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This article by Barbara Fox was published in U.S. 1 Newspaper on

October 27, 1999. All rights reserved.

Patents for Pharmas

When Prabha Fernandes left Bristol-Myers Squibb

to start Small Molecule Therapeutics at Princeton Corporate Plaza,

the new company had lots of expertise but no patents. Two years later

the company has 30 employees and several patents in its portfolio.

This model of a start-up — one that rapidly fills its intellectual

property portfolio — is advocated by Sonia K. Guterman,

founder of Dyax and former MIT licensing officer. She will offer patent

strategies for both young start-ups and big pharmaceuticals at a conference

for pharmaceutical and biotech executives staged by Global Prior Art

on Monday and Tuesday, November 1 and 2, at the Marriott. Cost $895.

Call 888-347-3257.

Boston-based Global Prior Art, which does patent searching and analysis,

has assembled industry leaders to discuss techniques for assessing

the strength of a patent, building a valuable intellectual property

portfolio, maximizing the payoff from R&D, defensive patenting, and

using metrics to value intellectual property. Speakers include Lou

Capezzuto of Johnson & Johnson, Katherine Gordon, CEO of

Apollo BioPharmaceutics, Robert Dodge, vice president of IDDEXX,

Donald Daus, former senior examiner for pharmaceuticals at the

U.S. Patent Office, and Patricia J. Conway, former vice president

at Orchid Biocomputer.

The daughter of an engineer/inventor, Guterman majored in biochemistry

at Cornell, has a PhD from MIT in microbiology, and was a senior scientist

at Biotechnica International. As co-inventor of important patents

on remodeling proteins, she co-founded Protein Engineering Corporation,

now called Dyax. She is a patent agent at Bromberg and Sunstein, a

Boston-based law firm E-mail: Her topic: "Creating

a Strong Intellectual Property Portfolio: Lessons for Small Biotech

and Drug Delivery Firms, including Documentation Issues, Business

Development, and Filing Strategies." Her advice:

Start ups should energetically file patents, whether licensed

from a university or derived from the founder’s idea, says Guterman:

"That in itself can create wealth." A company she co-founded

put most of its early capital into pioneering patents, and now that

portfolio has been licensed to 40 companies with revenues of up to

$2 million annually.

Startups can tap university research. Given the oversupply

of PhDs, young high-tech companies can take advantage of ambitious

young scientists and engineers ensconced at what are sometimes low-paying

university jobs. They want to generate some extra income and have

ideas but don’t have factories or lab programs. The university’s transfer

and licensing office will patent the ideas and license them to the

technology companies.

"You want to start up a company, you have some money — not

much but some — a good place to look is at universities,"

says Guterman. "If you have an idea of where you want to start,

collect names of leading scientists and talk to them. Universities

love start-ups. Instead of paying you up front, they may take five

percent of the company, usually a smaller percentage than would a

venture capitalist. Universities also usually want royalties on future


Start-ups should consider applying for provisional patents.

Because acquiring venture capital and filing applications is like

the chicken and egg problem, you can’t do one without the other, Guterman

suggests filing what is called a provisional patent application, appropriate

even for those who have no laboratory or new data. This kind of patent

helps level the playing field for biotech companies, which are by

nature more expensive to establish than software development or Internet-based


"The beauty of the provisional patent application is that it is

not examined," says Guterman. "It gives you a clear year to

collect data, get venture capital support, hire people, and set up

a lab. A year later, when you have these ideas in place, you can file

the nonprovisional patent application."

Consider other alternatives to patent applications. For

some technologies big companies might classify some of the discoveries

as trade secrets rather than patents. Trade secrets are acquired over

time and involve fine points of a particular process; Coca Cola’s

formula is a famous one. They are kept very clearly marked, with locked

files and limited access.

Depending on the technology these large firms could consider rewarding

their scientists with bonuses for trade secrets or other ideas not

patented. Patents are not cheap; they cost $15,000 to $20,000 in the

United States and $50,000 to $100,000 worldwide. Meanwhile the large

company may have thousands of scientists wanting recognition, bonuses,

and advancement — all linked to devising patents.

"Trade secrets should be rewarded by management to the same extent

that patents are, just the way that sales people get bonuses. Then

there wouldn’t be so much pressure on patent departments," says


Consider middle ground options. "If the scientist

in a large firm is enthusiastic about an idea, but management is not,

the company could file a provisional application. It is cheaper to

file, and it does not require a patent law expert to draft the claims.

The inventor can go a long way to creating the final product."

The company then allows the inventor to put together the "disclosure,"

words describing the invention, and to do the business plan and calculations

predicting the revenue stream and time table.

"You are much more likely to get value out of that scientist,"

she says. Either the idea comes through so the company can file a

nonprovisional application, or — if it turns out to be a flash

in the pan — the employee learns a lesson.

— Barbara Fox

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