Intellectual Property: Lessons from Shark Tank & Seinfeld

By: Dave Levin, M.D. and David Hyams
May 23, 2018

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.