IP Goldmine or Landmine? Investor-Ready IP Strategies | LSI Asia '25

David Schmidt  0:00  
Uh, thank you all for coming today. Today we're going to be talking about IP, and in particular, we'll be talking about IP as it relates to due diligence for investment. And we do have a number of slides here, but we want this to be more of a discussion, so feel free to interrupt us and ask questions, if you like. No problem. We don't get through all the slides. This is a good opportunity for you, because Sabrina and I are both IP attorneys, and you can ask us questions. But you know, obviously there's no billing rates or invoices or anything involved here, so feel free to ask any questions you like, and it will be around after the presentation for more questions, and then we also have a little table or booth right over by the bar downstairs on the first floor. So feel free to grab a drink and stop by to talk about IP. Okay, so my name is Dave Schmitz. I work at a law firm called Kenobi Martens. It's spelled knob, but it's actually pronounced Kenobi. Kenobi Martens is one of the biggest intellectual property law firms in the United States, and we are a boutique firm because we only do intellectual property. So we do intellectual property and trademarks, patents, copyrights, trade secrets, et cetera, and we do both IP litigation and prosecution. Now the reason we're here at this particular conference is because our firm has a very heavy emphasis on Medtech. About half of our practitioners all do work in the med tech space, and we have about 300 or so practitioners. And in fact, over the past five to 10 years, we filed more patent applications in the Medtech space than any other firm out there in the US. So definitely a lot of expertise in that area. For me in particular, most of my work is in the med tech space and also in the pharma space. I have a PhD in Biomedical Engineering, and then one of my master's degrees is in pharmaceuticals. So I do work all the way across the board in med device and in particular, I represent a large number of investors who invest in smaller med device companies, and then also the flip side companies that are looking for investment. So I'll turn it over to Sabrina.

Sabrina Wang  2:03  
Hello. My name is Sabrina Wang. I'm also an IP attorney at Kenobi Martens. I've been at Kenobi Martens for the last 10 years, and my practice also emphasize heavily on Medtech. I have a background in biomedical engineering. I actually went to undergrad in National University of Singapore, so really happy to be back here.

Varun Turlapati  2:24  
Hi folks. My name is Varun. My background is actually software engineering and electrical engineering, but I am managing director at Chau capital, where we invest in early stage neurotech startups. So quite within the Medtech space, and I really thank David and Sabrina for inviting me here on their panel.

David Schmidt  2:46  
Okay, come on. There we go. All right, so I'll just briefly touch on some of the different types of intellectual property, but I'm hoping you have some kind of a background in this area. So the four main areas of intellectual property are trade secrets and patents, trademarks and copyrights. It's really although trade secrets and patents are the ones that are kind of relevant for med, tech type diligence. Trade secrets refer to something that is kept secret by your company and that has some kind of an economic value. Those are the only two prongs that make it a trade secret. So it could be something from a manufacturing process that you want to keep secret that's sort of the special sauce for your product, or it could be something like a list that has a number of vendors or things like that that has economic value to you and you want to keep secret. Trade secrets often do come up in Medtech diligence. In fact, I've seen it become more relevant recently, and then investors seem to focus more on trade secrets. It really just depends where your protection lies. So if your company has more protection in the patent space versus trade secret, then maybe the focus is on patents. But if it's more in trade secret, then the focus can be there. Trademarks usually aren't a deal breaker in the med tech space. I think that's more for other industries. Same with copyrights. Copyrights cover things like the cover creative expression, for example, videos, music, poems, things like that, doesn't come up that often a med tech, except occasionally with software.

Sabrina Wang  4:09  
I'd just add, I have filed copyright on a on the ahead, which my client has developed for training injection techniques. Okay.

David Schmidt  4:26  
All right, so I guess I'll turn this to you. Varun, we got a quiz, so I have a patent on my device. Does that mean that I have freedom to operate true or

Varun Turlapati  4:37  
false? My true answer, false, false, correct. That's right.

