Keeping pace with the ever-changing life sciences industry, Morrison Foerster stays on top of the trends and political, legal, and economic drivers to support striking the balance between innovative discovery and purposeful business planning to assure our clients continued success. MoFo Life Sciences shares timely legal and business insights and in-depth analyses on trends and the complex technologies at the heart of the global pharmaceutical, biotechnology, diagnostics, medical devices, digital health, and AgTech fields.Learn more about our <a href="https://www.mofo.com/capabilities/life-sciences-healthcare" target="_self">Life Sciences practice</a>.<h2 dir="ltr">ABOUT MORRISON FOERSTER</h2>Morrison Foerster is a leading global law firm that transforms complexity into advantage for its clients. Our clients include some of the largest financial institutions, banks, consulting and accounting firms, and Fortune 100, technology, and life sciences companies. Highlighting the firm’s commitment to client service, leadership in market-changing deals and impact litigation, and values-based culture, Morrison Foerster has been repeatedly recognized as one of the top 10 firms on The American Lawyer’s A-List. Year after year, the firm receives significant recognition from Chambers and The Legal 500 across their various guides, including Global, USA, Asia‑Pacific, Europe, UK, Latin America, and FinTech Legal. Our lawyers passionately care about delivering legal excellence while living our values. Morrison Foerster has a long-standing commitment to creating a culture that respects and celebrates differences, while providing an inclusive environment. The firm has achieved Mansfield Certification Plus since 2018 as a result of successfully reaching at least 30 percent women, communities of color, and LGBTQ+ lawyer representation in a notable number of current leadership roles and committees. The firm also has a long history of commitment to the community and society through providing pro bono legal services, including litigating for civil rights and civil liberties, improving public education and fostering the wellbeing of children, advocating for veterans, promoting international human rights, enforcing the right to asylum, and safeguarding the environment.

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Dr. Meghan Poon counsels clients on patent preparation and prosecution, portfolio strategy, and IP due diligence in the areas of biotechnology and biologics. She has significant experience in diverse technologies including antibodies, cell therapies, gene therapies, diagnostics, and gene-edited plants. She represents clients ranging from large international pharmaceutical companies to midsized companies, startups, and universities.Meghan has filed numerous Patent Term Extension applications to secure additional term for her clients’ patents, which cover FDA-approved products. In addition, Meghan has extensive experience addressing complex obviousness-double patenting and subject matter eligibility issues impacting her clients’ patent portfolios. Meghan also represents clients in both investor-side and target-side due diligence, in deals from seed funding to initial public offerings.Prior to law school, Meghan attended graduate school at the University of California, Los Angeles, where she received a Ph.D. in biological chemistry based on her work on protein-protein and protein-DNA interactions at a molecular level. Meghan is the author of several scientific publications and has presented her research at international conferences.Meghan received her J.D. from the University of Southern California Law School and spent a year as a visiting student at Santa Clara University, where she focused on intellectual property.

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Dr. Meghan Poon counsels clients on patent preparation and prosecution, portfolio strategy, and IP due diligence in the areas of biotechnology and biologics. She has significant experience in diverse technologies including antibodies, cell therapies, gene therapies, diagnostics, and gene-edited plants.

Meghan Poon

Wolfgang advises clients on contentious and non-contentious matters involving their most valuable intellectual property assets in life sciences, digital, and high-tech industries.His subjects of focus include research and development collaborations, complex licensing agreements, and other technology transactions, as well as know-how protection strategies, and employee invention law. He also has substantial experience in litigating patents, trademarks, and other intellectual property assets, often in a multijurisdictional context. In addition, Wolfgang and his team frequently clear trademarks and ad campaigns and prosecute trademark applications.Wolfgang is co-editor of our <a href="https://lifesciences.mofo.com/" dir="ltr" target="_blank">MoFo Life Sciences Blog</a>.Wolfgang is a partner of Morrison Foerster based in our German office in Berlin.<h4 dir="ltr">Representative Transactional Matters</h4><ul dir="ltr"><li>U.S.-based BioTech fund on various research collaborations and other transactions with German start-ups or research institutions.</li><li>Negotiate multimillion-euro strategic partnership between two AgTech leaders concerning the development and commercialization of pest-resistant transgenic traits.</li><li>Craft global multi-million collaboration regarding AI-powered robotic MaaS.</li><li>UK-based digital health company on product roll-out of RPM applications in Germany; coordinate international expansion.</li><li>Advise numerous German start-ups on their U.S. expansion.</li><li>Draft diverse global patent and know-how license agreements in the areas of AgTech and life sciences—including gene licensing and licensing of genome editing technologies (e.g., CRISPR)—and medical devices; draft correlating supply and distribution agreements.</li><li>Structure IP rights in connection with joint ventures and other M&A transactions, including the carve-out of a patent-heavy semiconductor business comprising nine jurisdictions into a German–U.S. joint venture.</li><li dir="ltr">Advise on government-funded, multi-partner R&D projects and/or R&D projects with academic institutions, as well as on employee invention law.</li></ul><h4 dir="ltr">Representative Contentious IP Matters</h4><ul dir="ltr"><li>Lead counsel in an international dispute between software companies on rights and obligations following termination of a multi-million licensing and distribution arrangement; coordinate local counsel.</li><li>Defend Japanese chip manufacturer in high-profile SEP-litigation; advise on global settlement arrangement.</li><li>Represent leading internet retailer in patent infringement and concurrent invalidity proceedings in the context of a multijurisdictional dispute concerning touch-screen technology.</li><li>Represent diverse pharmaceutical and life sciences companies in national and cross-border patent infringement proceedings and other technology-related disputes, including preliminary injunctions as well as pre‑trial discovery and inspection proceedings, concerning, inter alia, drug-coating technologies, toner cartridges, medicinal gases, transgenic plants, and vaccines.</li><li dir="ltr">Conduct trademark, copyright, and false advertising litigation, including, most notably, a high-profile trademark litigation for a German bank, and a nine-country cross-border trademark litigation involving a famous pharmaceutical brand.</li></ul>

