Since its inception in 1981, Arthrex, Inc. has developed more than 8,500 products and surgical procedures in orthopedics. In recent years, the medical-device industry has been awash in intellectual-property litigation as companies fight tooth and nail to try to protect their patents and intellectual property. Arthrex’s chief intellectual property counsel, Trevor Arnold, is tasked with shepherding products safely from inception to production through a highly litigious environment. He spoke with AHL about what it’s like to work in an industry so rife with lawsuits—even some from companies that don’t really exist.
You’ve spent a good number of years in the medical-device industry, with Arthrex and also Medtronic. What attracts you to it?
Trevor Arnold: It’s a good blend between tech and legal work. And I enjoy helping people by being a part of a team that is designing new and innovative medical implants and instrumentation in orthopedics, patenting them, and clearing other people’s IP. It’s interesting working with the surgeons and going to surgeries and cadaver labs as part of the development and validation process. It’s an exciting area to be in.
What are the company’s main products?
Arnold: We launch thousands, but most of our products and surgical procedures are related to sports medicine and minimally invasive orthopedics. Arthrex’s mission is to help surgeons treat their patients better. Our largest group of products are anchors to reconnect tendons, ligaments, and other soft tissue to bone. Traditionally, you screw the anchor in the bone, wrap the suture around the tissue, and tie knots to anchor it down to the bone.
We’re one of the first companies to come out with knotless anchors, where you wrap the suture around the tissue and screw in the anchor without having stacks of knots on top of the tissue.
What does your job with Arthrex entail?
Arnold: I handle everything related to intellectual property. I’m responsible for all trademarks and patents that we file, as well as clearing our products of other people’s patents and trademarks. I’m involved from the start to the end of the design process, making sure we won’t be infringing when a product launches. And I’m in court, protecting our patents and enforcing them against other people. I also do all of our royalty and IP license agreements. Lastly, I perform the IP due diligence for our M&A activities.
Tell me more about how your office gets involved at the earliest stage of product development.
Arnold: When we’re going to develop a new product, we usually do a landscape search, looking for third-party patents or other roadblocks. Then we’ll figure out what space is available to patent and start looking at patenting our own inventions early on. As we progress through the product-development cycle, where the design might change due to surgeon feedback or preferences, we continue looking for and making sure no third-party patents will be a problem.
What is the state of the industry at this point?
Arnold: It is an incredibly aggressive and litigious industry. It is growing rapidly, and there is a lot of money at stake. As such, that seems to lead to more companies suing each other to protect their IP.
In addition to lawsuits from legitimate companies, you’ve had to deal with patent trolls. Can you describe for me what that refers to?
Arnold: To me, it is any entity that doesn’t make or sell anything, but just buys or generates IP with the goal of suing people and shaking them down. They will go out and buy weak or even invalid patents and extort nuisance value from people with them. Typically, they will sue companies in jurisdictions friendly to patent trolls. These jurisdictions make it very hard for a defendant to get the case dismissed or thrown out on summary judgment, and thus pressure the defendants to pay the troll to get the lawsuit dismissed.
“Our goal for our IP group here is to continue to get more offensive and to keep expanding in a smart way.”
How long has this been going on?
Arnold: It probably started about ten years ago, and Congress has been struggling for the last seven years or so with coming up with legislation to tamp down on the patent trolls. They passed the AIA [the Leahy-Smith America Invents Act] a few years ago, and in doing so, set up what is called IPR proceedings at the USPTO [United States Patent and Trademark Office]. IPRs allow individuals or companies who are threatened by patent holders, mainly trolls, to take the patent back to a panel of experienced judges at the USPTO in an attempt to invalidate the patents. The IPR proceedings are much cheaper and quicker than defending oneself in a district court. Congress has even tried to pass legislation in the recent past to make patent trolls post a bond before filing a lawsuit and making the loser pay the winner’s attorney’s fees. Unfortunately, these have all been unsuccessful.
How do you handle these patent trolls?
Arnold: Since most, if not all, of the patents trolls assert are invalid, we usually start with filing one or more IPRs against the asserted patents and trying to kill them off at the USPTO. This has been very successful in the past. We also let the troll know up front that we will not settle the matter for nuisance value, but rather, will aggressively defend ourselves all the way through trial if necessary. On a couple occasions prior to joining Arthrex, I have settled cases with trolls for nuisance value. However, I feel like this just puts a target on your back and encourages more trolls to sue you.
Any other initiatives to root out the problem?
Arnold: Recently we joined with a large competitor of ours with whom we’re involved in multiple adverse lawsuits and partnered up to try and defend against a troll who sued us both. I think we’re going to see more competitors joining forces in our industry to combat these trolls.
Is this a particular problem in your industry?
Arnold: In the medical-device industry it’s not as bad as telecom, but it’s getting worse. I’ve probably dealt with a dozen or more trolls trying to shake me down over the last six years or so.
The company has been in a growth phase for at least a decade now, and you just announced a further expansion. How does your growth play into the litigation you have to deal with?
Arnold: It brings more internal work and more litigations, for sure. The bigger we get, the more we’re selling and taking market share from our competitors, the more we get sued.
How do you handle all this work?
Arnold: Most of our patent preparation and prosecution is undertaken, at our direction and oversight, by outside IP counsel because we just don’t have the bandwidth in-house. We also have to hire outside IP litigation firms to help us out during litigations matters. In-house, we’re also in the process of continuing to build an IP group with more capabilities and bandwidth. I’ve been able to hire a senior patent lawyer who’s been here for about fourteen months, and I hope to be able to hire more in-house patent lawyers in the near future. Our goal for our IP group here is to continue to get more offensive and to keep expanding in a smart way. AHL