David Schmidt  4:44  
Yeah, that's right. So this is a common misconception in the industry, is that you have a patent on on a product, and you think, Oh, that means that I can go out there and I can, I can sell that product without any potential repercussions. But that's actually not the case. What a patent gives you is a patent gives you the right. To exclude others, it doesn't necessarily give you the right to practice that particular patent. So what that or sorry, to practice that particular invention. So what that means is that you might have a patent that covers some particular feature of your invention, but then when you try to sell that invention, there's other features of that invention that might run into other patents, or there might be broader patents that can still read on that particular invention. So it's very important to even beyond getting patent protection for an invention, to also understand the landscape of patents that are out there that could potentially block intervention. Okay, so now turning a bigger picture wise to IP diligence, when we're looking at IP diligence, there are sort of three big buckets that we look at when I'm doing IP due diligence. I've got a series of pages of different questions, but these are sort of the main buckets. So one is, do you own your IP? Two is, how strong are your patents and or your trade secret protection? And then three is, do you have freedom to operate? So I'll turn over to Varun of these three factors. Which one do you usually see as being the most important, and then how do they fit into your valuation of the IP for a company? Yeah,

Varun Turlapati  6:09  
probably hard to just give a short, quick answer, but I think freedom to operate. My personal preference tends to be that way, because, like you said, just having an IP or patent doesn't necessarily mean anything. Because venture capital, we are looking at commercialization pathways, we want to understand that, hey, look, we can start commercializing in some way and build on top of it and so on. So for me, and from whatever I've seen, freedom to operate comes pretty high, especially at these stages that we are operating at the pre feed and so on right. Of course, as you go on to advanced stages, Series A, B and so on, becomes more and more complicated. But by that time, the freedom to operate should have been very clear. And then the strong strength of the patent next, and then the ownership again, my perspective, because early stage, often the startups come to us from university incubations, but there is a tech transfer and all those kind of things that are involved. So sometimes we are willing to understand those, so long as there's a pathway. But I'll just pause there, if that makes sense.

David Schmidt  7:13  
Yeah, I agree with you. I think that freedom to operate is often the factor that investors are focused on the most. Nobody wants to buy a lawsuit, right? You don't invest in a company. And then I mean, company and then immediately get sued. So freedom to operate is very important to figure that out. Now, what often happens, particularly with early stage companies, is that they haven't even done freedom to operate yet, and so oftentimes the investor has to come in and they have to make the decision there, do they want to go ahead and do their own freedom to operate analysis or rely on what the other company has done before, or just just go ahead and make the investment and hope that nothing bad happens. So that can really depend on the level of investment and the sophistication of the parties involved.

Sabrina Wang  7:51  
There's, I've come across a cases where, you know, the investor would do some early stage FTO, and then they would in the closing, in the closing agreement with the target, they would say the target would have to do a full blown FTO after funding, yeah. Have you done that? Varun,

Varun Turlapati  8:10  
no, not in whatever I have been exposed to so far.

David Schmidt  8:18  
Okay, moving on. All right,

Sabrina Wang  8:19  
the next quiz question. So I have filed a patent application, AI, as in the company, so the company must own the IP. Is that true or false? Anybody in the audience? I've seen people shaking heads, all right, you're correct. It's false, because it's not always the case. Next slide. So in in the US and in many other countries, the IP rights typically automatically vest with the investor inventors, and the companies that hire these inventors will have to have a proper documentation to show that the rights have been conveyed by the event mentors to the companies. So there are because of that, startup companies typically don't pay close attention. Maybe you know and when they enter into agreements with either their employees or consultants and vendors where there are intellectual property related clauses in those agreements, but because those agreement, agreements in general, was not IP in nature, they would not have an IP attorney, take a look. And there's some languages there that are not clearly conveying the rights to the company itself, and those can create problems. And then, as VR mentioned, the university license agreements, I think, at the university level that May. Be that big of a concern, but sometimes the inventors themselves have the are employees of the university, and when they create some inventions, the university might already have the rights, and even though they sign a document that says, I commit my rights to the company, but the university actually have superseding rights. Those are also issues that we need to think about. And of course, there are trade secret protection programs that companies typically need to set up to make sure that they properly protect their mostly technical know how's in the startup company, and also when talking to collaborate, to collaborate with other companies, or maybe in the example of a startup company, when talking to surgeons or doctors a proper whether a proper NDA was in place to protect IP, and then I just speed up. And the later stage companies, there are also similar concerns like ex employees diligence, new employee onboarding, training, trade secret compliance and reminder of obligations during exit interviews.

