Surgical Robotics and the Attack of the Patent Trolls

Even when they are terrifying, like in Terminator films, robots are cool.

That’s especially true about the burgeoning field of surgical robotics. While we are not yet at the Empire Strikes Back moment when robots replace Luke Skywalker's hand after Darth Vader sheers it off, we are getting close. These new surgical robots are creating a surge of intellectual property advancements and improving patient outcomes. Like Terminator or Darth Vader though, patent trolls and patent privateers threaten the surgical robotics industry’s vitality and growth.

Recently, Fox Business News’ Liz Claman tweeted she was obsessed with a company called Intuitive Surgical .  Turns out she had good reason -- the company that makes the da Vinci robotic surgery system has returned over 2700% to shareholders.  While Intuitive Surgical has been around for two decades, others are joining this innovation movement. For example, Johnson & Johnson and Google recently announced they are partnering to jump into the robotic surgery market, while smaller companies like North Carolina’s TransEnterix just filed an application with the FDA for approval of their lower-end surgical robot.

The growth of this market is astounding. A recent report by WinterGreen pegged the surgical robot device market at $3.2 billion in 2014 and predicts that figure will reach $20 billion by 2021 as next generation devices, systems, and instruments are introduced.  Intuitive Surgical’s systems alone were used in over 570,000 procedures last year and the company’s annual report says that more than 2.5 million robotically-assisted procedures have been done worldwide to-date.

Surgical robots represent the best of innovation; they improve surgical outcomes for patients. In that sense, they can aid surgeons but not replace them. They may reduce patient blood loss and post-operative pain by allowing surgeons to operate – especially with minimally invasive surgeries – with even greater precision.

Intuitive Surgical’s longevity (its first system was approved by the FDA in 1999) and perpetual innovations may help it to stave off competition from global business giants as well as upstarts that are planning to enter the market at a lower price. At the same time, the freedom for companies to modernize without fear of frivolous patent lawsuits helps promote healthy competition and healthy patients.

Da Vinci’s parent company owns or has exclusive rights to 1800 patents, with another 1500 pending, and adds roughly 100 to 150 new patent applications and patents each year.  Patent protections are critical to Intuitive Surgical’s success. No doubt, many are sought for defensive purposes to fend off patent trolls. And Intuitive continues to introduce significant technological advancement in areas like diagnostics and enhanced imaging furthering the importance of intellectual property in medical robotics.

With Congress debating patent reform, once arcane intellectual property issues are now more mainstream. However, not all issues are being addressed in this debate. Let’s look at the suits filed against Intuitive. I have no insight into whether the patent suits filed against Intuitive Surgical were frivolous – Medicanica certainly did not think so – but even, so the suits deserve scrutiny for what they indicate about the state of patent litigation.

One suit against Intuitive Surgical was brought by Alisanos LLC after Medicanica – a company that retained surgical robotics patents – transferred its patent portfolio to Alisanos in a “licensing arrangement.” That agreement ensured Medcanica received a portion of any licensing fees Alisanos could extract from other companies. Alisanos itself is owned by the Medici Portfolio, a company that offers patent “monetization” services. Medici states that its “fee for advisory services is contingent on making money for the client.” In short, Medici and Alisanos make money when they propound demands on other companies for alleged patent infringement.

Undoubtedly, there are inherent benefits to having companies that aid inventors seeking compensation when their intellectual property has been infringed upon. When, however, neither the company suing nor the company for whose benefit a suit is being brought are actually producing products or services,  innovative companies are harmed without benefits being provided to the public. This practice of so-called patent privateering levies tangible costs for innovators globally. Just like pirates taxing commerce with unfair attacks on the high seas, innovative companies can be sapped of their capital and their vitality by patent litigation boutiques for hire. Often, the targets do not even know which company is launching an attack and who will ultimately benefit financially.

Freedom for companies to innovate without fear of frivolous patent lawsuits helps promote healthy competition and healthy patients. Competition in this marketplace benefits consumers by driving down costs of care, and a competitive marketplace is a healthy marketplace.

Innovators attacked by a patent privateer face the ugly prospect of either millions of asymmetric litigation costs – the patent privateer has no documents to share in discovery and no resources at risk – and enormous distraction from developing and offering great new products or paying abusive licensing fees and a percentage of sales simply to get back to business. Companies have to decide if they'd rather walk the plank or have their ship seized. Fortunately, for patients and surgeons, Intuitive Surgical was not derailed by these attacks. But innovators everywhere need more clarity about whether they will fear litigation more than competition.

Between robots or attacks from patent privateers, we should choose the robots. Patients, regulators and innovative companies everywhere are hoping Congress will end this pernicious practice.