Frequently Asked Questions

Emerging Biotech Company Issues:

• Most common issues?

Intellectual Property (“IP”) & Patents:

• What is intellectual property?
• Types of intellectual property?
• What is a patent?
• Why patent?
• What is the lifespan of a patent?
• How much are patent costs?
• When to patent?

Licensing & Strategic Alliances:

• What is a license?
• Pros & cons of licensing?
• Term sheet necessity?

Emerging Biotech Company Issues

What are the most common issues that challenge emerging biotech companies?
Biotech companies are faced with many, diverse challenges. However the most common issues to challenge emerging biotech firms are:

• Company positioning and coming to terms with current versus future drivers
• Financial challenges
• Lack of infrastructure, staffing and resources
• Lack of start-up and/or business experience
• Multiple goals with parallel tracks
• Necessity of focusing on milestones
• Founder issues and mechanisms to provide continued involvement and creativity

Intellectual Property ("IP") and Patents

What is intellectual property?
Intellectual property is any form of knowledge or expression that results from original creative thought, including inventions, literary or artistic works, computer software, patents, copyright material and trademarks.

What are the different types of intellectual property?
The law recognizes four main types of intellectual property (“IP”):

• Patents – for inventions, including products, processes, compositions, functions, etc.;
• Copyrights – for literary, musical or artistic works;
• Trademarks - for words, symbols and/or pictures used to distinguish goods and services; and
• Trade secrets – for business methods, processes, machines, formulas, patterns and techniques.

IP law also provides specific forms of protection for semiconductor layouts and designs, symbols indicating geographic origin, industrial designs, and plant breeders’ rights for new plant varieties.

What is a patent?
A patent is an exclusive right granted by a government to make, use or sell an invention for a limited period of time.

Why patent?
A patent provides a monopoly for a period of time in which to realize a return on the investments required to bring your technology to market. Without the protection provided by a patent, commercialization of a new technology would be a much riskier venture.

What is the lifespan of a patent?
In Canada, a patent lasts 20 years from the date of application for applications filed since October 1, 1989. In the United States, the term is also 20 years from the date of the first filed U.S. application. However, the term may be extended based on any delays in issuance of the patent caused by the U.S. Patent and Trademark Office for applications filed since May 29, 2000.

How much are patent costs?
Costs for filing a patent application vary, but generally range from $5,000 - $20,000. Additional costs are incurred during prosecution and maintenance. Often, patent expenses can be recovered from licensees in anticipation of future revenues generated by the patented technology.

When to patent?
Unless patent protection is initiated prior to publicly disclosing your research results or invention, you may be prevented from patenting them later on. You do not have to give up publishing your research results in order to protect your intellectual property. However, if you are planning to present your intellectual property to the public, it is recommended that you consider initiating patent protection beforehand.

Licensing and Strategic Alliances

What is a license?
A license is a contract with an external party giving it the right to make, use, sell, and/or export your intellectual property. Licenses can be exclusive or non-exclusive, and rights can extend to one, some, or all applications or fields of the technology.

What are the pros and cons of licensing?
There are many potential benefits of licensing, including licensing income, continued development and/or commercialization of the technology or product with no capital investment requirements, market access with no capital investment, feedback on the value of the licensed intellectual property, payback of development costs, as well as the benefits of business partnerships established and/or strengthened as result of the license arrangement.

However, licensing requires a range of demanding activities, including strategic planning, targeting of potential opportunities, due diligence, preparation of supporting material, contact with potential partners, negotiation and management of deals both pre and post-completion. Failure by the licensor to conduct these activities with adequate proficiency can have disastrous results. For example, if a biotech company licenses a third party to use a technology or product candidate, and it fails to carry out sufficient due diligence before giving the required warranties, the biotech company could end up having to repay its license fees in damages for breach of a warranty claim.

Is a detailed term sheet necessary to complete a license or strategic alliance?
A term sheet will ensure a common understanding of the key aspects of the transaction by all parties in the early stages of the deal, which will help prevent it from falling apart at a later, more costly stage. Term sheets may include a limited period of exclusive negotiation, but typically, they should otherwise be non-binding.