David Schmidt  11:14  
We sometimes see with very early stage companies that when they're just in there, messing around, making inventions, they don't necessarily get all the agreements in place for the ownership. The way that, legally it works in the US and in many other countries around the world is that the inventor initially gets the assigned inventions. The inventor initially owns the invention, and then at some point they have to then transfer it to another party, or there needs to be other some other agreement in place. So we've certainly seen many times that these early stage companies, they don't necessarily get all the agreements in place. They don't think about that kind of stuff. And then later on, when you're going through diligence and we start really investigating those issues, you'll find that, oh, you know, the company doesn't actually own the IP, or this person owns a piece of this IP, and we don't know. So these are all things to think about, you know, before you go into actual diligence.

Sabrina Wang  11:58  
All right? And I have a quick war story to share about messy agreements. So the star company, who was once my client, had formed a series of offshore companies for tax benefits. And when creating those companies and transferring all the IPs of they thought they had a clean chain of title. But when you look at the schedule, and there are several key buttons that were left out in the schedule, and we will have to go find a person who is an officer of that offshore company in order to perfect the title. And those companies have been dissolved a long time ago. And so how do you find even an officer who could sign those documents? It was a big challenge. Luckily, we found those people, and then we could back date assignments to, you know, before the company dissolved. But it would have been much cleaner if the IP attorney properly looked at all the assignments as the companies were getting form formed or dissolved.

David Schmidt  13:00  
Varun, do you have any any examples of when you've run into this where the IP just hasn't been properly assigned and the ownership is unclear? Actually,

Varun Turlapati  13:07  
I was going to ask you a question on behalf of the audience, but let's do this one first. Yes. So I think recently we were diligencing. We sent this about a year and a half ago. I had not encountered until that time, this kind of a thing where, I think it seemed to me like the the the entity, actually, there were two exam so anyway, one entity was, seemed like a lifestyle startup, lifestyle company, or what do you call that? They basically were trying to spin off different companies. The parent still held all the C level folks, and they would lend or loan a one of the execs to this new company, and they were looking for funding. And we're like, Okay, well, so you have a clear thing, that company owns this, yeah, we also have these persons involved in that one. And we're like, Okay, so now, okay, so are these persons going to be transferred to that company? No, no, no, not. Now it's about 5050, as needed. We'll just lend them and they come back. Okay, so at that point, if somebody wants to buy the company, or there's an exit potential, how are you going to do this? So it was not at all clear, we passed. Yeah, that's as much as I can like,

David Schmidt  14:15  
probably the right call. Yes. All right. All right.

Sabrina Wang  14:19  
Next, a few more other reminders about agreements that could really trip up your IP rights. I mean, actually, we have already covered those and some other issues that come up with agreements, particularly when you do vendors and third parties in addition to making sure that your IP rights are properly protected any work product or inventions coming out of any projects that the vendors and the third parties are performing, it should belong to the company. And then, if you're really working with just one vendor who already has all the know how's and is it used to be. Typical that the no house would automatically belong to to a company. But it seems that these days, some vendors really like to just take it because they could, you know, make the same thing for another company, or maybe they can do their own thing. We have certainly had a client in our firm whose vendor took their invention and started their own company, and it went into a big trade, trade secret misappropriation lawsuit. And then there are other things, like assign ability and other issues that are, you know, at first glance, they're not really IP related, but if you think about it, it, it really becomes an IP rights issue. So bottom line is a check with attorneys before you sign anything.