Dr. Wolfgang Schönig berät Mandanten zum Schutz des geistigen Eigentums sowohl in streitigen als auch nichtstreitigen Angelegenheiten, mit einem besonderen Fokus auf die IP-rechtliche Beratung von Unternehmen aus den Bereichen Life Sciences, Digitalwirtschaft und High-Tech.Zu seinen Beratungsschwerpunkten gehören Forschungs- und Entwicklungskooperationen, komplexe Lizenzvertragsgestaltungen und andereTechnologie-Transaktionen, sowie Know-how-Schutz-Strategien und das Arbeitnehmererfinderrecht. Er verfügt zudem über umfangreiche Prozesserfahrung zur Durchsetzung von Patenten, Marken- und anderen IP-Rechten, häufig auch in einem grenzüberschreitenden Kontext. Darüber hinaus bewertet Dr. Wolfgang Schönig zusammen mit seinem Team regelmäßig die Rechtskonformität von Werbekampagnen, prüft die Verfügbarkeit von Marken und entwickelt entsprechende Anmeldestrategien.Dr. Wolfgang Schönig ist Co-Editor des Life Sciences Blogs von Morrison Foerster.Er hat seinen Doktortitel an der Heinrich-Heine-Universität Düsseldorf und seinen LL.M. an der Fordham School of Law in New York erworben, jeweils mit Schwerpunkt im gewerblichen Rechtsschutz. Seinen MBA-Abschluss erhielt er von der European University in Barcelona.Dr. Wolfgang Schönig ist Partner des deutschen Büros von Morrison Foerster in Berlin.<h4 dir="ltr">Repräsentative Transaktionen</h4><ul><li dir="ltr">BioTech-Fonds mit Sitz in den USA bei verschiedenen Forschungskooperationen und anderen Transaktionen mit deutschen Start-ups oder Forschungseinrichtungen</li><li dir="ltr">Verhandlung einer hochvolumigen strategischen Partnerschaft zwischen zwei Technologieführern im Bereich Crop Science betreffend der Entwicklung und Kommerzialisierung von bestimmten Resistenzen</li><li dir="ltr">Gestaltung einer globalen Multi-Millionen-Zusammenarbeit für KI-gestützte Roboter</li><li dir="ltr">Ein in Großbritannien ansässiges Unternehmen für digitale Gesundheit bei der Markteinführung von RPM-Anwendungen in Deutschland; Koordination der internationalen Expansion</li><li dir="ltr">Beratung zahlreicher deutscher Start-ups bei deren US-Expansion</li><li dir="ltr">Strukturierung und Verhandlung diverser Patent- und Know-How-Lizenzen in den Bereichen Ag Tech und Life Sciences – einschließlich Fragen zu genome editing wie CRISPR-Medizingeräte, sowie Gestaltung von Softwarelizenzverträgen und Erstellung korrespondierender Liefer- und Vertriebsvereinbarungen</li><li dir="ltr">Strukturierung von IP-Rechten im Zusammenhang mit Joint Ventures und anderen M&A-Transaktionen, darunter die Koordination eines neun Länder umfassenden IP Carve-Outs im Rahmen eines Halbleiter-JVs</li><li dir="ltr">Beratung zu staatlich geförderten Multi-Partner F&E-Projekten und/oder F&E-Projekten mit akademischen Einrichtungen sowie zum Arbeitnehmererfindungsrecht</li></ul><h4 dir="ltr">Repräsentative IP-Streitigkeiten</h4><ul><li dir="ltr">Lead Counsel in einem internationalen Rechtsstreit zwischen Softwareunternehmen über Rechte und Pflichten nach Beendigung einer millionenschweren Lizenz- und Vertriebsvereinbarung; Koordinierung der lokalen Anwälte</li><li dir="ltr">Verteidigung eines japanischen Chipherstellers in einem prominenten Streitfall bezüglich Standardessentieller Patente (SEP); Beratung zu einer globalen Vergleichsregelung</li><li dir="ltr">Verteidigung einer führenden Internetplattform gegen Ansprüche eines Patenttrolls wegen vermeintlicher Verletzung von Patent bezüglich Touchscreen-Technologie sowie korrespondierende US-Streitigkeiten</li><li dir="ltr">Vertretung von Pharma- und Life Science-Unternehmen in nationalen und grenzüberschreitenden Patentverletzungsverfahren und anderen technologiebezogenen Streitigkeiten, einschließlich einstweiliger Verfügungsverfahren und vorprozessualer Beweissicherungs- und Besichtigungsverfahren, unter anderem in Bezug auf Arzneimittelbeschichtungstechnologien, Tonerkartuschen, medizinische Gase, transgene Pflanzen und Impfstoffe</li></ul>

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Wolfgang Schönig is a partner of Morrison Foerster (International) LLP based in our German office in Berlin. His practice specialty is advising on IP aspects relative to transactions in, among others, the life sciences, AgTech and pharmaceuticals industry, as well as legal representation in IP disputes. Wolfgang is specialized in research and development collaborations, complex licensing agreements, technology acquisitions, know-how protection strategies, and employee invention law.

Wolfgang Schönig focuses his practice on IP aspects relative to transactions in the digital, telecoms, high tech, life sciences, and pharmaceuticals industry, as well as legal representation in IP disputes.

Wolfgang Schönig advises clients on IP aspects relating to transactions in, among others, the life sciences, AgTech and pharmaceuticals industry, as well as legal representation in IP disputes. His additional focus areas include research and development collaborations, complex licensing agreements, technology acquisitions, know-how protection strategies, and employee invention law.

