Intellectual Property: Lessons from Shark Tank & Seinfeld | Dave Levin, M.D. and David Hyams | Healthcare Blogs Skip to content Skip to navigation

Intellectual Property: Lessons from Shark Tank & Seinfeld

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Intellectual property can provide powerful legal rights that can build a business and drive valuation

It seems like everyone is becoming a healthcare entrepreneur: from Amazon and Apple to health systems with dedicated innovation teams to two women in a garage inventing the next great thing. Investors are fueling this trend with record levels of healthcare investments, particularly in health IT. One thing these entrepreneurs and investors have in common is that their businesses may be generating assets that are more valuable than they realize. In addition to their system, product or solution, they may also be creating valuable intangible assets known as intellectual property (IP).

This leads to some obvious questions for both entrepreneurs and investors: What are the different kinds of intangible assets? Why are they important? How can they determine what IP they have? What, if anything, should they do about it?

“Shark Tank” Is Wrong About Intellectual Property

We love the television show “Shark Tank,” in which aspiring entrepreneurs pitch their business plan to a panel of experienced investors (the “Sharks”) who then choose whether to invest as a business partner.

One of the first questions the Sharks ask is: “Do you have any patents?” It’s a good question, but it’s too narrow: intellectual property is much more than just patents.

There are four general areas of IP: patents, trade secrets, copyrights and trademarks. It’s important to understand the four types and how they differ.

Patents protect inventions. An inventor files an application with the U.S. Patent and Trademark Office (USPTO) that explains the invention in enough detail to enable a person with the typical skill level in the relevant field (e.g., a competent engineer) to make or use the invention. Once the USPTO publishes the explanation, the U.S. government grants the applicant a monopoly over the invention for twenty years from the date of filing the application. 

Trade secrets are in some ways the flip side of patents.  Trade secrets are information that provides value to a business so long as it remains secret. Trade secrets can include just about anything, whether technical or non-technical—even a soup recipe that has customers lining up around the block.

The law protects trade secrets as long as a business takes reasonable measures to protect their secrecy. What’s “reasonable” generally includes keeping confidential information under lock and key, restricting disclosure to a “need to know” basis, requiring signed nondisclosure agreements before discussing outside the company and training employees on how to keep trade secrets confidential. If properly maintained, trade secrecy can last forever.

Copyright protects a specific “expression” of a general idea. This protection is relatively narrow compared to patents or trade secrets. Although copyright originated with protecting artistic works, such as novels and paintings, it has since expanded to specific software code as another tool to safeguard the embodiment of a process or system.

Trademarks protect your brand identity from unauthorized use. Trademarks can be used without registering with the USPTO, but federal registration creates the presumption you own that mark in all 50 states.

Each form of IP provides a legal right that enables the asset’s owner to sue someone who uses their property without permission. Unauthorized use of a patent, trademark or copyright material is “infringement.”  Ownership of patents and trademarks is publicly available, so the world is deemed to be on notice – and therefore, it is possible to unintentionally infringe on someone’s patents or trademarks. In contrast, copyright infringement usually requires intentional copying. Trade secrets are not public and unauthorized access to trade secrets is considered theft. However, there is no protection against someone independently developing your secrets, or reverse engineering from publicly available information.

A company can own all four types of intellectual property. For example, Google owns the trademark for its name­­, one of the world’s most valuable trade secrets (its search algorithm), numerous patents and all its software code (protected by copyright). It’s safe to say for Google and many other companies, intellectual property is their most valuable asset.

Why Is Intellectual Property Important?

A company’s IP makes a direct contribution to the company’s valuation. IP provides a legal right to exclude others from using it. This allows companies to protect the fruit of their innovations and development work. If there is sufficient demand for this IP, they can charge others for the privilege of using it and earn licensing fees for their ingenuity.

Investors care about IP too. For example, they usually want to see an IP portfolio and often base the amount of their investment on the development of IP. Similarly, in the mergers and acquisitions world, many companies buy a target company to acquire their patented inventions, software and trade secrets.

On the flip side, a competitor’s IP can present a legal minefield that can have a negative impact on value. A company that moves forward with a new product without analyzing the patent holdings of the competition may later discover they are infringing on a competitor’s patent. At best, the company may be forced to license that patent or design around it, increasing their costs and delaying entry to the market. At worst, they may be forced to change their existing product or cease production. Moreover, good due diligence on third party IP must look beyond patents. Just ask the CEO of Uber, which settled a lawsuit with Alphabet-owned Waymo for $245 million in Uber’s stock, all because Uber hired three ex-Google employees who allegedly stole Waymo trade secrets.   