David Schmidt  15:42  
This is an important pitfall to note, because we've seen it multiple times. You need to keep track of your vendors. So we've seen a number of occasions where you'll have a smaller company or a startup, you'll go to a vendor, and the vendor is making a product for you, or maybe making your materials, making your raw materials, and you're sharing information with that particular vendor. We have seen occasions where that particular vendor has just gone out and then filed a patent on exactly that, and so that's one of the questions that will come up in diligence. And if you're a small startup company, you're working with particular vendors, you need to take a look and see what they're actually filing, because there's always a chance that they might be filing on what you're working on, and that could be a real problem.

Varun Turlapati  16:20  
I actually have a question, because this is something that we see. A lot of startups approach us, and they already have vendors, coherent suppliers, and so on. What is a good way? So in this particular example, you talked about, is there a way to prevent those vendors from doing that? Because the whole job is the vendor does this for me as a startup, and I've done, I'm owning everything else. So how do I prevent them? Like, is there a way for me to track that? Oh yeah,

David Schmidt  16:46  
yeah. I mean, the way to prevent it is in the agreement you have with the vendor. But the problem is that there's, there's sort of a disparity of power sometimes, right? So when it's a small startup company, they're trying to get a vendor to help them out. They might even need to get R and D help from that vendor. And so they're, they're maybe not sophisticated enough to get the right terms in the agreement, or they might feel like there's a power imbalance and they have to agree to terms that are favorable to the vendor. I mean, really what you should have is you should have an iron clad agreement that is going to make it clear that IP that's co developed with the vendor, is going to belong to the startup company. That doesn't always happen, particularly with smaller companies that are less sophisticated. And these are all the kind of things that just come up in diligence, and you have to talk about them.

Sabrina Wang  17:27  
Okay. Next question, so I have a patent, so my device must be protected by the patent, true or false. I

David Schmidt  17:39  
think for in Oh, I

Sabrina Wang  17:41  
think people should start seeing the trend. Everything is false.

David Schmidt  17:44  
Everything's false. Yeah. They're all gonna say

Varun Turlapati  17:47  
just, just the trend,

Sabrina Wang  17:49  
yeah. So depending on the stage of a company, there are a lot of different patent strategies that are at play and and when we talk about early stage company, typically one that's not even that's pre revenue, you're only have so much IP budget to just file a handful of patent applications just to cover your core IP. And sometimes you really want to get the patents quickly, you know, for funding purposes or for exit strategy. And you try to take advantage of some fast track programs in various patent offices, for example, the Fast Track program in the US or that Patent Prosecution Highway, if you file a PCT application. But as you move to a mid stage level, where you know, for example, when you started generating revenues from your products. Then you started to make sure that you file, not only file patents on core technology in the US, but you start thinking about filing internationally and have multiple continuations pending, particularly in the US, where continuation practice is a little bit more friendly, not so much anymore today because of the new patent office fee rules. But overall, your the general idea is you're going to try to create pickets and fences. Think about what Dave mentioned, that patent is a right to exclude. So visually, just think about them as building fences or molds around your core technology, and not just maybe not just even the product itself, but how you make it, method of manufacturing, method of use, any software, user interface, anything that could, you know, set your product apart from other similar products on the market, and then in for even Bigger companies at a commercial stage where you're like, generating a lot of revenue from your various products, then I really have to be strategic in important global markets and continue, continue building that patent thick head. Okay. Next question. Yeah, my device has been around for decades, so there's no way for me to get patent on this improved device. Is that correct? False? Yes, yeah, that's an easy one. It's true. And don't be discouraged if you're entering a market where it looks really crowded. There's a lot of a prior art out there. For example, we're just using a very simple stand example here. Maybe someone who invented stand that was a very long time ago. This thing is definitely in the public domain, and the count as prior art. Pa stands for prior art. But and then a little bit later, someone made an improvement on the stand. So now it's a particular material, a nickel titanium stand, which is patent number two, and maybe that becomes old. And then someone added another improvement, which is covered nickel titanium stand, which becomes pattern number three. And then a little bit later, another person made another improvement, which is drug eluting from that improved patent number three, then it could become your patent. So everyone is just building a little incremental improvements on medical devices, and you can certainly still find patent protection for your devices or method of using it, or method of manufacturing, whatnot.