Wolfgang Schönig

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Having shed light on the relevance of the intended purpose of a medical device when determining whether software qualifies as medical devices software (“MDSW”) under the new EU Medical Device Regulation 2017/745 (“MDR”) in <a href="https://lifesciences.mofo.com/topics/Software-as-Medical-Device-in-Eu--New-Reg-Enter-into-Force--Part-2-of-6.html" target="_blank">part 2</a> of our <a href="https://lifesciences.mofo.com/topics/Software-as-a-Medical-Device-in-Europe--New-Regulatory-Regime-About-to-Enter-into-Force--Part-1-of-6.html" target="_blank">series of articles</a>, in this part 3, we now turn to the issue of risk classification of such MDSW under the MDR.<h4>INTRODUCTION</h4>Under the current <a href="https://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CONSLEG:1993L0042:20071011:en:PDF" target="_blank">EU Medical Device Directive 93/42/EEC</a> (as amended by Directive 2007/47/EC – “MDD”), most stand-alone MDSW (i.e., MDSW not implemented in a more complex medical device, such as control software) including, for instance, a mobile app that allows users to take pictures of moles on their skin and evaluates whether it is a melanoma, are classified as Class I medical devices and therefore subject to self-certification (see <a href="https://ec.europa.eu/health/sites/health/files/md_topics-interest/docs/md_borderline_manual_05_2019_en.pdf" target="_blank">Manual on Borderline and Classification, Version 1.22</a>, page 81). This is likely going to change under the MDR, coming into full effect on May 26, 2021. Due to new classification rules, significantly more stand-alone MDSW will likely be classified as Class IIa or higher. This means that obtaining CE markings for stand-alone MDSW will more often require involvement of a notified body with an increasing level of scrutiny depending on the determined class.<h4>1. THE EU RISK CLASSIFICATION SYSTEM</h4>Already under the current MDD regime, medical devices, such as stand-alone MDSW, are classified according to their intended purpose and their inherent risks, and are divided into the following four risk classes: Class I (lowest-risk class), Class IIa, Class IIb, and Class III (highest‑risk class).These risk classes determine which conformity assessment procedures are required to obtain CE markings and range from self-certification (for Class I) to a full review of the technical design and manufacture of the specific device by a notified body (for Class III). Self-certification includes compliance with general safety and performance requirements, performance of clinical evaluation, preparation of technical documentation, and the issuance of an EU Declaration of Conformity. In addition to that, a Class IIa examination requires that a notified body examines the quality management system (“QMS”) and the technical data of one representative product sample per product category. In Class IIb, examination is conducted per generic product group, and in Class III, the QMS and technical data of every product must be examined.<h4>2. AMENDED RISK CLASSIFICATION SYSTEM FOR MDSW UNDER THE MDR </h4>The classification of MDSW under the MDR will take place in accordance with Annex VIII of the MDR. For classification purposes, MDSW, just like hardware devices, is considered an active device and can be classified in all four risk classes. Depending on whether the MDSW is a stand‑alone MDSW, an accessory to a hardware device, or drives or influences the use of a hardware device for a medical purpose, Rules 9, 10, 11, 12, 13, 15, and 22 of Annex VIII, Chapter 3 to the MDR (the “Rules”), can be relevant. Stand-alone MDSW, such as most health apps, will be classified independently from any hardware medical device (Annex VIII, Chapter 2, para. 3.3 of the MDR) and will thus mainly be governed by Rule 11 of Annex VIII to the MDR (“Rule 11”).According to Rule 11:(a)   Software intended to provide information that is used to take decisions with diagnosis or therapeutic purposes is classified as Class IIa, except if such decisions have an impact that may cause:<ul><li>Death or an irreversible deterioration of a person’s state of health, in which case it is Class III; or </li><li>A serious deterioration of a person’s state of health or a surgical intervention, in which case it is classified as Class IIb. </li></ul>(b)   Software intended to monitor physiological processes is classified as Class IIa, except if it is intended for monitoring of vital physiological parameters, where the nature of variations of those parameters is such that it could result in immediate danger to the patient, in which case it is classified as Class IIb.(c)   All other software is classified as Class I.In light of the foregoing it seems that a significant portion of stand-alone MDSW will fall in the higher risk classes IIa to III, as most of the stand-alone MDSW with an intended medical purpose will likely also provide information that is used for decision-making with diagnosis or therapeutic purposes.