December 01, 2019 Feature

IP Strategies for the Red-Hot Digital Health Industry

Mi Zhou, Mark Russell Sperling, Justin T. Fleischacker, and Preston K. Ratliff II

©2019. Published in Landslide, Vol. 12, No. 2, November/December 2019, by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association or the copyright holder.

In recent years, the life sciences industry has been experiencing a rapid expansion in digital health via, for example, promoting the use of connected mobile devices for the management of health and wellness-related activities. As in the case of high-tech industries, intellectual property can play a crucial role in protecting competitive advantages and supporting future investments in the digital health industry.

To date, there are over 340 consumer wearable devices and 318,000 health apps available worldwide.1 Sales in the global health-care wearable devices sector reached $5.1 billion in 2015 and are forecasted to reach $18.9 billion in 2020.2 Digital technologies have also been integrated into conventional drugs and medical devices to monitor patient usage and improve patient compliance.3 Additionally, software-only products have emerged as a new class of digital therapeutics that have been validated through randomized clinical trials.4 Investments in digital health continue to grow, totaling $8.2 billion in 2018 and $4.2 billion through the first half of 2019.5

This article explores opportunities and challenges for protecting the red-hot digital health industry, including patent eligibility challenges, use of trade secrets, and sustaining life cycles for products based on digital technologies.

Patent Eligibility Challenges

Under U.S. patent law, patents may be granted for any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvements thereof.6 The U.S. Supreme Court has explained that this statutory text includes an implicit, but important, exception for laws of nature, natural phenomena, and abstract ideas.7 To distinguish between eligible and ineligible patent claims, the Supreme Court has articulated a two-step test under which courts consider (1) whether claim elements are directed to a patent-ineligible concept, such as an abstract idea; and (2) if so, whether any remaining claim elements contain an “inventive concept.”8

Digital health innovations often take the form of specific applications of abstract ideas, such as using digital technologies to provide health care or manage wellness in an innovative way. As abstract ideas themselves are not eligible for patenting, digital health innovations often face patent eligibility challenges. For example, claims drawn to computer-implemented methods and systems for providing telehealth were found to be patent ineligible.9 Specifically, the claimed invention was directed to, among other things, using computer technology to monitor and record information about doctors and to allow patients to request on-demand, real-time consultations with doctors.10 In finding the claims patent ineligible, the court found that the claims embodied the abstract idea of connecting a patient with an available doctor, and that the remaining claim elements that were not drawn to the abstract idea merely described routine performances of a computer and thus did not contain an inventive concept.11

In Cellspin v. Fitbit, the U.S. Court of Appeals for the Federal Circuit provided guidance on what could constitute an “inventive concept” for rendering digital health inventions patent eligible. In Cellspin, the patents-in-suit related to a process of acquiring, transferring, and publishing data by connecting a data capture device, such as a wearable fitness tracker, to a mobile device so that a user can automatically publish content from the data capture device to a website.12 The district court dismissed the lawsuit, finding the claims patent ineligible.13 Specifically, the district court found that the claimed invention was directed to an abstract idea, and that the elements of the claimed invention not drawn to the abstract idea involved the use of generic computer components and thus lacked an inventive concept.14

The Federal Circuit agreed that claim elements reciting a process of acquiring, transferring, and publishing data were abstract.15 The patentee, however, had identified several ways in which its two-step, two-device structure could be unconventional.16 For example, the patentee argued that it was unconventional to separate the steps of capturing and publishing data so that each step would be performed by a different device or to establish a paired connection between the two devices before data transmission. Further, the patentee argued that its specific combination of elements provided benefits over the prior art, including allowing the data capture device to be smaller, cheaper to build, and simpler to use. The Federal Circuit found that implementing a well-known technique with particular devices in a specific combination, like the two-device structure here, could be inventive.17 This was sufficient to create a factual dispute, and the Federal Circuit reversed the grant of motions to dismiss from the district court.18

For innovations directed to new ideas of managing health, it is critical to show an “inventive concept” without relying on claim elements that are directed to abstract ideas. During prosecution and later during a litigation, patent eligibility may be established by showing that the claimed combination, arrangement, or order of using existing computer or telecommunication technologies was unconventional. The context for an inventive concept is, of course, the prior art, and it will be helpful to compare the limitations of prior technology with the benefits of the claimed invention.