Intellectual Property Best Practices

Given the importance and value of IP for entrepreneurs and investors alike, it’s well worth the effort to adopt and follow common IP best practices.

1. Know what IP you have. Conduct an audit, internally or with the help of an outside expert, to determine the extent of your existing IP. Consider whether any of your products, services, techniques or other ideas might be better protected by patents or kept as trade secrets. And, especially for trade secrets, you should determine which staff members need to know these valuable secrets.

2.  Determine what IP your competitors have. Issued and published patent applications are publicly available. The USPTO and several private companies provide searchable databases of patents, trademarks, and applications, many free of charge. The most serious concern is avoiding unintentional infringement of third party patents.

3.  Evaluate your IP. When you know what you have, you can ascertain its value. As with physical assets, value can be a relative thing. Whether a patent is weak or strong depends on its scope and on what other patents are extant in your field. A patent with narrow scope in a crowded field may be less valuable than a broad patent in a new field.

4.  Secure your IP.  Identify key inventions and file patent applications for them. A good patent attorney will not only understand your technology area but can also help identify patent ideas you have not considered or previously discarded.  Apply for trademarks to protect your branding.

5. Ensure process compliance. Ensuring legal protection for your trade secrets requires that reasonable procedures are in place and consistently followed. A protection regime may include: using non-disclosure agreements, employment agreements that require proper handling of confidential information, physically or electronically locking up key confidential information, putting “confidential” notices on documents and emails, and notifying recipients of your confidential information that “this document is confidential, and only provided to you for [a specific reason].”

6. Audit your software code.  This is especially important for embedded software products that may be difficult to update or change after their release. For example, software that includes open source code must properly incorporate the related compliance in its license terms. Use of almost all open source software is governed by licenses that bind a company merely by using the open source code. Some open source software licenses, such as the GNU General Public License (GPL), require a company makes all software code that incorporates code covered by the GPL available for review.


Intellectual property can provide powerful legal rights that can build a business and drive valuation. Ensuring the protection of a company’s IP and being aware of the risks posed by infringement on third-party IP are vital to success. Otherwise, you could end up bankrupt like the real Soupman: “No soup for you!”

David Hyams is an attorney with The Marbury Law Group in Reston, Virginia. David has nearly 20 years of experience in intellectual property and commercial law and has served as both in-house and outside counsel to an array of technology companies. He can be reached at Mr. Hyams wishes to remind you that this article is for general informational purposes and should not be considered nor relied upon as legal advice. If you have legal questions you should seek the advice of a competent attorney.

Dr. Dave Levin has been a physician executive and entrepreneur for more than 30 years. He is a former Chief Medical Information Officer for the Cleveland Clinic and serves in a variety of leadership and advisory roles for healthcare IT companies, health systems and investors. You can follow him @DaveLevinMD or email Dr. Levin wishes to remind you that this article is for general informational purposes and should not be considered nor relied upon as medical advice. If you have medical questions you should seek the advice of a competent clinician.

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Town Hall Ventures Close First Fund at $115 Million

September 20, 2018
by David Raths, Contributing Editor
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Adds Landmark Health, Bright Health, Strive Health to Portfolio

Town Hall Ventures, an investment firm built to address the healthcare challenges of the most vulnerable Americans, has closed its first fund at $115 million.

The founding partners — Trevor Price, Andy Slavitt, and David Whelan — announced the firm’s formation on May 7, 2018, at the HLTH Conference in Las Vegas. Their goal is to help build companies to improve care in Medicare, Medicaid, and risk-based care, and in addressing complex conditions and social determinants of health.

The fund and its limited partners represent multiple large nonprofit health systems and payors, along with entrepreneurs, executives and investors. 

Town Hall also disclosed investments in three companies:

• Landmark Health LLC, which provides home-based care to high-acuity Medicare, Medicaid, and Dual Eligible populations who are frail and chronically ill. Landmark’s new CEO, Nick Loporcaro, was recruited by Trevor Price and Oxeon Partners, and the company is backed by General Atlantic and Francisco Partners.

• Bright Health Inc., a technology-enabled health insurance plan that is built in partnership with leading health systems. Bright’s CEO is Bob Sheehy, former CEO of UnitedHealthcare, and the company is backed by NEA, Bessemer Ventures, and Flare Capital Partners.

• Strive Health LLC, a leading provider of chronic kidney disease solutions, focused on transforming healthcare and patients’ lives through early engagement, comprehensive coordinated care, and expanded treatment options. The company's co-founder and CEO is Chris Riopelle. The concept for the business was developed with the co-founders inside the Oxeon Venture Studio and backed by lead investor NEA.