<h4>3. A MORE DIFFERENCIATED APPROACH TO CLASSIFICATION</h4>However, classification of stand-alone MDSW under the MDR will not be black and white. Guidance and a more detailed approach on risk categorizations and classification under Rule 11 is provided by the European Commission’s <a href="https://ec.europa.eu/docsroom/documents/37581" target="_blank">Guidance on qualification and classification of software in Regulation (EU) 2017/745-MDR and Regulation (EU) 2017/746-IVDR</a> (in the version of October 2019; “MDCG 2019-11”). Although the MDCG 2019-11 are not binding, as official documents, they should be taken into consideration when assessing software for classification under the MDR.According to the MDCG 2019-11, Rule 11 mirrors the regulatory guidance developed at the international level — more specifically, in the context of the International Medical Device Regulators Forum (“IMDRF”). The IMDRF framework for risk categorization of software as a medical device (SaMD) (“IMDRF Risk Framework”) categorizes the risk of software based on the combination of two factors:        i.            the significance of the information provided by the software to the healthcare decision,and      ii.            the healthcare situation or patient condition.In this regard, the IMDRF has developed a table for assisting manufacturers in identifying the appropriate risk category for their MDSW. This table was further supplemented by the European Commission and included in Annex III to the MCDG (“Amended IMRF Framework”) to reflect the corresponding MDR risk classes according to Rule 11:<div class="embedded-entry redactor-component block-entry" type="entry" data-sys-entry-uid="blt884195cd18c433c7" data-sys-entry-locale="en-us" data-sys-content-type-uid="image_content" sys-style-type="block"><div data-reactroot=""><img src="https://media2.mofo.com/v3/images/blt5775cc69c999c255/blt8bcd954f749ec7e1/62731787b5ad5f2863c59610/annexiii2.png?format=auto&amp;quality=60" alt="Annex III Table"></div></div>Source: Annex III of the MDCG 2019-11The Amended IMRF Framework allows a more differentiated approach to risk categorization and classification of stand-alone MDSW under Rule 11. For example, a mobile app intended to analyze a user’s heartbeat, detect abnormalities, and inform a physician accordingly may be classified as Class IIb per Rule 11(a), if the information provided by the software is intended to guide the physician in the diagnosis, because the information drives clinical management and the health care situation can be critical.[1] Yet, if the MDSW were intended to automatically adapt treatment (e.g., medication plans) of, for example, cardiac arrhythmias, it may be classified as Class III per Rule 11(a), as not only would the health care situation be critical but the MDSW would also be used to take immediate action to treat a disease or a condition.On the other hand, MDSW intended to rank therapeutic suggestions for a health care professional based on patient history, imaging test results, and patient characteristics (e.g., a MDSW that lists and ranks all available chemotherapy options for BRCA-positive individuals) may be classified as class IIa per Rule 11(a) since, albeit cancer being a critical disease, the MDSW only informs clinical management about the options.[2]It must be noted that the table does not take into account MDSW, which is Class I, as Class I MDSW falls outside the IMDRF risk categories.<h4>4. ROOM FOR CLASS I CLASSIFICATION OF MDSW</h4>However, a classification in Class I still remains possible. This will be the case for stand-alone MDSW that — even though intended for medical purposes — stays under the threshold set out by Rules 11(a) and (b) and thus falls under Rule 11(c). Manufacturers of MDSW should therefore not assume by default that any MDSW must at least be Class IIa but will still find it worthwhile to carefully assess whether the features of the software do not rather warrant a Class I categorization.For example, an app intended to support conception by calculating the user’s fertility status based on a validated statistical algorithm in which the user inputs her own health data (i.e., basal body temperature (BBT) and menstruation days) to track and predict ovulation and in which the fertility status of the current day is reflected by one of three indicator lights (i.e., red = fertile, green = infertile, or yellow = cycle fluctuation) may be regarded as Class I, as this MDSW is neither used to take decisions with diagnosis or therapeutic purposes, nor does it monitor physiological processes. Another example may be a mobile app that assists users with a medical condition to self-manage their condition or to pursue a healthier lifestyle based on data provided (e.g., sleeping hours, heart beat frequency) and preferences selected by the user, including increased body activity or recommendations concerning regular sleep.It is important to note that, other than the MDCG 2019-11, which are not binding, there are no conclusive guidelines as of now, and naturally no examples of enforcement or relevant court decisions applicable to Rule 11 due to its significant deviances from the framework under the MDD. Therefore, practical appliances will only clarify the continued relevance of Class I classifications when the MDR will be applicable.<h4>CONCLUDING REMARKS</h4>Developers and operators of new stand-alone MDSW not yet placed on the EU market need to brace themselves for the new, more rigid classification system under the MDR, which will likely make more products subject to the direct involvement of the notified bodies. Therefore, obtaining CE markings will become more complex and time consuming. A careful assessment should be made, taking into account the intended purpose and the functions of the stand-alone MDSW and by applying the Amended IMRF Framework. Under certain requirements, stand-alone MDSW already on the EU market and classified as a Class I medical device under the MDD will only be required to comply with the new rules as of May 26, 2024. We will discuss these requirements in more detail in Part 6 of our series of articles on Software as a Medical Device in Europe, available on March 19, 2021.  [1] See Annex IV of the MDCG 2019-11on classification examples.   [2] See Annex IV of the MDCG 2019-11on classification examples.