Potential legislative reform that may result in a rule change in favor of patent eligibility is on the horizon. In May 2019, a draft bill that would revise the U.S. patent law was introduced.19 The draft bill includes, among other things, provisions that would require construing the law in favor of patent eligibility and abrogate the current patent eligibility test created by the Supreme Court.20 As U.S. patent law continues to evolve, it may be valuable for companies to continue their investments in U.S. patent portfolios covering digital health technologies, despite the current patent eligibility challenges.

Use of Trade Secrets

In the rapidly developing, highly competitive digital health industry, it can be critical to strategically combine the use of patents and trade secrets to protect technologies.21 Trade secrets may protect frequent incremental technological improvements in digital technologies, such as software updates, which may not be regarded as novel or inventive under patent law. Trade secrets may also serve as an alternative form of protection for technologies underlying the digital health products (such as algorithms and databases), where innovative ideas of managing health using such technologies may face patent eligibility challenges. Further, as lead time is often a major competitive advantage in the digital health industry, trade secrets can be valuable for pioneering companies to protect their market positions.22 If misappropriation occurs, trade secret litigation can provide powerful remedies, including injunctive relief,23 ex parte seizure orders,24 compensatory and punitive damages,25 and criminal penalties.26

In the digital health industry, trade secret protection may be available for various components of commercially available products or services even after sale. For example, software, algorithms, and databases underlying digital applications may all be kept secret and fully protected by encryption to prevent reverse engineering by the public after sale.27 Trade secret protection may also be available for proprietary compilations of publicly available health-care data (such as a compilation of publicly available doctor qualifications and availabilities) underlying the digital health products.28

Thus, companies may protect innovative ideas in the digital health space by disclosing general ideas in patents while keeping specific commercial embodiments secret. When protecting digital technologies using a combination of patents and trade secrets, it is important to carefully evaluate the amount of disclosure required to describe and enable the invention, and disclose the best mode of practicing it, while being deliberate and mindful about any potential risk to trade secret protection. For example, trade secrets were not lost when the related published patent documents did not disclose the trade secret information with sufficient detail.29 Further, the timing of patent publication is critical, as remedies may be available for misappropriation of trade secrets that occurred before the publication of patent applications that disclosed the relevant trade secrets.30

Product Life Cycle Management Opportunities and Challenges

The advent of digital health technologies has created new opportunities and challenges for managing drug product life cycles. Before digital health, drug product improvements often involved the development of new formulations, drug-drug combinations, administrative routes, treatment indications, and manufacturing processes. Digital health technologies improve therapeutic outcomes in innovative ways, creating new opportunities for additional patent protection. As such, digital health innovations can strengthen and diversify the patent portfolio of a drug. Further, patents directed to later-developed digital health innovations may enjoy later expiration dates,31 and thus may help to sustain the patent life with an improved product.

Abilify MyCite®, the first FDA-approved digital medicine system, is one example where digital health innovations help to improve the utility and the product life cycle of a successful drug. Abilify MyCite®, approved by the FDA in 2017, is a prescription digital medicine containing an antipsychotic tablet (Abilify®) with an embedded microsensor for digitally tracking drug ingestion in patients with schizophrenia or bipolar disorder.32 The antipsychotic tablet Abilify® is a blockbuster drug developed by Otsuka Pharmaceutical and was first approved by the FDA in 2002. The digital components of Abilify MyCite® were developed by Otsuka’s partner, Proteus Digital Health.