David Schmidt  21:24  
Yeah. I think the lesson here is that even in a crowded space, incremental improvements may still be patentable, and small incremental improvements can be extraordinarily valuable, particularly if there's something that you've patented more recently and you've got 20 years of term, it could allow you to capture the market. So even though the space is a little bit crowded, don't be completely discouraged. There's too much out there, because there's, there's often gaps where improvements can still be captured.

Varun Turlapati  21:50  
I have a question, actually, yeah, question, and pardon my engineering hat at this point. Oh, no worries. But you know, let's, let's talk about the your pattern part of it, right? So drug eluting covered. So the first term is, for me, the differentiator right hatch. I mean, it's on top of the foundation. So let's say there's another company simultaneously. Let's call it disintegrating covered nickel. So everything else on the foundation up to pattern three is the same, and just the first term is where mine and another companies differs. How does it work? I mean, is the net value just the incremental how is it treated when you look at distinction? Well, if you

David Schmidt  22:30  
look in terms of patent infringement, so you just have to meet every single limitation. So potentially, if patent number three is still in force and that's owned by another party, it might cover both theoretical company A and theoretical Company B. But if theoretical company a right, they've gone in a different direction from Company B, then they might get protection for using that stent that dilutes drugs, has the nitinol base and then uses whatever feature that they have. So they might have protection in that area, whereas the other company B would have protection in the in the further area, but neither A nor B might actually be infringing each other right, because they have limitations that would not be covered by the product from the

Sabrina Wang  23:08  
other company, right? It's so in the freedom to operate exercise you saw the other company's patent, you check the mark and say, I am missing that particular element, so that one is not a risk for me. Yeah. So, building off of the previous slide, we're talking about, what when you have an invention and you don't realize it, many, many of you here are really smart engineers, PhDs, doctors, and the issue sometimes with people who are really smart is they think everything is obvious, but for to get a patent, typical three standards, it needs to be new. It needs to be something that something identical must not have been around before. That is not a very high bar, and it needs to be useful, which is also not a very high bar, but it also needs to be non obvious over what is already in the public and is it's it typically comes up when you're trying to solve a problem that came up in your engineering job. And yeah, then the smart engineer thinks, oh, yeah, I know how to do this. It would just be this way. Oh, this is so obvious. There's no way I could get patent on that. I hear that from clients all the time, and you have to tell them, please tell me when you're solving a problem, because that could be valuable IP and in how you solve that problem, or sometimes even in realizing there is a problem to be solved, which I mean in the product development world, which is called an unmet need. And we just provided a laundry list of all the possible ways you know, you can, you can, you can protect some new innovation. And the list is really non exhaust, exhaustive, okay, yep. And talking about what is already in. The public domain. That is something that startup companies really need to not just start up companies, many companies and the engineering team and R D team really need to be very careful of is to not lose your rights by inadvertently disclosing your innovation to the public before you even file the patent application. The United States uniquely has a grace period. If you disclose something, you still have one year to file patent protection on that. But many countries don't have such a grace period, like China or Europe. Once you disclose it to the public, you lost patent rights. So a very important lesson is any time when the company is making some publications, like if you're submitting an abstract for for a trade show or a journal article, posting something on social media, going on on the trade show, and showing your new device to to the doctors or the focus group, we need to make sure that patent application has already been filed before you make those disclosures. And another detail to when making those public disclosures is what we call academic humility, is you know when, when someone published a journal article and says, Well, this, these, these hypotheses have been validated in animal models, but we don't know if it works in humans. And then go ahead and file a patent application, and the years down the road, there's an infringer, and the application is on human and then the infringer will do anything Scorched Earth to find a way to say, I don't infringe your patent. And they're going to highlight that sentence that in the publication, it says they said they don't know if this will work in human How could they file a patent application on that? Similar to that, there's what we call lawsuit fodder, like when you're talking to someone or writing an email or and that says, you know, this device works exactly like the other device that's already on the market, and those things could really come back and haunt people. We can just skip to

