiling, translating, or modifying the Products, or granting any other person or entity the right to do so. Further, the ISR shall refrain from infringing on any copyright, utility patent, or other intellectual property rights of the Company. The ISR shall not tamper with or otherwise adulterate the Products; nor shall the ISR repackage the Products and sell them under a different label. The remedy at law for breach of this provision being inadequate, the ISR understands, acknowledges and agrees that the Company shall be entitled, in addition to such other remedies it may have, to temporary and permanent injunctive relief for any breach or threatened breach of this provision without proof of any actual damages that have been or may be caused to the Company by such breach.

Notification of Infringement. The ISR shall promptly notify the Company of: (1) any claims, allegations, or notification that its marketing, licensing, support, or service of the Products may or will infringe the intellectual property rights of any other person or entity; and (2) any determination, discovery, or notification that any person or entity is or may be infringing the intellectual property rights of the Company.

Such language must be carefully drafted (or, if prepared by opposing counsel, reviewed) for hidden IP issues, by an attorney skilled in trademark and other intellectual property law.

IP issues often arise with physicians who are medical academics, who are bound by trade secret and other IP language as well as conflicts of interest policies by their medical school or university.  Our healthcare legal team can advise on negotiating the legal terrain that physician medical academics face, as well on their commercialization of intellectual property they own.

Leveraging IP in Healthcare Practices and Businesses

Healthcare practices and businesses can leverage their intellectual property to maximize value. The healthcare company’s IP portfolio often gives the healthcare company its key competitive advantage.

Sometimes it is patent protection that safeguards innovation, while at other time it is the copyright, trademark, or simply trade secret.  Healthcare companies should not only protect their IP initially, but also use legal counsel to assert and defend IP rights where necessary.

We recommend that our healthcare clients secure trademark protection on their logos, marks and significant advertising assets.  IP is a critical component of due diligence in the M&A transaction as well, and thus important to an exit.  Healthcare startups should pay particular attention to whom owns the foundational IP; if the IP is in the hands of the owner, arrangements could be made to formally transfer the IP to the healthcare company.

Copyright protection can be powerful, although copyright law only protects the expression of ideas and does not protect the idea itself.  Still, penalties for a copyright violation can be significant.

Where MSOs are involved, the MSO should seek ways to retain access to customer data even when the relationship with the MD or professional medical corporation, ends.  This can be complicated, given the interface of medical board regulations and state and federal law governing the privacy and security of protected health information (PHI).

IP protection is something that healthcare practices and companies should think about early on in the game, before disputes arise.  For example, the question of who owns the patient and customer lists is one that healthcare employers should address in the employment agreement.

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