This article originally appeared in Law360 on November 22, 2021. It is republished here with permission.
Telemedicine and digital health technology have evolved during the COVID-19 pandemic, and changes to telemedicine laws reflect the innovation by providers and technology companies. Enacted and proposed laws and rules, such as those from Centers for Medicare and Medicaid Services, illustrate that telemedicine and digital health are likely to stay after the COVID-19 pandemic ends.
As entities innovate to provide new offerings and products to better service patients remotely, these entities are often facing questions as to how to best protect their innovations with intellectual property rights.
When it comes to protecting IP rights, telemedicine and digital health companies often raise two questions about protecting their innovations: (1) Is the idea even patentable, and (2) are trade secrets just as effective as patents to protect the idea?
A comprehensive IP strategy uses a combination of patents and trade secrets, and this article evaluates both types of protection.
Patents protect ideas that are new, useful and nonobvious. Innovations may improve upon state-of-the-art products and services.
The U.S. Patent and Trademark Office will generally grant a patent for a new telehealth technology once it is shown to overcome two hurdles to patentability: (1) whether it is disclosed by the prior art or an obvious variation thereof, and (2) whether the subject matter is eligible for patent protection by not being an abstract idea that could be performed without a computer.
Telemedicine and digital health innovations typically fit into one or more categories of computing technologies, such as software, cybersecurity, cloud-based services and any number of devices.
When it comes to software or other computing technology, a patent cannot protect the idea or the math alone, and instead must apply that idea or math to something.
For example, a patent cannot protect the idea for an innovative compression algorithm or the math underlying the algorithm, but a patent can protect a patient e-consultation app that employs the compression algorithm created by the developer.
Two types of patents are most relevant here: utility patents that protect a functional invention, and design patents that product an ornamental appearance. A utility patent may protect features of an app, whereas a design patent may protect a user interface appearance.
In contrast to patents, trade secrets protect any type of secret information with some economic value derived from its secrecy. The type of information protectable by trade secrets is broad. Common examples include secret recipes, mathematical algorithms and compiled customer lists.
Trade secret protection is a creature of state law, though some federal statutes exist. Most states adopted and adapted the Uniform Trade Secrets Act, which is a model collection of laws prepared and revised over several decades by blue-ribbon panels of lawyers. State legislatures adapt and adopt the UTSA as they see fit, so trade secrets protect a wider variety of information than patents.
Trade secrets are often an enticing alternative to seeking patent protection because, unlike patents, they do not require formal examination or filing process. Instead, trade secret protection can be used in a portfolio in conjunction with the patent strategy.
As explained below, establishing trade secret protection is not always as simple as not filing a patent, and there are other trade-offs to consider as well. Ideally, a telehealth IP portfolio would consider and include both patent and trade secret protections.
Patents can be particularly useful in gaining a competitive advantage in the marketplace. Patents give a patent holder a right to exclude others from making, using or selling the invention, even if the patent holder does not use the invention. If a competitor independently conceives of the invention and makes a competing product, a patent may still enjoin that competitor from selling the product.
A trade secret may be used to protect its owner against someone, such as a former employee or a consultant, misappropriating, misusing or improperly disclosing the secret.
Unlike patents, trade secrets may be particularly valuable when someone has access to company secrets and uses them improperly, but a trade secret will not protect against a competitor who independently learns, develops and exploits the secret information. Only a patent protects against independent invention.
It is critical for a telemedicine and digital health company to consider the types of harm they want to prevent when considering whether to pursue patent or trade secret protection. This question often arises in new telehealth technologies whose novelty or commercial benefit is linked tightly to a particular algorithm.
Common examples involve digital diagnostic and treatment apps with novel machine-learning models that diagnose users and suggest a course of treatment. In these examples, the developers could employ trade secrets to protect both the mathematics of a neural network's hidden layers and the software code of the machine-learning engine.
In addition, the inventors could seek patent protection for their app. The patent application would describe the features of the new app and the functions that the novel machine-learning model enables.
For example, the patent application would generally describe the types of data that the machine-learning architecture ingests, processes and outputs, as well as the user-facing features or interfaces that interact with the machine-learning architecture. The patent application, however, need not describe the mathematics or detail the inner workings of the neural network's hidden layers.
The ordinary process for protecting an invention begins with preparing a patent application to file with the USPTO for examination.
The patent application is like a scientific paper that has various legal requirements and will form the basis of the monopoly in that idea.
In many technical areas related to telemedicine technologies, it will take about 18 to 24 months for the application examination to begin, and examination can take another year or so. There are some ways to speed up this process, which may be helpful if competitors are quick to copy an idea once it goes to market.