To protect its product, Otsuka applied for and received patents directed to, among other things, the Abilify® tablet formulation and methods of using the active ingredient in Abilify® to treat schizophrenia and bipolar disorder.33 In addition, Proteus applied for and received patents directed to, among other things, an in-tablet sensor, a device for receiving a signal from the in-tablet sensor, and a software-based method for reading a signal from the tablet and determining whether it has been digested.34 Proteus’s patents directed to the later-developed digital health innovations in Abilify MyCite® expire after the expirations of Otsuka’s patents for Abilify®. When compared to Abilify® tablets, Abilify MyCite® can improve clinical outcomes and, in doing so, create new opportunities for protecting and potentially extending the product life cycle.

Although software-only health-care products have emerged as a new class of treatments,35 pursuing patent protection might be challenging. reSET®, the first FDA-approved software-only prescription digital therapeutic, is one example where options for patent protection might be limited. reSET® was developed by a digital health company, Pear Therapeutics, and is marketed by Sandoz. It is a software-only product that provides cognitive behavioral therapy for patients with substance use disorder.36 Its efficacy was established by a 12-week clinical trial, in which the patients who used reSET® had an improved retention rate compared to those who did not.37 The product inserts for reSET® list relevant trademarks but do not reference any patents or patent applications.38

For future digital health innovations, patent protection may be possible, and companies should remain on the lookout for patentable opportunities. For example, depending on the prior art landscape, companies developing digital applications may be able to pursue patent protection on innovative methods of treating diseases using chemical drug products in combination with digital therapy. A flexible and comprehensive intellectual property strategy can be critical to optimize the commercial values of this new class of medicines.

Conclusion

In summary, the red-hot growth of new technologies in digital heath has led to new opportunities and challenges for protecting innovations. Due to the diverse forms that these technologies can take, from software-only products to digital systems integrated into conventional drugs, it is essential that companies maintain a flexible and comprehensive approach to intellectual property, and collaborate closely with their partners to navigate challenges and make the most of the opportunities. Further, as new intellectual property strategies continue to be tested, it will also be critical to monitor legal developments closely.

Endnotes

1. IQVIA Inst., The Growing Value of Digital Health: Evidence and Impact on Human Health and the Healthcare System 3 (2017). Examples of health apps and wearables include an Apple Watch app for the real-time tracking of the onset and duration of seizures, a wearable device for monitoring asthma symptoms, and an over-the-counter wearable device for chronic pain relief.

2. Medical Wearables: The Future of the Internet of Medical Things, Digital Health Age (May 18, 2016), http://digitalhealthage.com/medical-wearables-the-future-of-the-internet-of-medical-things.

3. Examples of digital drugs and “smart” medical devices include Abilify MyCite® and SmartTouch for Symbicort®. Abilify MyCite® is an antipsychotic drug with an embedded microsensor for digitally tracking drug ingestion in patients with schizophrenia or bipolar disorder. SmartTouch for Symbicort® is a “smart” medical device that is installed in an inhaler and used to monitor and encourage patients with asthma and COPD to adhere to self-management plans.

4. In November 2018, Pear Therapeutics and Sandoz launched the first FDA-approved prescription digital therapeutic reSET®, which is a software-only therapeutic indicated for the treatment of substance use disorder. Additional digital therapeutics in late-stage development include software applications for treating schizophrenia, depressive symptoms in multiple sclerosis patients, chronic insomnia and depression, major depressive disorder, pediatric attention-deficit/hyperactivity disorder, and pediatric autism spectrum disorder.

5. Heather Landi, Digital Health Investments in 2019 Poised to Surpass 2018: Rock Health, FierceHealthcare (July 2, 2019), https://www.fiercehealthcare.com/tech/4-2b-invested-digital-health-first-half-2019-as-sector-poised-to-surpass-2018. Investors of digital health range from venture capitalists to pharmaceutical, medical device, technology, and health insurance companies. Notable acquisitions of digital health startups include Roche’s acquisition of Flatiron Health (company building data platform for oncology), Bayer’s acquisition of RediMetrics (developer of radiation dose-monitoring technology), Fitbit’s acquisition of Twine Health (health coaching platform for chronic disease management), UnitedHealth’s acquisition of PatientsLikeMe (patient network and real-time research platform), and Apple’s acquisition of Tueo Health (asthma monitoring company).

