According to the FDA, the medical device industry experienced significant supply chain disruptions during the COVID-19 pandemic. Such disruptions caused shortages of PPE, ventilators, diagnostic testing, and other medical devices. As Janet Woodcock, M.D., the Acting Commissioner of Food and Drugs, acknowledges in her July 21, 2021 statement:
“the pandemic has exposed great weaknesses in the medical device supply chain and its dependence on foreign medical devices.”
Woodcock also explains the steps being taken by the FDA to avoid such shortages in the future. One step includes a request for $21.6 million to fund a new Resilient Supply Chain and Shortages Prevention Program (RSCSPP). This funding request is part of the FDA’s request for $97 million to support its core safety programs. Woodcock explains “the funding will provide, for the first time, resources to establish a permanent program for U.S. supply chain resilience for medical devices.” RSCSPP’s goal is to prevent and mitigate the supply chain issues like those experienced during the pandemic while reducing dependence on foreign medical devices.
Additionally, the FDA is looking to expand its authority to prevent future shortages. The FDA seeks broader authority “to obtain supply disruption notifications for critical devices.” Broader authority has also been requested to require manufacturers to develop and share risk management plans. The FDA plans to work with Congress to ensure the FDA has the resources and authority needed to advance these initiatives.
The U.S. Supreme Court recently decided a case resolving a patent dispute between two medical device companies, Hologic, Inc. and Minerva Surgical. The opinion was closely watched because it raised the question of whether an inventor who has assigned a patent is legally prevented from later attacking the validity of that same patent — a doctrine historically referred to as “assignor estoppel.”
The Supreme Court’s opinion on June 29, 2021, upheld but limited this doctrine, defining its boundaries and emphasizing it is based on legal principles of equity and fair dealing.
In the case, Csaba Truckai was a listed inventor on a patent application, the rights to which were subsequently acquired by Hologic, Inc. Mr. Truckai then founded Minerva Surgical, Inc. and developed an endometrial ablation system. Hologic sued Minerva for patent infringement of one of the assigned patents related to endometrial ablation.
In response to the claims of patent infringement, Minerva attacked the patent as allegedly invalid. In response, Hologic argued that, under assignor estoppel, Minerva should be prevented from attacking the patent’s validity because Minerva’s founder, Mr. Truckai, was an inventor on the same patent.
In deciding the case, the Court recognized the fairness principle of assignor estoppel — that an inventor shouldn’t be able to initially tout an invention to the patent office, only to later disclaim its worth after assigning it. However, the Court decided that the lower court had applied assignor estoppel too expansively to muzzle inventors. Thus, the Court held that the doctrine applies only when an inventor makes statements (explicitly or implicitly) in assigning a patent, and later contradicts those statements in litigating against the owner of the patent. The Court reasoned that an assignment does carry an implied assurance of a patent’s validity, but where the assignor has not made explicit or implicit representations that contradict an invalidity defense, there is no ground for assignor estoppel.
To illustrate the boundaries of assignor estoppel, the Court provided three non-exhaustive examples of when assignor estoppel does not apply:
- First, when assignment occurs before an inventor can make a warranty of validity (e.g., “when an employee assigns to his employer patent rights in any future inventions he may develop during his employment”);
- Second, when a later legal development renders the warranty of validity irrelevant (such as a change in the law); and
- Third, when a change in patent claims occurs for an assigned application (e.g., “the new claims are materially broadened” during patent prosecution after the assignment takes place).
Nevertheless, each assignor’s and each company’s situation is unique, and the application of assignor estoppel depends on the particular situation. Medical device companies and others concerned about patents should seek the guidance of professional legal counsel when making any determination regarding whether assignor estoppel applies.
Nephros is a water technology company, providing filtration and pathogen detection solutions to the medical and commercial markets. Nephros acquired substantially all of GenArraytion’s assets, namely, GenArraytion’s proprietary assays, multiplexing technology, and selection methods for detecting waterborne pathogens and other microorganisms using Polymerase Chain Reaction (PCR) technology. GenArraytion has developed infectious disease diagnostics for hospital-acquired infections and other water safety targets
GenArraytion currently produces MultiFLEX® Bioassays. These bioassays are customizable for detection of “clinical pathogens, tick- and mosquito-borne pathogens, food- and water-borne pathogens and biothreat agents” according to GenArraytion’s website.