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Counsel

Stephan is counsel at Morrison Foerster’s German office in Berlin. He focuses on advising major German and international clients with regard to drafting and negotiating complex technology-related agreements and on matters concerning cloud computing, software, e/m-commerce, digital media, intellectual property rights, consumer rights, electronic communication, big data and cyber security requirements.

Stephan Kreß

Stephan is counsel at Morrison Foerster’s German office in Berlin. As a member of the technology transactions group, he focuses on advising major German and international clients with regard to drafting and negotiating complex technology-related agreements and on matters concerning cloud computing, software, e/m-commerce, digital media, intellectual property rights, consumer rights, electronic communication, big data and cyber security requirements.

Robert Grohmann

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Software as a Medical Device in Europe – New Regulatory Regime About to Enter into Force – (Part 3 of 6)

Fourth Circuit’s Decision Revitalizes First Amendment Challenge to the TCPA

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Having shed light on the relevance of the intended purpose of a medical device when determining whether software qualifies as medical devices software (“MDSW”) 

Software as a Medical Device in Europe – New Regulatory Regime About to Enter into Force – (Part 3 of 6)

Nearly one year after its introduction to the House of Commons, the Medicines and Medical Devices Bill 2019‑2021 (the Bill) was granted Royal Assent on 11 February 2021, becoming law as the Medicines and Medical Devices Act 2021 (the Act). The purpose of the Act is to create a structure for the UK Government to legislate for updates or amendments to our existing laws on human and veterinary medicine, clinical trials, and medical devices. Now that the Brexit transition period has come to an end, the Government views the Act as essential in ensuring that the UK retains its position as a world leader in the life sciences industry and is able to take advantage of innovative medicines and technologies more quickly.During its passage through Parliament, the Act was subject to a number of amendments, including the introduction of: (i) an independent Commissioner for Public Safety, and an overarching objective focused on safeguarding public health; and (ii) public consultations in relation to proposed regulations, and requirements for the Medicines and Healthcare products Regulatory Agency (the MHRA) to lay periodic reports before Parliament. These amendments were made to address concerns in the House of Lords surrounding the wide-reaching powers delegated to the MHRA under the Act.One aspect of the Act that remains largely unchanged, however, is the introduction of new enforcement powers for the MHRA. With these new powers, the MHRA can impose either civil or criminal sanctions for breaches of the Act or any secondary legislation made pursuant to it. These offences can be committed by corporates as well as individuals, including company directors. For more information on the offences themselves and the ways in which the resulting penalties can be defended or avoided, see <a target="_blank" href="https://www.mofo.com/resources/insights/201113-uk-life-sciences-regulation-post-brexit.html">our previous alert</a>.Now that the Act has become law, the MHRA must prepare and publish guidance as to the civil sanctions that can be imposed. In particular, the guidance should provide further information regarding monetary penalties and the MHRA’s power to accept enforcement undertakings in place of criminal conviction or the imposition of a fine.  With the objective of the Act being the safeguard of public health and safety it is, however, likely that financial sanctions will be onerous and tolerance for corporates without robust procedures in place will be low.Although the Act now allows the UK the flexibility to respond quickly to medical advances and developments in medical technology, we note that the UK-EU Trade and Cooperation Agreement does not provide for the mutual recognition of regulatory regimes. It will, therefore, be interesting to see how the UK Government and the MHRA seek to balance a new, robust and evolving regulatory regime with the need to remain commercially viable for multinational pharmaceutical companies, medical devices manufacturers and other affected parties that currently operate in both markets. Stephanie Pong, London Trainee Solicitor, contributed to the drafting of this alert.

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Of Counsel

Jenny Galloway advises corporate clients and senior executives on a range of complex dispute resolution matters, including general commercial and corporate litigation, investigations and contentious regulatory matters. 

Jenny Galloway

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Life Sciences Regulatory Framework Becomes Law Post-Brexit

UK Plans for Robust Life Sciences Regulation Post-Brexit

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Nearly one year after its introduction to the House of Commons, the Medicines and Medical Devices Bill 2019‑2021 (the Bill) was granted Royal Assent on 11 Febru

Life Sciences Regulatory Framework Becomes Law Post-Brexit

In Part 2 of our <a target="_blank" href="https://lifesciences.mofo.com/topics/Software-as-a-Medical-Device-in-Europe--New-Regulatory-Regime-About-to-Enter-into-Force--Part-1-of-6.html?utm_source=linkedin_elevate&utm_medium=social">series of consecutive articles</a> on the reformed regulatory framework under the <a target="_blank" href="https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32017R0745">EU Medical Device Regulation 2017/745</a> (“MDR”), which will soon govern medical devices software (“MDSW”) in the EU, we will shed further light on the expansion of the definition of “medical device” and the importance of the intended purpose of healthcare-related standalone software in determining the regulatory requirements of companies offering such software in the EU.<h4>Introduction: The Relevance of the Intended Purpose</h4>As is already the case under the current <a target="_blank" href="https://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CONSLEG:1993L0042:20071011:en:PDF">EU Medical Device Directive 93/42/EEC</a> (as amended by Directive 2007/47/EC – “MDD”), the purpose for which the software is intended to be used is and remains the critical factor when determining the obligations regarding regulatory compliance with the European medical devices regime. The intended purpose establishes whether standalone software is considered a medical device in the first place.