Existing investments include:

• Cityblock Health Inc., which provides primary care, behavioral health, and human services to address unmet health and social needs in urban populations.

• Somatus Inc., which provides treatment and new models of care for patients with chronic kidney disease and end-stage renal disease.

• Welbe Health LLC, a provider of integrated medical and social services to frail seniors who qualify for PACE. 

• Aetion, Inc., a provider of real-world analytics and evidence to help biopharma companies and payors better understand how drugs work in the real world to enable value-based care.

Town Hall also announced that Ann Hickey has joined the firm as a vice president. She previously worked at Audax Group, Oak Hill Capital Partners, Castlight Health, and, most recently, Archimedes Health Investors.

Town Hall is led by Andy Slavitt, former Administrator of the Centers for Medicaid and Medicare Services (CMS) and Group Executive Vice President of Optum; Trevor Price, Founder and CEO of Oxeon Holdings – the parent company to Oxeon Partners, a retained executive search firm – and Oxeon Ventures, an investment firm and venture studio; and David Whelan, Managing General Partner of predecessor firm Oxeon Ventures and former General Partner and CFO of investment firm Accretive LLC.



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At Partners HealthCare, Bringing Digital Transformation to Clinical Care

September 18, 2018
by Rajiv Leventhal, Managing Editor
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Last spring, Partners HealthCare, founded by Brigham and Women’s Hospital (BWH) and Massachusetts General Hospital, and California-based software company Persistent Systems, announced a strategic collaboration to develop a new industry-wide open-source platform with the goal of bringing digital transformation to clinical care.

Indeed, with the digital platform, Partners’ leaders hope to enable greater exchange of information across healthcare providers everywhere, and make available open source applications to any health system. At the time of the 2017 announcement, officials said that the co-developed digital platform will be based on Substitutable Medical Applications & Reusable Technologies (SMART), an open, standards-based technology platform along with Fast Healthcare Interoperability Resources (FHIR). “The platform will enable provider systems across the country to rapidly and cost effectively deploy industry-leading best practices in clinical care across their ecosystems,” according to the announcement.

Healthcare Informatics Managing Editor Rajiv Leventhal recently spoke with Sandy Aronson, executive director of information technology at Partners Healthcare, about this collaboration, its specific goals and outlook, and how things have come along so far. Below are excerpts of that discussion.

What would you say is the greatest significance behind this collaboration?

I have been at Partners for about 15 years, and the first 13 of those years were primarily focused on the clinical use of genetics and genomics. In that space, we created a suite of applications that was architected differently than health IT applications are typically architected. These were applications that helped with the generation of interpreted reports for genetics and genomics sequencing test results. So, where normally in health IT applications you create a transaction system and then try to bolt a knowledge base on top of it to the extent you can, we decided to architect this in the opposite way.

We built a knowledge base that deeply modeled the tests that a laboratory offers, the genes that are covered by that test, variants known to exist in these genes, variants that are learned over time, and the state of knowledge linking those variances to clinically relevant facts—so disease states, drug response, drug efficacy, etc. So we built this deep knowledge base and built a transaction system on top of it, and made a rule that you can’t report out test results unless you keep the knowledge base up-to-date and consistent with your test results. And that enables you to automate the generation of reports.

But as a result, we wound up with this continually-updated knowledge base, so based on that we created what would now be a SMART on FHIR app that plugs into the EHR [electronic health record] and provides clinicians with alerts if something new and potentially clinically relevant is learned about a variant previously identified in one of their patients. So it created this notion of a knowledge base alert being interjected into clinical care.

We studied this and found that clinicians liked it, but the rate at which this learned was dependent on the number of transactions that flow through the system, because that’s how geneticists would gather the data that would enable them to improve their assessment of variants. So we registered this as a medical device, distributed it outside of Partners, and networked the different instances together, so it could learn not just based on our volume, but other folks’ volume as well. Ultimately, we sold that to Sunquest [Information Systems]. The thing we feel was most important was creating this infrastructure that facilitated new clinical processes and captured, shared, and federated data in a way that enabled learning to care.

After having done that, we took a step back and said OK, what should we do next? The infrastructure we built was very specific to issues where genetics and genomics are the major components to deciding what to do for a patient. So we wanted to look at all of the things that made that infrastructure hard to do, and build a platform to make it easier to build things like GeneInsight [an IT platform company owned and developed by Partners], and then distribute that platform, so that in addition to building examples of a similar infrastructure, others can build those examples, too. We wanted that platform to make it easier to distribute apps that are created by different folks in different organizations, ultimately with the goal of networking those apps together.