The acquisition enhances Nephros’ capabilities for measuring and monitoring waterborne pathogens utilizing PCR testing, and propels Nephros’ abilities to detect and mitigate the spread of infectious disease in premise plumbing.
Waterborne pathogens are a major worldwide public health concern. In addition to developing organisms and new strains from already known pathogens, high prevention and treatment costs present concrete challenges to the public health sectors. The acquisition will allow Nephros to provide on-site testing and data for premise water management.
Nephros issued 123,981 shares of its common stock to GenArraytion, for an aggregate purchase price of $1.2 million. Half of the shares are subject to a risk of forfeiture, which will lapse upon the satisfactory completion of certain intellectual property transition services. Nephros will also make royalty payments to GenArraytion based on net sales of GenArraytion products over the next five years.
The U.S. Patent and Trademark Office (USPTO) allows a patent applicant to pay reduced fees if it qualifies as a “small entity.” Many types of filing fees are reduced by 50%. These savings can be important for companies on a tight budget, and can add up where applicants have multiple filings. For example, the savings on filing fees per non-provisional patent application are currently more than 900 USD, and the current savings on the 11.5 year maintenance fee for an issued patent are a whopping 3,850 USD!
Many startups can qualify as a small entity and reap the savings. However, in some situations, even a tiny startup may need to pay the large, undiscounted entity fees. It is important to make sure you truly qualify as a small entity, because in some situations, incorrectly filing as a “small entity” can be seen as a “fraud” on the USPTO, which can result in your patent being declared “unenforceable.”
A “small entity” for purposes of paying reduced USPTO fees is defined in 37 CFR 1.27(a) as a person, a small business concern, or a nonprofit organization. The USPTO Director has the authority to establish regulations defining independent inventors and nonprofit organizations. The U.S. Small Business Administration (SBA), a United States government agency, was given authority to establish the definition of a small business concern.
For small business concerns, most U.S. patent practitioners are familiar with the basic “small entity” requirements: i) have no more than 500 employees, and ii) not be obligated to assign the patent application to an entity that is not a small entity. However, startups and other small companies should be aware that the first requirement actually states the following: “A concern eligible for reduced patent fees is one: (a) Whose number of employees, including affiliates, does not exceed 500 persons.” (emphasis added).
So, what is an “affiliate”? Is an investor an affiliate? What if that investor is a large strategic medical device company? The answer is important, but may not be straightforward.
The SBA regulations state that two entities may be “affiliates” where one has the “power to control” the other. The regulation states, in part, “[i]t does not matter whether control is exercised, so long as the power to control exists.” The control may be “affirmative or negative,” or “indirect.” Further, the SBA will “consider the totality of the circumstances,” including various factors “such as ownership, management, previous relationships with or ties to another concern, and contractual relationships.”
This is just an overview – various other issues are considered as well, and various other scenarios may also land you in large entity territory. For example, the SBA may find “affiliation” based on stock ownership, where a “person owns or controls, or has the power to control, 50% or more of the concern’s voting stock.” Further, such a situation “is a non-rebuttable basis for finding affiliation.” (emphasis added). There are other scenarios as well.
Determination of “entity size” is an individualized issue, dependent on various factors. If your medical device startup has a large investor, which for example, has over 500 employees, and that investor has the power to control your startup, you may actually need to pay large entity fees. Or, if one of the many scenarios provided by the SBA applies to your startup, you may need to pay large entity fees.
Each company’s situation is unique, and the application of large or small entity status depends on the facts of your particular business. You should seek the guidance of professional legal counsel when making any determination regarding entity size when applying for patents before the USPTO.
In a first complaint, filed against Exactech, Conformis accused Exactech’s Vantage® Total Ankle System of infringing U.S. Patent Nos. 8,460,304, 9,295,482, 8,623,026, 9,326,780, and 9,186,161. According to the complaint, the infringing products include 3D-printed tibia and talar cutting guides and the associated ankle implants.