David Schmidt  27:13  
next. So Varun, in your work, have you ever come across this kind of a situation where a company has sort of accidentally destroyed some of their their art, their their patents or IP protection.

Varun Turlapati  27:25  
I think the most recent point about the academic humility, I did not know it by that term. But I think that is significant, because yes, as as scientists and technologists, I know my fund advisor, as a scientist, sitting on a startup idea, maybe we should come, come To you sitting on a startup idea and has actually held back on publication, so you're absolutely spot on. And I think, why aren't you publishing? Well, if I publish it, it's all out there. Why would I do that? And I think, oh, yeah, that's right, right. So yes, it is. And to your point that that one thing that, oh, we may not, sorry, it may not work on humans. Is enough of a thing for somebody to come and challenge you. So yes, it's a day to day conversation that I have, I kid you not, with my fund advisor, as well as some of the early stage founders that come to us. They say, Yes, we are working on research. So one of the first things we do is like, Okay, have you published everything? Well, no, right. Okay, so hold on. So you need to talk to somebody and so on. So we point them to the right sources and so on. So yeah, we do, yeah. I mean,

David Schmidt  28:30  
it's a big problem with academics, and we've run into this many, many times. There's just so much pressure to publish. You don't need to publish to get grants, things like that, but that publication you know, doing your duty to disclose to the world what you've been researching, it could potentially impact your patent rights later. So this is definitely something to think about. Think about the words that are going in to those journal articles, those publications, and then think about whether they should be submitted at all, you know, or if you should be getting patent protection first. So all things to think about, all right, so we're not gonna ask this question. We I asked this earlier, but we're gonna circle back. Circle back on FTO. Because, you know, as we talked about earlier, FTO is usually the number one issue that investors are looking at when they're investigating whether to, you know, acquire or invest in a med tech startup. And the reason for that is, again, nobody wants to buy a lawsuit. Nobody wants to have to buy a company and then automatically have to be licensing all these things. No one wants to try to enter in a marketplace and try to sell your product and then be told you can't even sell the product. So when you're evaluating FTO, you've got to consider these third party patents, because you can still be liable to a third party patent, even if you get a patent on some improved products that we talked about earlier, the improved stent, but for infringement, every single claim limitation must be present in your product. So this is the way to escape patents, right? Is, you look at these patents, and they'll often have a number of limitations, because they have to overcome the prior art, and oftentimes there'll be a limitation in there that may not read on your particular invention. So. For example, we talked about this earlier, but we have a drug eluting covered nickel titanium stent. So it's got all these different features, right? But something like this could still potentially infringe on a patent that only has the drug eluting stent, because the drug eluting stent might not recite all these limitations, but the product itself might still read on just that drug eluting stent piece. So potentially there's infringement, right? Infringement risk. There's also potential risk if there's just the nickel titanium portion of the stent, because, again, that's still in the product, even if you've improved on that. So lots of things to look out for out there. And it certainly does make sense to you know, for a small company to start looking at some of your major competitors first, before you go into due diligence, and then, if it's merited, if the size of the valuation is high enough to maybe even do some of your own freedom to operate searching,

Sabrina Wang  30:48  
yeah, sometimes it's a really uncomfortable conversation that you can we have to have with our clients when you show them a patent claim and say it has element ABC, and the client said, but I have this D that the ABC doesn't have, and you have and you have to that's not how patent infringement works. That's how patentability works. That's how you get a patent so

David Schmidt  31:11  
continuing along the lines of freedom to operate, actually, I'll turn this to Varun. So what do you look for at different stages of a company in terms of their freedom to operate analysis.

