We often get calls from people that have an idea for a new medical device. These calls typically come from surgeons and other clinicians, that, through their practice, see opportunities for technology to improve the Standard of Care. Many times this is their first foray into the medical device startup realm. This series is designed to provide some guidance as to what needs to happen, and in what sequence, to help ensure their idea gets off the ground.
The first step we recommend to aspiring entrepreneurs is to secure an experienced patent attorney. Run down their references. Know that, from this point going forward, one of your primary activities, every day, is to de-risk your opportunity for your potential investors (and the FDA).
Conducting a Freedom to Operate Assessment
Your legal counsel will conduct what is known as a “Freedom to Operate” assessment. This is a search to help ensure your technology is not infringing on someone else’s patent. While there is no insurance against future litigation, this effort will go a long way to help protect you going forward. You also don’t want to waste your time and capital if someone has submitted a patent before you came up with a “too similar” idea.
Submitting a Provisional Patent Application
If it is determined you have Freedom to Operate, your next step is to submit a provisional patent application. This “tags” your patent idea with a submission date and provides interim protection enabling you the time to prepare your actual patent submission. The U.S. Patent Office gives you twelve months to submit your patent application after submitting your provisional. This twelve-month period cannot be extended.
Establishing Legal Entity Status
At some point, you’ll want to establish “legal entity status” for your startup business. While investors typically want to invest in a “C Corporation”, registered in Delaware, they are often quite comfortable with your company being a Limited Liability Company (LLC) with the understanding you’ll convert to a C Corp upon investment. Talk to your attorney about legal entity formation to determine what is best for you.
Finally, be prepared to invest between $20,000 to $30,000 on these initial, legal activities. On a positive note, investors expect the entrepreneur to have some “skin in the game” beyond “in-kind” contributions.
In our next post, we’ll begin exploring the investor-driven, Strategic Planning process that has proven to be highly successful, both in attracting investor capital and in the execution of the business.