Once the examiner is satisfied that the patent application meets the requirements, the USPTO will grant a patent.
As a part of the quid pro quo for patent protection, the patent issues and becomes publicly available to give society the details as to how the invention works. In exchange, the patentee has a limited monopoly until expiration about 20 years from the filing date.
A trade secret, by its nature, is a secret. If the secret is somehow disclosed, then the protection is lost altogether. At a fundamental level, establishing trade secret protection means taking steps toward maintaining secrecy and nondisclosure. A company should be prepared to show that it took reasonable efforts to maintain the secret.
Establishing trade secret protection usually involves developing a trade secret program and observing the program's rules on an ongoing basis.
A trade secret program may begin with defining the secret information, and following and auditing a plan for keeping the secret and limiting access. If the program's guidelines are not appropriately restrictive or they are not observed, then the trade secret protection is jeopardized.
We often hear software innovators mention a preference for trade secret protection over filing for a patent because trade secrets do not demand a formal preparation and examination process. However, lower costs are not always guaranteed over the long run.
An adequate trade secret program may include any number of self-imposed obligations and processes.
Taking the earlier example of the diagnostic and treatment app with a novel machine-learning architecture, the developers may choose to forgo the public nature of patent protection and instead rely on trade secret protection. Given the importance of the mathematics, the algorithm and the code of the machine-learning architecture, the trade secret program would likely need to be extensive and restrictive.
For example, the developers may prepare a detailed document describing the target of the trade secret — resembling a patent application — label the detailed document and related materials as confidential trade secrets, and prepare a log for tracking individuals' access to the trade secret materials, e.g., software code.
There are certainly situations where trade secret protection alone would be appropriate or sufficient.
Due to the different requirements for patent and trade secret protection as well as the different obligations to maintain that protection, we caution against making the decision for one type of protection over another solely on costs.
Trade secrets do not guarantee appropriate protection against all risks of harm. As mentioned, trade secrets offer no protection against a competitor reverse engineering your product or independently developing a competing product.
Consider the goals of the protection and risks of harm, in addition to the upfront requirements for acquiring protection.
Patent protection requires disclosure of the invention. A patent application must be written to teach a person skilled in the particular technology ways to practice the invention. The patent application must disclose enough description such that the invention could be made without undue experimentation.
When describing software, various aspects of an algorithm may be described, though pseudocode or source code is rarely required. In many instances, a skilled patent drafter may often find a compromise when drafting a patent application, describing just enough to meet the legal requirements of a patent without disclosing too much or any secret sauce.
A trade secret, on the other hand, requires the owner to keep the information secret or risk negating the protection. Trade secret is generally a better route for protecting unpatentable concepts that are critical to products or services, such as the math or code underlying a diagnostic artificial intelligence tool.
We find that the need for absolute secrecy is atypical, and a compromise may be available for pursuing both patent and trade secret protections. A patent application could be drafted without giving away too much of the underlying math or algorithms, which would be protected as a trade secret. Ideally, the patent application would work in conjunction with trade secret protection.
In the earlier example of the remote consultation application, a patent application could disclose and protect the software and hardware that employs the novel compression algorithm, whereas the details of the underlying math could be omitted from the patent application and protected by trade secret.
When that software is used for a medical device, the electromechanical aspects of the medical device may be more prone to reverse engineering, so patent protection may be more valuable. However, the software for that medical device could require both patent and trade secret protection, depending upon the user-facing aspects and underlying functionality.
A patent generally lasts for 20 years from when the application was filed at the USPTO. In contrast, trade secret protection expires only when the secret information is disclosed or becomes publicly available.
In theory, a trade secret term is indefinite. The trade-off is that trade secret protection could be disrupted by independent research, reverse engineering, or inadvertent or malicious disclosure. A patent does not share these vulnerabilities, though the protection is capped at 20 years.
For telemedicine and digital health technologies that continually evolve, the technology is likely to evolve faster than the 20-year life of a patent. The longevity of trade secret protection is appealing, but it is not always critical. In many cases, a telehealth technology has no need for trade secret protection that outlives the 20-year protection of a patent.
A key benefit of a patent is it could serve a blocking function against competitors bringing their own evolutionary products to market, which is usually more beneficial than the protection offered by trade secret.
Patents and trade secret protection can be valuable in their own circumstances. Patents will eventually become publicly available, but can offer a tool against competitors. Trade secrets may offer protection against misappropriation if the trade secret is properly protected. In some scenarios, a combination of these two strategies may be employed.