In a second complaint, filed against both Bodycad and Exactech, Conformis accused the two companies of infringing U.S. Patent Nos. 8,974,539, 9,387,079, 7,799,077, 8,077,950, 8,638,998, and 9,180,015. The accused products include Bodycad’s Reflex UniTM unicondylar knee replacement and software, for replacing a single compartment of an arthritic knee, and Bodycad’s Fine OsteotomyTM patient-specific surgical guide and plate, for a knee osteotomy procedure where either the tibia or femur is cut and then reshaped to relieve pressure on the knee joint. According to an exclusive distribution agreement announced November 24, 2020, Exactech will be the U.S. distributor for Bodycad’s Reflex Uni system under the name Truliant Reflex Uni, with limited market availability in early 2021 and a full release by the end of 2021.
These two lawsuits continue Conformis’s history of enforcing patents from its portfolio of over 200 issued patents. U.S. Patent Nos. 8,460,304, 9,295,482, 8,623,026, 9,326,780, and 9,186,161, from the first complaint against Exactech, have been asserted by Conformis in prior litigations, but U.S. Patent Nos. 8,974,539, 9,387,079, 7,799,077, 8,077,950, 8,638,998, and 9,180,015, from the second complaint against Bodycad and Exactech, are being asserted for the first time. These newly asserted patents include claims directed to patient-specific implants, which differ from patents asserted in prior suits which included claims directed to systems comprising patient-specific instruments and off-the-shelf implants.
The prior litigations include cases filed against large orthopedic companies such as Depuy Synthes, Wright Medical Technology, Medacta, Smith + Nephew and Zimmer Biomet. The litigations against Depuy Synthes, Wright Medical Technology and Medacta are active, while the litigations against Smith + Nephew and Zimmer Biomet were settled according to press releases issued on September 17, 2018 and May 28, 2020. Several of the Conformis patents have also been challenged in inter partes review proceedings before the USPTO Patent Trial and Appeal Board.
UCLA Biodesign Launches Study to Help Advance MedTech and Digital Health Innovation Forward Into a New Decade
What does it require to bring a transformational innovation to patients? To address this question, the UCLA Biodesign Hub for MedTech and Digital Health has launched an industry-wide study to uncover the cost and time to achieve regulatory and reimbursement approval in the United States and to understand the impact of regulation and reimbursement on the advancement of medical technology and digital health innovation. The last time such a study was conducted was over ten years ago.
The study is led by a research team out of the UCLA Biodesign Hub, in partnership with the life science innovation ecosystem and with support from the U.S. Economic Development Administration. This independent study interviews medtech and digital health regulatory executives to examine trends, establish benchmarks for time and cost to bring transformative technologies to patients, and to inform future decision-making on regulatory and reimbursement.
The questions being explored include:
- How long does it really take innovations to get to market?
- Is breakthrough designation breaking down regulatory barriers to access?
- Is the U.S. keeping pace with Europe, Japan and China?
- Do digital health and AI/ML have a clear path to market?
- Is reimbursement the new barrier to innovation?
- What is next on the regulatory and reimbursement horizon?
Learn more and schedule an interview to participate as a thought leader and build a consensus for innovation policy at www.medtechstudy.com, or contact a member of the research team at firstname.lastname@example.org. Participation will help to establish benchmarks and inform future decision-making for similar companies, and an industry report will be presented at leading conferences in 2021.
Royal Philips NV acquired BioTelemetry, Inc. for $2.8 billion US dollars. Headquartered in Malvern, Pennsylvania, BioTelemetry provides cardiac diagnostics and monitoring tools that, according to the press release, are expected to add to Philips’ line of hospital-based patient monitoring solutions.
As the COVID-19 pandemic drives up demand for telehealth and remote patient monitoring, Philips expects BioTelemetry business to contribute to sales growth and adjusted EBITA margin in 2021 and deliver double-digit growth and improve profit margins to more than 20% by 2025. According to Frans van Houton, CEO of Philips, “the acquisition of BioTelemetry fits perfectly with [Philips’] strategy to be a leading provider of patient care management solutions for the hospital and the home.”
