Founding Partner
Medical device licensing requires a clear understanding of who owns the underlying IP, how those rights are transferred, and what protections must be in place before commercialization. Strong agreements depend on identifying all patentable features, securing confidentiality during negotiations, and setting terms that safeguard long-term value. Licensing can expand market reach and speed up distribution, but it only works when IP rights are properly evaluated and documented from the start.
Identifying What IP You Are Licensing
Before you enter any licensing discussion, you need a precise understanding of the IP involved. Medical devices rarely rely on a single asset. Instead, they combine multiple protected elements that must be accounted for in the agreement. These can include:
- Utility patents covering core functionality
- Design patents protecting shape or appearance
- Software or firmware protected by copyright
- Trademarks tied to product names or branding
- Trade secrets involving manufacturing processes or algorithms
A thorough review helps you avoid gaps, conflicting claims, or undisclosed contributors who may hold rights in the device.
Patent Status and Freedom-to-Operate Review
A licensing partner will expect proof that the patent rights are enforceable and do not infringe on someone else’s technology. This usually involves:
- Confirming the patent has been issued or is still pending
- Checking continuation or divisional filings to see if related claims offer broader protection
- Reviewing prior art searches
- Conducting a freedom-to-operate analysis to determine whether the device can be marketed without infringing another patent
A clear record supports stronger negotiations and makes your rights more appealing to potential partners.
Trade Secrets: Protecting Know-How and Proprietary Processes
Many medical devices rely on proprietary manufacturing methods, calibration steps, or embedded algorithms that are not publicly disclosed. You might not want to patent these components if doing so would reveal sensitive details. In these situations:
- Confidentiality agreements should be in place before sharing any trade secret information
- Agreements must specify exactly how the receiving party may use the information
- The license should describe what happens if the relationship ends, including the return or destruction of confidential materials
Trade secrets are only enforceable when reasonable measures are taken to protect them, so documentation and well-structured NDAs matter.
Regulatory Considerations Affecting IP
FDA requirements often influence the scope and timing of IP protection. For example:
- Design changes made during regulatory review may affect pending patent claims
- Revisions required by the FDA can trigger the need to update or file new applications
- Software-driven medical devices may require stronger data security provisions to address cybersecurity guidance
- Your licensing partner may want assurances that the IP strategy aligns with FDA milestones
Because regulatory pathways can stretch for years, your licensing terms should leave room for updates to the IP portfolio.
Royalty Structures and Payment Terms
The financial structure of a medical device license depends on the strength of the underlying IP and the market potential. Common components include:
- Upfront licensing fees
- Milestone payments tied to FDA clearance, manufacturing goals, or sales thresholds
- Royalties based on net sales or units sold
- Minimum annual royalty requirements to prevent product stagnation
We recommend thinking through how long it will take to bring the device to market and whether your payment terms reflect realistic timelines.
Territory, Field of Use, and Performance Obligations
Medical device licensing often involves splitting rights into specific fields of use or geographic regions. This lets you work with more than one partner while keeping control over core markets. Typical clauses address:
- Exclusive or nonexclusive rights
- Defined territories, such as North America, Europe, or Asia
- Clinical versus consumer applications
- Minimum commercial efforts, including production targets or marketing commitments
Clear performance obligations ensure your device reaches the market rather than sitting unused.
Dispute Resolution, Indemnification, and Termination
Licensing agreements must account for what happens when things go wrong. You can reduce future disputes by including:
- IP enforcement obligations
- Indemnification for third-party infringement claims
- Insurance requirements
- Termination rights for nonpayment, nonperformance, or regulatory failure
- Post-termination responsibilities, including sell-off periods or return of confidential information
A strong agreement anticipates conflict and sets the rules before it begins.
Protecting Your Medical Device Licensing Strategy
Licensing a medical device can open doors, but success depends on clear ownership, enforceable rights, and a contract that protects your interests throughout development and commercialization. At Gearhart Law, we help innovators secure, license, and defend their IP so they can bring life-changing technologies to market. Contact us to discuss how we can support your licensing strategy.