6. 35 U.S.C. § 101.

7. Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 573 U.S. 208, 216 (2014).

8. Id. at 217.

9. Am. Well Corp. v. Teladoc, Inc., 191 F. Supp. 3d 135, 137–39, 146 (D. Mass. 2016).

10. Id. at 137–39.

11. Id. at 144–46.

12. Cellspin Soft, Inc. v. Fitbit, Inc., 927 F.3d 1306, 1310 (Fed. Cir. 2019); Cellspin Soft, Inc. v. Fitbit, Inc., 316 F. Supp. 3d 1138, 1144 (N.D. Cal. 2018), rev’d, 927 F.3d 1306.

13. Cellspin, 927 F.3d at 1309, 1313–14.

14. Id. at 1312–14.

15. Id. at 1315–16.

16. Id. at 1316–17.

17. Id. at 1318–19.

18. Id. at 1319.

19. Press Release, Thom Tillis, U.S. Senator for N.C., Sens. Tillis and Coons and Reps. Collins, Johnson, and Stivers Release Draft Bill Text to Reform Section 101 of the Patent Act (May 22, 2019), https://www.tillis.senate.gov/2019/5/sens-tillis-and-coons-and-reps-collins-johnson-and-stivers-release-draft-bill-text-to-reform-section-101-of-the-patent-act.

20. Id.

21. See, e.g., Complaint, Masimo Corp. v. True Wearables, Inc., No. 8:18-cv-02001 (C.D. Cal. June 17, 2019) [hereinafter Masimo Complaint] (asserting claims including patent infringement and trade secret misappropriation with respect to wearable technology for pulse oximetry, i.e., noninvasive monitoring of a person’s arterial oxygen saturation); Third Amended Complaint, Cardionet, LLC v. InfoBionic, Inc., No. 1:15-cv-11803-IT (D. Mass. Mar. 20, 2017) (asserting claims including patent infringement and trade secret misappropriation with respect to wearable technology for automatic detection of arrhythmia in patients).

22. See, e.g., Iconics, Inc. v. Massaro, 266 F. Supp. 3d 449, 452–53 (D. Mass. 2017) (observing that the disputed core architecture trade secret was argued to be particularly useful to a software developer in the early stages of development, because the new developer could utilize these benefits without having to invest the time and energy it took the trade secret owner to realize them).

23. See, e.g., Par Pharm., Inc. v. QuVa Pharma, Inc., 764 F. App’x 273, 275–81 (3d Cir. 2019) (affirming the district court’s grant of a preliminary injunction for the lead-time associated with the alleged misappropriation of the trade secret manufacturing plan and certain aspects of the vasopressin formulation).

24. 18 U.S.C. § 1836(b)(2); see, e.g., Solar Connect, LLC v. Endicott, No. 2:17-cv-1235, 2018 WL 2386066, at *6 (D. Utah Apr. 6, 2018) (granting ex parte seizure of digital files and data from the parties accused of trade secret misappropriation).

25. See, e.g., Epic Sys. Corp. v. Tata Consultancy Servs. Ltd., No. 14-cv-748-wmc, 2017 WL 4357993, at *1 (W.D. Wis. Sept. 29, 2017) (awarding compensatory damages of $140 million and punitive damages of $280 million after a jury verdict finding willful misappropriation of software-related trade secrets).

26. See, e.g., People v. Aleynikov, 31 N.Y.3d 383, 386–405 (2018) (affirming conviction of a former Goldman Sachs programmer who was found to misappropriate Goldman Sachs’ proprietary source code that constituted “secret scientific material” under criminal law).

27. For example, the OxxiomTM device, a wireless wearable pulse oximeter monitor, was sold with its software fully encrypted. See Masimo Complaint, supra note 21, ¶ 38.