According to BioWorld, Biotelemetry had 2019 sales of $439 million US dollars and annually monitors over 1 million cardiac patients remotely. Biotelemetry’s current portfolio includes wearable heart monitors and AI-based data analytics and services. Philips sees opportunities to “broaden the scope of wearables” using BioTelemetry’s remote monitoring portfolio. In addition, Philips expects BioTelemetry’s 30,000 referring physicians to provide cross-selling opportunities, geographical expansion, pipeline opportunities, and productivity gains. According to van Houton, the referring physicians “a new channel for Philips” that can “provide [Philips’] offering for multiple therapeutic areas.”
It is estimated that Philips’ acquisition of BioTelemetry gives Philips a significant share in the estimated $3.7 billion US dollars cardiac ambulatory market. According to Roy Jakobs, executive vice president and chief business leader of Philips’ Connected Care business, BioTelemetry currently is No. 1 in the cardiac ambulatory market space. Among top 3 competitors in the cardiac ambulatory market, only BioTelemetry offers all four cardiac measurement types: short-term Holter monitor, extended long-term Holter, cardiac event monitor and mobile cardiac telemetry.
According to Philips, Philips is acquiring all shares of BioTelemetry for $72 per share and BioTelemetry and its employees will become part of the Philips’ Connected Care business upon completion of the acquisition.
UCLA Biodesign is currently inviting professionals in engineering, medicine, design, computer science, and business to apply for an exciting year-long fellowship, starting in the summer of 2021, associated with the world-class resources at UCLA Health. Now in its 2nd year, UCLA Biodesign fellows will join a team of like-minded healthcare innovators and leaders on a three-stage development process, from the identification of meaningful clinical opportunities, to invention and solution development, and to the initiation of a new venture.
Launched in 2019, UCLA Biodesign’s first class of 10 fellows included two UCLA Health faculty members and eight postgraduate professionals from engineering, business and medicine. The program expanded in 2020 to include two tracks – the Discovery Track and the Accelerator Track. The Discovery Track includes 8 fellows who will start with three months of clinical immersion followed by nine months of product development. The newly formed Accelerator Track is geared toward the in-residence clinical entrepreneur or technical innovator with a mature idea or concept, and includes 10 fellows. All fellows will receive mentorship from industry experts in areas such as product development, business development, corporate venture and intellectual property. Mentorship in intellectual property will include guidance from IP experts and Knobbe partners Rabi Narula and Sabing Lee.
UCLA Biodesign is led by Co-Executive Directors Desert Horse-Grant and Dr. Jennifer McCaney. Desert is on the executive leadership team at UCLA Health and is Senior Director, UCLA Health Research & Innovation. Jennifer is an Assistant Director of the UCLA Clinical and Translational Science Institute and Adjunct Assistant Professor at the UCLA David Geffen School of Medicine and UCLA Anderson School of Management and a leading expert in disruptive technology and entrepreneurship in healthcare. Together, they are looking to train the future leaders who will develop the groundbreaking innovations to solve the most complex medical needs.
Medtronic recently announced that it received clearance from the FDA and CE Mark approval for its LINQ II insertable cardiac monitor (ICM). The announcement notes that ICMs “are small, subcutaneously implanted devices offering continuous ambulatory electrocardiogram monitoring” and that in particular, ICMs focus on detecting and managing subclinical atrial fibrillation. Articles have noted that recently some ICM’s have expanded their monitoring capabilities to assist with home monitoring of COVID-19 patients.
The LINQ II system purports to offer remote programming and remote patient management that allow system optimization without the patient visiting the hospital. Rob Kowal, M.D. Ph.D, the chief medical officer of Medtronic’s Cardiac Rhythm and Heart Failure division touted this as an advantage of the LINQ II system in view of the COVID-19 environment:
[T]he LINQ II system offers patients a seamless way to experience ongoing connectivity between their device and their physician, while reducing the need for in-office visits.