Varun Turlapati  31:25  
So can you be more specific? Maybe. So

David Schmidt  31:28  
for So, for example, if we have a small company, maybe they've only got angel investment or maybe series A or even earlier, our expectation for them would be that they haven't done a full FTO, but maybe they've at least looked at some of their main competitors. From your perspective, what should they have done by that stage?

Varun Turlapati  31:45  
Yeah, I think to first of all, I think we, by virtue of going at it through a commercialization aspect, again, from our funds perspective, we're trying to look at is the technology unique at a very high level, and that itself gives us some indication of what are the kind of things we may want to look at in terms of IP right? The number of pitches that I get in this, this field, often, if there is, if the technology is not deep enough, it's very easy to say, Okay, it's kind of borderline. I can expect it so kind of a repeat or not much of an innovation. So then it's a go, no go, that I decide right then and there. But often it's deeper tech, and by virtue of that, I would expect that it is already passed a lot of these kind of checks of like, hey, it's strong, technically, strong pattern, basically, freedom to operate wise, I think so far, at least for our fund, we've been looking at non existent incumbents. I don't know if that makes sense, like the solution doesn't exist, so it's a completely different like a pharmaceutical solution. So for us, it becomes easier to then look and say, Okay, well, it is kind of doable. I think I'm in the ball parks there, but you know, that's why I was asking for a more specific case. But yeah, this typically has been my experience so far. Makes sense,

David Schmidt  33:07  
yeah, for for a mid Stage Company, investors would expect a little bit more on the FTO front. So if you've already gone through, you've gotten Series B, maybe 10s of millions of dollars investment. At that point, they'd be looking for you to have done more of an FTO analysis of the marketplace, and have a better understanding of what's out there, whether there are risky patents that need to be licensed or required. And then at a later stage, you'd want to be able to demonstrate low risk of infringement for all aspects of the commercial product, possibly internationally. And at that point, you can start to think about whether, if there are some problem patents out there, things that you can't necessarily get around looking at lawsuits or invalidation some other routes like that. Okay, but that's the end of our talk here. So if you have any questions, we've got a few more minutes left. Oh, thank you.

David Schmidt  33:52  
All right. Varun, did you have any questions? 

Varun Turlapati  33:57  
I had one. 

David Schmidt  33:58  
Okay, 

Varun Turlapati  33:58  
maybe you probably have to go back to some of the slides I forget, but I think this, I'll turn it back to you for just a bit, right as investors, or as startups and investors having these early conversations, right? Somebody who's coming from a university incubator, for example, what are some guidelines that we as investors can give them, especially with freedom to operate, because that's the number one. You're right. So now, what are the key land mines that we should point them towards to say, hey, and that's an answer that'll help me as well, but also help the startup founders think about the strategy going forward. Yeah,