[1]In particular with regard to so-called health apps or other apps related to biological functions or wellbeing (e.g., related to fitness, diet, sleeping habits, or mental health), no bright line can be drawn between normal software and MDSW. For example, an app that allows the user to monitor his or her food habits for weight control purposes will qualify as normal software, while the same app might qualify as medical device if the monitoring is intended to be used for prevention of diseases such as metabolic disorders. A standalone software application that is claimed by its manufacturer to be a natural method of birth control and in which the user enters certain parameters (first day of menstruation, body basal temperature, etc.) in order to obtain the fertility window, should qualify as a medical device as it is intended to prevent pregnancy or facilitate conception.The following table highlights some of the distinctions:<table border="1" cellspacing="0" cellpadding="0"><tbody><tr><td width="312" valign="top" style="width: undefined%; height: auto;">Medical purpose</td><td width="312" valign="top" style="width: undefined%; height: auto;">Non-medical purpose</td></tr><tr><td width="312" valign="top" style="width: undefined%; height: auto;">Prevention or diagnosis of disease or injury</td><td width="312" valign="top" style="width: undefined%; height: auto;">Patient medical education (e.g., giving general health tips)</td></tr><tr><td width="312" valign="top" style="width: undefined%; height: auto;">Treatment or alleviation of disease or injury (e.g., giving instructions to alleviate symptoms such as tinnitus)</td><td width="312" valign="top" style="width: undefined%; height: auto;">Monitoring of general fitness (e.g., physical exercise tracker), general health, and general wellbeing (e.g., wellness diary)</td></tr><tr><td width="312" valign="top" style="width: undefined%; height: auto;">Decision support or decision-making (e.g., with regard to therapeutic measures)</td><td width="312" valign="top" style="width: undefined%; height: auto;">Communication or simple search functions (e.g., finding a certain healthcare specialist)</td></tr><tr><td width="312" valign="top" style="width: undefined%; height: auto;">Control of conception</td><td width="312" valign="top" style="width: undefined%; height: auto;">Storing and displaying medical data (e.g., weight or body fat) without any change or analysis</td></tr></tbody></table> In this regard, we want to focus on three changes introduced by the MDR that are particularly noteworthy.<h4>1. Expansion of the Definition of “Medical Device”</h4>The MDR broadens the scope of medical purposes that are covered by adding new specifications to the list of relevant medical purposes. The full list of medical purposes under Article 2(2) of the MDR thus reads as follows (emphasis added to highlight the changes compared to the MDD):<ul><li>Diagnosis, prevention, monitoring, prediction, prognosis, treatment, or alleviation of disease;</li><li>Diagnosis, monitoring, treatment, alleviation of, or compensation for, an injury or disability;</li><li>Investigation, replacement, or modification of the anatomy or of a physiological or pathological process or state;</li><li>Providing information by means of in vitro examination of specimens derived from the human body, including organ, blood and tissue donations; or</li><li>Control or support of conception.</li></ul>For standalone software, in particular, the addition of prediction and prognosis of disease can become relevant, e.g., for software providing healthcare professionals with information on a patient’s future health prospects or likely individual outcomes of a certain therapy. The importance of this addition also becomes palpable when looking at current COVID-19 apps. Based on a person’s recent contacts, such apps often make a prognosis with regard to the risk of the user developing COVID-19, while the app would not be in a position to actually diagnose the infection.<h4>2. Expansion of Relevant Material and Product Life Cycle Approach</h4>The MDR comprehensively includes further material to be considered when assessing the medical purpose. Under current law, according to Article 1(2)(g) of the MDD, “intended purpose” means the use for which the device is intended according to “the data supplied by the manufacturer on the labelling, in the instructions and/or in promotional materials.” In this regard, Article 2(12) of the MDR now also lists sales materials and statements to emphasize that any such information in whatever form given will be relevant. It also includes the specifications made by the manufacturer in the clinical evaluation (regarding the increased importance of the clinical evaluation, as we will describe in Part 4 of this series, available from March 5, 2021), which will require manufacturers to put even greater care on the framing of the intended purpose.In line with the new product life cycle-focused approach of the MDR, it further intends to prohibit any attempts by the manufacturers to expand the intended purpose after the conformity assessment has been carried out. Article 7(d) of the MDR stipulates this expressly and prohibits the use of text, names, trademarks, pictures, or signs in the labelling; instructions for use; or making available, putting into service, and advertising of devices that are not in compliance with the intended purpose for which the conformity assessment was carried out.<h4>3. The Intended Purpose Is Not the Only Factor Qualifying a Product as Medical Device</h4>The MDR introduces in its Annex XVI groups of products (e.g., contact lenses) that irrespective of their intended purpose qualify as medical devices. While these product groups currently are not relevant with regard to standalone software, this may change as Annex XVI will likely be expanded over time.<h4>Concluding Remarks</h4>Even though the changes introduced to the regulation of software by the MDR may seem subtle at first glance, developers and stakeholders in the fields of digital health, fitness, and wellbeing should be aware that more products might be regulated in the foreseeable future. The MDR will make inevitable a careful assessment of the intended purpose of apps and other software products, which must cover every part of their documentation and advertisement. Framing the purpose of MDSW correctly will not only determine the applicability of the MDR but also potentially limit the scope of use for which an app can be marketed. Only a proactive and consistent approach in this regard will prevent any interference by the competent authorities and secure a smooth transition into the future market under the MDR. [1] Software also falls under the MDR’s framework if the software is intended for controlling or influencing the performance of medical devices or is an “accessory for a medical device” within the meaning of Article 2(2) of the MDR. In this series, however, we focus on standalone software.