Medtronic advertises the LINQ II as delivering the lowest published rate of false positives as compared to other ICM devices. Medtronic asserts that this increased accuracy will allow clinicians to spend approximately 33% less time reviewing ICM transmission, thereby streamlining their workflows. The LINQ II also purports to offer up to a 4.5 year lifespan, a 50% increase from the three year average lifespan of ICM’s reported in 2018. According to Medtronic, the LINQ II system also includes Medtronic’s MyCareLink Heart mobile app to automatically transfer data from the LINQ II to their physician. For patients who cannot use a cell phone, Medtronic notes that it offers a dedicated MyCareLink Relay Home Communicator.
COVID-19-related web applications have been popping up from the very start of the pandemic, and many, including Apple and others, have stepped up to contribute to the developments. The majority of COVID-related applications attempt to tackle the effort of contact tracing in order to get a better grasp on where the virus is spreading. Many of them have taken on a variety of approaches to tackle the issue – some apps are optional while others have mandated downloads. The MIT Technology Review Covid Tracing Tracker goes into an in-depth evaluation of the 25 applications it was able to identify. For example, Turkey requires all residents who have tested positive for COVID-19 to download Hayat Eve Sığar and share their data with the police, while India has become the only democracy that is making its app Aarogya Setu mandatory for millions of its people. On the other end of the spectrum are apps like Austria’s Stopp Corona and Iceland’s Rakning C-19, which are entirely voluntary to use.
Like many other players in the market, Apple also plans to build out a contact-tracing application in partnership with Google. However in the meantime, Apple released a US-focused website and app simply titled COVID-19 at the end of March. The goal of the website and app is to “help people stay informed and take the proper steps to protect their health during the spread of COVID-19.” To achieve this, the website notes that Apple provides users with a Screening Tool to help assess their condition and risks, and supplements that with a variety of COVID-19-related information. Contact tracing is not part of the app and website’s functions.
According to the press release, the Screening Tool can be used to evaluate your own condition or complete the screening on someone else’s behalf. Before diving into the questionnaire, users are shown a list of symptoms that would constitute an emergency and are asked to contact 911 if any of them are present. Once emergencies are ruled out, a list of comprehensive questions asks users the usual symptom and travel-related questions, but also goes into more detail with questions such as “do you work in a medical facility?” and “do you live in a long-term care facility?” At the end of the questionnaire, users are presented with recommendations on next steps, which for some may include testing for COVID-19, or reaching out to a healthcare professional. When using the app, the questionnaire answers and recommendations are stored in the app and can be accessed at a later date. When using the website, users will instead see an option to print their results for their records. In either scenario, Apple states that it does not collect answers from your screening, and only collects website/app usage information to improve usability.
The website and application were developed by Apple in partnership with the CDC, The White House, FEMA and local state governments in “a direct response to President Trump’s call for an all-of-America approach and will help Americans heed CDC guidelines and self-isolate to limit COVID-19 transmission.” Once a user selects their home state, they receive a summary of official guidance, such as quarantine and social distancing measures, applicable to them. The option to ‘Learn More’ takes users directly to state government websites with fully expanded explanations.
According to the press release, while using the website or app, users will see additional links that include resources for unemployment help, instructions for making cloth face coverings, latest updates featured on the Apple News app, and mental health crisis help lines. Furthermore, if the Screening Tool recommends reaching out to a healthcare professional for guidance, users are presented with a variety of telehealth applications. According to the American Foundation for the Blind, the site “works well when using a screen reader” and the app is accessible to those with disabilities.
The app and website purport to go beyond focusing on just the virus and stress the importance of maintaining good physical and mental health. It reminds users to exercise, eat well and reach out to a health professional for non-COVID related matters as well. The press release indicates that the website lists strategies for staying in good mental health while working from home, going to work, or dealing with unemployment is also presented. Finally, users are encouraged to connect with friends and family as a way of supporting one’s mental health – a timely callout for May’s Mental Health Awareness Month.
Apple’s website and app can be found here: https://www.apple.com/covid19.