David Schmidt  34:39  
I think a full blown FTO can be quite expensive, and it's very resource intensive. So you first, you've got to pay some kind of a searching company to actually do the searching and analysis. And you know, those can run over $10,000 depending on the complexity of the search. But then, of course, you've got to analyze all the hits that come back. And sometimes there can be hundreds and hundreds of hits, which can be a significant amount of. Attorney, time for your lawyers, but then also internally, right? The founders of the company might have to work on those, and the engineers and such would have to help with the analysis. So it could be a significant investment for an early stage company. And then there's also some additional risk in that you've now become exposed to all of this prior art, which then, of course, means that it needs to be bundled up into what's called an information disclosure statement with it with the USPTO. So all these things need to be disclosed because now they've been exposed to all this prior art. So for smaller stage, early stage companies, we often advise you don't necessarily have to do a full blown FTO. You know, it's not necessarily expected at that stage, particularly when the numbers are fairly low, but there is an expectation to understand some of the big players in your space, right? So some of the bigger players that you're going to be up against in the marketplace, at least have a general understanding of what kind of IP they have, and maybe even do an assignee type search would be looking at all of the IP that they have, rather than doing a full blown keyword type freedom to operate search a

Varun Turlapati  35:57  
quick follow up on that as well, right? So yes, that brings to mind another case or another example. So we talked about patents where you have a platform and increment and increment and so on. And there comes a time when there are a few players in the market, they're going about it differently. Maybe one is talking about ultrasound and the other one is talking about radio frequencies, electromagnetic signals. So physics wise, yes, two different things. But at the end of it, they're trying to solve a problem, and that problem is the common part here. So now, how should they think about freedom to operate in this case, you know, and early stage. So they're all equally early stage. So when we are doing the due diligence, we look and we easily find out, not from a patent perspective, but technology. Oh, this company is doing ultrasound, that one is doing video frequencies and so on so forth. So we have narrowed it down to that point. Now, what should we look for? We as startup founders, we as investors, you know, things like that.

Sabrina Wang  36:57  
I think for if it's a limited number of players in the field, even if the key technical differentiator is different, typically would still advise the startup company to set up a monitor, which actually is not expensive to do at all with some of the self commercialized software, and for every One of the patents those those key competitors are coming getting you would always want to check whether they're the claims would include that key differentiator that you don't have in your device, as long as you don't then and from, from a third party risk perspective, you don't have that. It usually especially in the US, where they can go to the 10th continuation application. That's when the claims get broader and broader and broader at it to the point where it's just claiming solving a problem without actually saying how you solve it. I anticipate that's when you get nervous with, you know, the players is solving that problem, even though with a different technology. Yeah. Yeah.

David Schmidt  38:00  
Okay, makes sense. Oh, sorry, we asked a question. Was that two minutes? Okay, yeah, okay, well, uh, any other questions out there? Otherwise, oh, yeah, yes.

Sabrina Wang  38:20  
And we get that question a lot, where do you file? I think, though we are home country, is a no brainer. You always want to file there. Then the next question is, where do you file internationally? And it's a budget issue, and it's also an issue of, where do you see yourself commercializing that product in those country where your key competitors are coming out of, and your key competitors, where are they filing patent protection for? And also, if it's a fairly early stage company, you also want to think, who are my potential acquirers or investors, and where would they be interested to see patent protections, some of the guidance, some of the key points to think about, yeah,

David Schmidt  39:05  
there's also this aspect of maybe kicking the can down the road a little bit. So there is the Patent Cooperation Treaty, which gives you the opportunity to file, you know, an international patent, but you don't have to actually enter countries immediately. You know, it can sit there for up to 30 months before it actually has to enter into another country. Another country. So that's a way, if you know, if you've got limited funds, you don't necessarily know where to file yet, but you're starting to go through investment rounds, you know, get that PCT filed, and then now you you can tell your potential investor, hey, look, I haven't gone to these countries yet, but I can go anywhere I want, you know, I've got this option right here to take it to any country that is of interest to you. 

Sabrina Wang  39:39  
Right? Many times, investors and acquirers want to see flexibility in your patent protection. You don't have to have done it very well, but as long as you have left the option open for them to later on fix it, then it's usually fine.

David Schmidt  39:52  
Okay, I think we're done. So thank you everybody for your time. Appreciate it. We'll be at our table on the first floor if you want to stop by and talk IP, thank you for your time. Bye.