Wolfgang advises clients on contentious and non-contentious matters involving their most valuable intellectual property assets in the digital, high-tech, life sciences, and pharmaceutical industries.

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Robert advises companies in the healthcare, pharmaceutical, medical device, and technology industries on all aspects of intellectual property law, primarily in connection with commercial life sciences, licensing, and technology transactions. His clients range from multinational companies to startups.

Robert Grohmann is counsel at Morrison Foerster’s German office in Berlin. As a member of the technology transactions group, he focuses on advising domestic and foreign companies and startups in all areas of technology and IP law, including patent and software licensing, employee inventions law, as well as know-how protection. Moreover, Mr. Grohmann’s expertise encompasses the judicial and extra-judicial representation in matters of trademark law, design law, and competition law.

Software as a Medical Device in Europe – New Regulatory Regime About to Enter into Force – (Part 2 of 6)

In Part 2 of our series of consecutive articles on the reformed regulatory framework under the EU Medical Device Regulation 2017/745 (“MDR”), which will soon go

Software as a Medical Device in Europe – New Regulatory Regime About to Enter into Force – (Part 2 of 6)

The COVID-19 pandemic has significantly accelerated the adoption of digital health and virtual care in Europe, as well as globally. Fueled by technological advancement, including in the space of data analytics and AI, <a href="https://www.fiercehealthcare.com/tech/7-predictions-for-how-technology-will-shape-healthcare-2021?_lrsc=24600661-c20a-46c7-b0d4-aa4705e23af1&cid=other-soc-lke" target="_blank">this trend is likely to continue</a>.As with every health-related product or service, manufacturers of software addressing certain health issues must navigate a complex regulatory landscape. In Europe, prior to being placed on the market, software applications must obtain a CE marking when intended to be used for one or more of the following medical purposes:<ul><li>Diagnosis, prevention, monitoring, treatment, or alleviation of disease;</li><li>Diagnosis, monitoring, treatment, alleviation of, or compensation for, an injury or disability;</li><li>Investigation, replacement, or modification of the anatomy or of a physiological process; </li><li>Providing information by means of in vitro examination of specimens derived from the human body, including blood and tissue donations; or</li><li>Control or support of conception.</li></ul>Software also falls under the medical devices regulatory framework and requires CE marking if the software is (i) intended for controlling or influencing the performance of medical devices (e.g., software controlling the dosage of automatically given medication) or (ii) is an “accessory for a medical device” (e.g., software on a smartphone linked wirelessly for data collection to a monitoring medical device).The relevant framework is currently laid out in the EU Medical Device Directive (93/42/EEC, as amended by Directive 2007/47/EC – “MDD”), as transposed in various national laws of the EU Member States, in Germany, for example, the German Medical Device Act (Medizinproduktegesetz).On May 26, 2021, the MDD is intended to be replaced by the <a href="https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32017R0745" target="_blank">EU Medical Device Regulation 2017/745</a> (“MDR”). The MDR will provide for a revised and, in certain areas, significantly stricter regulatory framework not only for medical devices in general but also for medical devices software (“MDSW”) in particular. Other than the MDD, the MDR will apply directly in all EU Member States without requiring transposition into national law.The MDR was initially intended to come into effect on May 26, 2020. This date was moved to May 26, 2021, to avoid the chance that medical device companies will be burdened with additional requirements amidst the COVID-19 pandemic.Albeit rumor has it that the EU lawmaker is contemplating a further postponement. Given the time and resources that will be required to comply with the new requirements that lie ahead, it is high time for companies planning to offer new MDSW products or services in the EU to start getting up to speed with the new framework now if they have not already done so.In this series of consecutive articles, we will give a detailed overview on certain key changes that the new MDR regime will bring about for companies that market stand-alone MDSW in Europe.[1] In our upcoming five articles, we will discuss the following issues in greater detail:<ol><li><a href="https://lifesciences.mofo.com/topics/Software-as-Medical-Device-in-Eu--New-Reg-Enter-into-Force--Part-2-of-6.html" target="_blank">A more detailed approach to the “intended purpose.” </a>The new definition of “intended purpose” covers more devices. This includes MDSW for the purpose of “prediction and prognosis” of diseases and health conditions. Furthermore, companies should be aware of the way the intended purpose is determined, as this requires a consistent approach to labelling, use instructions, and promotional material. (Available 2/19)</li><li><a href="https://lifesciences.mofo.com/topics/Software-as-Medical-Device-in-Europe-New-Reg-Regime-to-Enter-into-Force-Part-3.html" target="_blank">Risk class re-categorization</a>. The new risk categorization regime of the MDR introduces a specific rule dedicated to stand-alone MDSW, according to which many stand-alone MDSWs are expected to be categorized as Class IIa and higher. As a result of that, mere self‑certification will no longer suffice, and there may be a need to update technical documentation. There will, however, still be room for categorization in Class I. (Available 2/25)</li><li><a href="https://lifesciences.mofo.com/topics/Software-as-a-Medical-Device-in-Europe--New-Regulatory-Regime-About-to-Enter-into-Force-Part-4-of-6.html" target="_blank">Additional quality assurance and documentation requirements for MDSW</a>. In contrast to the MDD, the MDR places more emphasis on the entire life cycle of a MDSW. This approach entails new requirements and an increased level of detail to Quality Managements Systems, Clinical Evaluations, and Technical Data, as well as the reinforcement of the post‑market obligations. (Available 3/11)</li><li><a target="_blank" href="https://lifesciences.mofo.com/topics/Software-as-medical-device-in-Europe--New-Regulatory-Regime-About-To-Enter-Into-Force--Part-5-of-6.html">Introduction of a Unique Device Identification requirement for MDSW</a>. The MDR introduces a more detailed tracking mechanism. The unique device identification (“UDI”) must be used by any MDSW company. It allows the company and authorities to trace individual devices through their supply chain. The intention here is to make recalls fast and efficient if devices have been deemed a safety risk. Moreover, the MDR aims for a more efficient access to information about approved MDSW through the European Databank on Medical Devices (“EUDAMED”). (Available 3/24)</li><li><a target="_blank" href="https://lifesciences.mofo.com/topics/Software-as-medical-device-in-Europe-new-regulatory-regime-to-enter-into-force-part-6.html">How about Class I MDSW already on the market?</a> MDSW currently classified as a Class I medical device under the MDD, which would be moved into a higher-risk class under the MDR, will only be required to comply with the new rules as of May 26, 2024, if it continues to comply with the requirements of the MDD and there are no significant changes in design and the intended purpose. Guidance on what constitutes significant changes can be found <a href="http://www.doks.nbog.eu/Doks/NBOG_BPG_2014_3.pdf" target="_blank">here</a>. Yet, these MDSWs, too, will be subject to the requirements of the MDR relating to market surveillance and post-market surveillance, vigilance, registration of economic operators, and of devices from May 26, 2021. (Available 4/13)</li></ol>MDSW companies placing or intending to place MDSW on the EU market should be aware of the key changes of the MDR and consider whether these affect their operations in order to ensure a smooth transition from the MDD to the MDR. Read more in our weekly series publications. [1] Note that this article does not address the In Vitro Diagnostic Regulation (“IVDR”); the interested reader can find information <a href="https://www.gov.uk/government/publications/in-vitro-diagnostic-medical-devices-guidance-on-legislation" target="_blank">here</a>.

Software as a Medical Device in Europe – New Regulatory Regime About to Enter into Force – (Part 1 of 6)

The COVID-19 pandemic has significantly accelerated the adoption of digital health and virtual care in Europe, as well as globally. Fueled by technological adva

Software as a Medical Device in Europe  – New Regulatory Regime About to Enter into Force – (Part 1 of 6)