28. See, e.g., Par Pharm., 764 F. App’x at 278 (finding that while some individual elements of the proprietary information may be known in the industry, a combination of these elements likely constituted a trade secret itself); AirFacts, Inc. v. de Amezaga, 909 F.3d 84, 96 (4th Cir. 2018) (“[A]lthough a trade secret cannot subsist in information in the public domain, it can subsist in a combination of such information, as long as the combination is itself secret.”).

29. See, e.g., Giasson Aerospace Sci., Inc. v. RCO Eng’g, Inc., 680 F. Supp. 2d 830, 841 (E.D. Mich. 2010).

30. See, e.g., Par Pharm., 764 F. App’x at 276 (finding that Par’s use of a specific diluent in a pharmaceutical formulation could constitute a trade secret, even though Par disclosed it in a patent application published months after the alleged misappropriation).

31. The term of a U.S. patent issued from a patent application filed on or after June 8, 1995, is calculated, in part, based on the effective filing date of the application. See 35 U.S.C. § 154.

32. Abilify MyCite® Highlights of Prescribing Information (Nov. 2017), https://www.otsuka-us.com/media/static/ABILIFY-MYCITE-PI.pdf.

33. According to the U.S. Patent and Trademark Office (USPTO) website, Otsuka is the assignee of various patents directed to Abilify®, including U.S. Patent No. 7,053,092, directed to, among other things, the method of administering aripiprazole (the active ingredient of Abilify®) to a patient suffering from depression; and U.S. Patent No. 8,017,615, directed to, among other things, pharmaceutical formulations of aripiprazole. USPTO Pat. Full-Text & Image Database, http://patft.uspto.gov/netahtml/PTO/search-adv.htm (query “an/otsuka and aripiprazole”) (last visited Oct. 23, 2019).

34. According to the USPTO website, Proteus is the assignee of various patents directed to digital components of Abilify MyCite®, including U.S. Patent No. 7,978,064, directed to, among other things, an in-tablet sensor; U.S. Patent No. 9,444,503, directed to, among other things, a device to receive a signal from the in-tablet sensor; and U.S. Patent No. 10,097,388, directed to, among other things, a software-based method for reading a signal from the tablet and determining whether it has been digested. USPTO Pat. Full-Text & Image Database, http://patft.uspto.gov/netahtml/PTO/search-adv.htm (query “an/proteus and health”) (last visited Oct. 23, 2019).

35. The U.S. FDA continues to develop approval programs for software as a medical device and prescription drug-use-related software. See, e.g., Prescription Drug-Use-Related Software; Establishment of a Public Docket; Request for Comments, 83 Fed. Reg. 58,574 (Nov. 20, 2018); U.S. Food & Drug Admin., Software as a Medical Device (SAMD): Clinical Evaluation—Guidance for Industry and Food and Drug Administration Staff (2017).

36. reSET® Clinician Information (July 2019), https://peartherapeutics.com/wp-content/uploads/2019/08/D-PDH-1377550-reSET-Clinician-Brief-Summary-July-2019.pdf.

37. Id.

38. See id.; reSET® Patient Information (July 2019), https://peartherapeutics.com/wp-content/uploads/2019/08/D-PDF-1377551-reSET-Patient-Brief-Summary-July-2019.pdf.

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Mi Zhou is an associate in the litigation practice of Paul Hastings LLP in New York, where she focuses on complex patent litigation in the pharmaceutical and life sciences areas.

Mark Russell Sperling is an associate in the litigation practice of Paul Hastings LLP in New York, where he focuses on complex litigation with an emphasis on intellectual property matters in the fields of pharmaceuticals and biotechnology.

Justin T. Fleischacker is an associate in the litigation practice of Paul Hastings LLP in New York, where he focuses on complex litigation with an emphasis on intellectual property matters in the fields of pharmaceuticals and biotechnology.

Preston K. Ratliff II is a partner of Paul Hastings LLP and chair of the firm’s litigation practice in New York. His practice includes patent litigation, counseling, licensing, and portfolio development.

 

This article reflects the authors’ current personal views and should not necessarily be attributed to their current or former employers, or their respective clients or customers.