Intellectual Property and Health Tech – potential pitfalls

Technology and innovation is at the forefront of current medical practice, with new software, apps and websites being released regularly. Over the past few years there have been numerous stories about new health care apps and ideas which have appeared in both industry journals, and in the wider media. What may be partly a result of this frequent reporting, the sector has seen a growing number of practitioners embarking on the development of software, apps and websites which they hope will improve the delivery of services to patients.

This article is designed to offer an overview of some of the potential mistakes you could make if you are considering the development of your own health technology from the intellectual property (IP) perspective.

IP is the term that is used to describe things that can be owned but are not physical in nature, examples of this would include copyright, the code forming part of an app or the design behind a company’s logo. IP is something unique that you create, or that is created for you but which you have the right to control. Ideas by themselves are not IP in the law, but things that result from an idea can be. One error we see is practitioners not necessarily realising what IP is, or who may own this seemingly elusive thing. The owner of IP doesn’t own something that is physical but instead has the right to control how an intangible thing is used, for example a logo or brand name. Outside of healthcare, these IP rights are sometimes more obvious. For example, it is the ownership of the branding for “Nero”, “Starbucks” and “Costa” which prevents rival coffee shops opening under these names.

You can have joint ownership of IP, it can belong to individuals as well as businesses and you can also sell and dispose of IP in a similar way to a normal physical object.  It is important for businesses to be aware that IP is a company asset, which can carry a significant value. This is emphasised by figures from a recent report published by the UK Government[i], which showed that the world’s five most valuable companies are worth £3.5 trillion together but their balance sheets show just £172 billion of tangible assets. This means that 95% of their value is in the form of intangible assets such as IP and data.

It is therefore fundamental that any business which requires IP to be operational has the appropriate rights to make use that IP. There can often be confusion over IP rights held by small or start-up companies. Often new start-ups begin in a relatively informal manner.  A good idea by an individual or group of interested investors may lead to some seed money to pay for the development of a website or app. A business may be even more informal, with family members or friends assisting with the designing of your company logo or writing the initial code for a potential app.

In the absence of a clear agreement or an employment contract with the individuals providing these roles, the ownership of IP may be difficult to discern, and may lie with them and not necessarily with you or any company you may create. In the majority of cases, especially with family members, it may be relatively simple to arrange for any unclear IP ownership issues to be resolved.

There are two main ways in which this can be done; firstly, the company can be given permanent ownership rights through what is known as an IP Assignment, whereby ownership of that particular IP is ‘assigned’ by the owner to the company. Alternatively, the owner of the IP can retain ownership of it but licence the right to use it to you by way of an IP Licence.

In general, if someone is an employee of a company, the law states[ii] that any IP created during the course of their employment will automatically lie with the company, unless there is an agreement to the contrary. However, for non-employees such as consultants or freelancers, the IP will typically remain with that individual, unless there is an agreement to the contrary.    Quite often the position in relation to IP will be dealt with under a consultant’s terms and conditions, or similar agreement, but it is important to check this carefully.

IP rights are key at any stage of business but are often overlooked during the early stages, which can have negative consequences in the future. Where the rights over, for example, a name or logo are disputed, it may prove easier and cheaper to change these than to dispute ownership. However, this may damage the business, or potentially leave competitors able to exploit this. The written or video materials on your website, the operational code of your app, the very name of your business are important, and the ownership and right to use these should be clear.

[i] https://www.gov.uk/government/publications/getting-smart-about-intellectual-property-and-intangible-assets

[ii] Copyright, Designs and Patents Act 1988, Registered Designs Act 1949.