We are at a unique point in time where you have these new data types coming online that can be helpful to the care delivery process, you have algorithmic-based medicine starting to come into use, both machine learning-based and not, and you have people looking at transformative ideas on how to alter clinical processes where in order to incorporate these new data types and incorporate algorithmic-based approaches to care, you need new kinds of IT support in order to enable these transitions to occur. And that creates an opportunity, not only related to the specific transitions, but also to start collecting data for specific clinical problems in a much finer-grained way that lays the groundwork for these networks that can build the data that’s required to underlie continuous learning processes.

All of this is happening in a time with incredible cost pressure in healthcare, which does constrain internal investment but also makes organizations far less resistant to change. The goal here is to fundamentally enable clinicals to evolve their practices, their care, new data, ideas, and techniques in ways they haven’t done in the past.

Sandy Aronson

And how are you working with Persistent Systems on this, specifically?

We are building this platform together. The platform is called HIP, or health innovation platform, and the platform itself will be open-source, and it sits on top of the current clinical IT ecosystem. You interface it to underlying systems, and then it handles things like some aspects of security, authentication, and HIPAA, but also access to data as well as incorporating shared algorithms.

The goal is having different places hook up the platform, and once it is hooked up, it should create a uniform surface on top of the platform so that apps built on top of the platform become more shareable and distributable. We are now focused on both building the platform and building certain apps. And the apps get interjected to the EHR as SMART on FHIR apps.

Can you give some examples and details of the apps that are being built?

One example is that we have been working with BWH’s cardiology [department] on this program that they have, where if you look at heart failure, which affects about 2 percent of the population and has a very high mortality rate with a great deal of costs associated with it, there are guidelines that have been shown to really be helpful, yet very few people are treated in a way that actually adheres to guidelines. And that’s because the process of getting them to guideline-based care involves this drug selection and titration process that requires a lot of interaction, some of which can make patients unconformable.

But as it turns out, you can instantiate a process where you use patient navigators to take patients through this drug selection and titration process, interacting with them far more frequently than a cardiologist would ever be able to, to get them to guidelines. It’s a data-intensive process. So we are providing support for that program through the HIP platform today and we are really focused on deepening that support.

What are your goals in the next 12 to 24 months regarding this partnership? What would you like to see happen?

The ideal world is that our group and Persistent Systems will continue to add more capabilities to the platform, and that the platform is reducing costs. So many clinicians have ideas on how to fundamentally improve care but they can’t put those ideas into use without these kinds of IT interventions.

One thing I hope is that this will continuously reduce the cost of building those interventions and as a result, our team, and others, too, will develop more of these apps. We hope to see some cross-institutional adoption of apps built here and elsewhere, that the sharing will begin at the app level and ideally, in two years or so, we will be having real conversations about how we can get the networking between apps really going.

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Cigna to Invest $250M in Venture Fund with Eyes on Healthcare Startups

September 17, 2018
by Rajiv Leventhal, Managing Editor
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Cigna, the Connecticut-based health services company, has announced the launch of Cigna Ventures, a corporate venture fund focused on investing in promising healthcare startups and growth-stage companies.

Cigna has specially committed $250 million of capital to Cigna Ventures to invest in transformative and innovative healthcare companies “that are unlocking new growth possibilities in healthcare and will bring improved care quality, affordability, choice, and greater simplicity to customers and clients,” officials said in a press release.

Cigna Ventures is particularly focused on companies across three strategic areas: insights and analytics; digital health and retail; and care delivery/management. Officials say the venture fund was created to help Cigna identify, assess and sponsor early-stage innovation ideas that warrant deeper exploration through focused pilot and test-and-learn activities with the goal of realizing meaningful business value.

“Cigna’s commitment to improving the health, well-being and sense of security of the people we serve is at the front and center of everything we do,” Tom Richards, senior vice president and global lead, strategy and business development at Cigna, said in a statement. “The venture fund will enable us to drive innovation beyond our existing core business operations, and incubate new ideas, opportunities and relationships that have the potential for long-term business growth and to help our customers.”

As an article in Bloomberg noted, “Health insurers have been starting venture-capital arms to find new ideas to improve their businesses and generate financial returns. UnitedHealth Group Inc., the biggest health insurer, said in November that its Optum unit was creating a venture arm with $250 million in funds. Humana Inc., Kaiser Permanente, and a group of Blue Cross and Blue Shield insurers all have venture units.”

According to officials, the venture fund builds on Cigna's existing venture activity, including collaboration with five venture capital partners and an equal number of existing direct investments. These include leading the C1 round of financing with Omada Health, investments in Prognos, Contessa Health, MDLIVE and Cricket Health.

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