Protecting the AI Advantage: Why Patents Are a Critical Growth and Risk-Management Tool for Digital Health Platforms

For CEOs, general counsels, and CTOs, the question is no longer whether patents matter. The question is whether the company has an intentional strategy to identify, capture, and deploy intellectual property in alignment with product and corporate goals.

Digital health companies are building core health care infrastructure. AI-driven clinical decision support, remote monitoring platforms, digital therapeutics, and data orchestration systems are no longer experimental. For many companies, these AI systems are the product. When technology is central to enterprise value, it must be protected as such.

Yet many digital health companies still treat securing patents as a future consideration, something to address after product-market fit or the next financing round. That approach increasingly creates risk. In today’s AI-enabled health care market, patents are not optional legal artifacts. They are a strategic business tool that protects enterprise valuation, strengthens defensibility, shapes competitive leverage and reduces downside exposure.

The Shift From Code to Capability

Historically, many digital health companies subscribed to a first-to-market or fastest-to-market strategy that relied on speed, trade secrets, and execution to stay ahead and minimized or skipped patent protection. The assumption was that the company’s products and the competitive and technological landscapes would iterate too quickly to make patent protection worthwhile. That assumption no longer holds. 

Patents are uniquely suited to protect that layer of innovation. Unlike copyrights, which protect specific source code, or trade secrets, which only protect against misappropriation, patents protect functional capabilities. They establish enforceable rights over how a system works, not just how it is written.

Well-designed digital health patents protect system-level functionality. This includes how data is ingested and normalized, how models are trained or fine-tuned in regulated environments, how outputs are validated or constrained, and how decisions are operationalized in clinical settings. These capabilities are often the true competitive advantage.

Why AI Raises the Stakes

AI has raised both the value of innovation and the risk of exposure. On one hand, AI enables rapid iteration and differentiation. On the other, it accelerates competitive replication. A feature that took years to develop can now be approximated in months by a well-funded competitor using similar models and public research.

Patents create a counterbalance. They establish enforceable boundaries around what competitors can and cannot do, even if they independently build similar systems. This is particularly important in health care AI, where multiple companies often pursue the same clinical or operational problems using overlapping technical approaches.

There is also a regulatory dimension. AI in healthcare is increasingly scrutinized by regulators, payors, and enterprise customers. Patents can serve as objective evidence of technical novelty and investment. They signal that a company has built something meaningfully different, not just assembled off-the-shelf components.

Patents and Data Strategy Go Hand in Hand

One common misconception is that data alone is the moat. While proprietary data is valuable, data rights are fragile. Access can be lost, licenses can terminate, and regulatory interpretations can change. Patents provide durability where data access may not.

In AI-enabled digital health platforms, patents can protect how data is used, not just the data itself. This includes methods for training models on sensitive data while preserving privacy, techniques for bias mitigation or explainability, and architectures that allow models to operate within health care compliance frameworks.

For companies navigating HIPAA, state privacy laws, and emerging AI governance regimes, this is critical. A patent portfolio aligned with your data strategy can reinforce compliance by design and reduce dependency on any single data source.

Defensive Value and Litigation Reality

Digital health is no longer a litigation-light industry. Patent assertions are increasing, particularly as the sector matures and exits accelerate. Patent litigation has grown significantly in the medtech space from 2020 to 2025. Companies without patents are exposed. They have little leverage to counter assert and often face binary outcomes: settle or litigate from a position of weakness.

A thoughtful patent portfolio changes that dynamic. Even a modest number of high-quality patents can deter opportunistic claims and create leverage in disputes. This is not about being litigious. It is about risk management.

For general counsels, patents also support cleaner diligence and smoother transactions. Acquirers and investors increasingly expect to see patent coverage around core platform functionality, especially where AI is central to the value proposition. The absence of patents raises questions about defensibility that can impact valuation.

Timing Matters More Than Ever

Patent strategy is not something that can be bolted on at scale. Filing too late can mean losing rights altogether. Public disclosures, customer demos, regulatory submissions, and even investor pitches can create prior art that limits what can be protected.

The most effective patent programs start earlier than many companies expect. That does not mean filing dozens of applications prematurely. It means identifying core technical concepts early and protecting them before they become public.

For CTOs, this requires coordination between engineering and legal teams. Engineers should understand that patents are not about slowing innovation. They are about capturing it. For CEOs, this means treating patents as a business decision, not a purely legal one.

Patents as a Strategic Signal

Beyond protection, patents send a signal to the market. They demonstrate long-term thinking, technical depth, and seriousness about defensibility. In competitive enterprise sales, especially with health systems and payors, that signal matters. It reassures customers that the platform they are adopting is not easily displaced.

In the AI context, where skepticism about commoditization is growing, patents help distinguish platforms that are truly differentiated from those that are not. They tell a story about how the technology works and why it is hard to replicate.

A Practical Path Forward

Not every digital health company needs an expansive patent portfolio, but every digital health company should make intentional decisions about patents. Digital health companies should: 

• Identify what actually differentiates their platform on a commercial level.
• Focus on the system-level functions and innovations (e.g., how a recommendation AI engine functions), rather than surface features (e.g., what the recommendation AI engine does from the end-user’s perspective), that were designed, developed, or integrated to bring those differentiators to life.
• Align patent strategy with data strategy, regulatory posture, and product roadmap.
• File early enough to preserve options but thoughtfully enough to avoid noise.
• Most importantly, integrate patent thinking into broader AI and technology governance. In a world where AI is central to health care innovation, patents are no longer optional. They are part of the infrastructure of a durable digital health business.
• Encourage developers and engineers to capture instances and details of solving a technological problem during the software development lifecycle.

For companies building the next generation of health care platforms, the question is simple. If the technology is worth building, it is worth protecting.

For more information on AI, telemedicine, telehealth, digital health, and other health innovations, including the team, publications, and representative experience, please contact Aaron Maguregui, Matthew Horton, or any of the partners or senior counsel in Foley’s Cybersecurity and Data Privacy Group, Health Care Practice Group, or Electronics Practice Group.