On January 28, 2021, the United States’ Department of Justice (DOJ) announced an $18.25 million <a target="_blank" href="https://www.justice.gov/opa/press-release/file/1361441/download">settlement</a> with athenahealth Inc. (“Athena”) to resolve allegations that Athena violated the False Claims Act by paying impermissible kickbacks related to its electronic health records (EHR) product. At the center of the DOJ’s complaint was Athena’s use of three different marketing programs, which the DOJ alleges violated the False Claims Act and the Anti-Kickback Statute.<h4>Marketing Programs</h4>In its complaint, the DOJ highlighted three of Athena’s marketing programs, all of which allegedly incentivized the use of Athena’s EHR product in return for cash payments or other luxury amenities. In its “Concierge Events” program, Athena provided key decision-makers at current clients and potential new clients with tickets, travel, and luxury accommodations to events such as the Kentucky Derby and the Masters golf tournament. In a second marketing program, Athena implemented a “Lead Generation” program to find new customers, which provided existing customers with direct payments that varied based on the volume and value of business generated for Athena’s services. In a third marketing program, Athena entered into “Conversion Deals” with competitors that were going out of business. Athena paid these competitors based on the volume and value of the health care practices that the competitor was able to refer and convert from the competitor to Athena’s product.<h4>Compliance Program</h4>DOJ contended that Athena implemented these programs despite having policies and procedures in place that barred the payment of kickbacks and business payments, including a specific policy prohibiting gifts that were “likely or intended to influence a specific decision or deal.” The DOJ’s complaint also alleges that Athena’s internal documents acknowledged the issues with the Concierge Events program. In particular, internal documents referenced recruitment challenges because invitees’ compliance issues would prevent the invitees from accepting an invitation. Further, the DOJ alleges that due to its previous settlement with another EHR vendor due to that vendor’s impermissible referral program, Athena had actual knowledge that its referral program was also impermissible, given the substantial similarities.The DOJ’s action here shows that it is not enough for companies to have policies and procedures in place, but rather a company’s actions must match what is set forth in its compliance program. Similarly, companies need to be aware of DOJ enforcement actions and adjust their practices in the event the DOJ finds that a similar program violates the Anti-Kickback Statute.<h4>Alleged Anti-Kickback Statute and False Claims Act Violations</h4>The DOJ alleges that the marketing programs described above constituted illegal remuneration under the Anti-Kickback Statute. In turn, these illegal payments caused Athena’s health care provider customers to submit millions of dollars of false claims for payment to Medicare and Medicaid under the Health Information Technology for Economic and Clinical Health Act’s (HITECH) electronic health record incentive program, later replaced by the Merit-based Incentive Payment System (MIPS).<h4>Other EHR DOJ Settlements</h4>This settlement comes on the heels of last year’s $145 million resolution with Practice Fusion, Inc., to resolve criminal and civil investigations related to its EHR software. In that arrangement, Practice Fusion received impermissible kickbacks from pharmaceutical companies in exchange for implementing clinical decision support alerts in its software that prompted health care providers to prescribe the pharmaceutical companies’ drug products. Together, these DOJ actions show that the DOJ will continue to crack down on the provision of incentives that influence health care providers’ decision-making.

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EHR Vendor Settles Kickback Allegations to the Tune of $18.25 Million

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On January 28, 2021, the United States’ Department of Justice (DOJ) announced an $18.25 million settlement with athenahealth Inc. (“Athena”) to resolve allegati

EHR Vendor Settles Kickback Allegations to the Tune of $18.25 Million

In this fifth episode of our podcast series on COVID-19, <a href="https://www.mofo.com/people/michael-ward.html" target="_blank">Michael Ward</a>, MoFo partner and global head of the firm’s Life Sciences Group and Patent Group, discusses with Janie Schulman, employment and labor partner in our Los Angeles office as well as co-chair of the firm’s COVID-19 task force, how the availability of the vaccine may impact the workforce, including compliance requirements, employer/employee rights, and whether employers can mandate employees must be vaccinated.<a href="https://www.mofo.com/resources/video-audio/200107-covid-vaccines-in-the-workplace.html" target="_blank">Listen to the podcast episode.</a>

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Michael (Mike) Ward is co-chair of the firm's Life Sciences + Healthcare Group, Patent Group, Intellectual Property Group, and Food + Agriculture Group.

Michael Ward Ph.D.

Michael (Mike) Ward is global head of the Life Sciences + Healthcare Group, head of the Patent Group, co-chair of the firm’s Intellectual Property Group, and co-chair of our global Food + Agriculture Group.

Michael Ward

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Podcast: COVID-19 Vaccines in the Workplace

Podcast: Unpacking the Science and Legal Considerations of COVID-19 Testing

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In this fifth episode of our podcast series on COVID-19, Michael Ward, MoFo partner and global head of the firm’s Life Sciences Group and Patent Group, discusse

Podcast: COVID-19 Vaccines in the Workplace

Sponsored Research Agreements (SRA) are used by companies to contract a research organization, such as a university, to conduct research and development activities in exchange for fees and the university’s rights to use the results for general research purposes. Care should be taken to ensure intellectual property (IP) of the sponsoring company (Sponsor) is properly secured. In this latest edition of <a href="https://www.mofo.com/capabilities/life-sciences-transactions-licensing.html" target="_blank">MoFo’s Life Sciences Transactions + Licensing</a> Top 10, we provide a list and explanation of our top 10 issues to consider when drafting and negotiating SRAs with universities, and we cover some of the distinctions that arise under U.S., EU, and German law.1. CONSIDER A LIMITED LICENSE GRANT TO SPONSOR’S BACKGROUND IPA research partner may need access to the Sponsor’s background IP to conduct the research and development activities that are the subject matter of the project to which the SRA relates. The Sponsor should consider limiting any license to Sponsor’s background IP to include the IP necessary for the research partner to conduct the research and development pursuant to the SRA for the benefit of the Sponsor. Sponsors frequently limit any such license in both scope and duration, solely for the performance of the services to be provided by the research partner, consistent with the scope of the project, and pursuant to the terms of the SRA. Any license to Sponsor’s background IP is commonly non-exclusive to avoid interference with the Sponsor’s and its other licensees’ use of the licensed IP.Sponsors should also consider obtaining a present assignment of all improvements to its background IP that the research partner creates (either solely or in conjunction with the Sponsor) during the term of the SRA. Since a patent does not grant a patent holder any right to improvements, without an assignment, care should be taken to ensure that the research partner is prevented from blocking the Sponsor from practicing an improvement to its invention. When drafting the applicable assignment, it is critical that the assignment clause includes language that will be enforced to ensure automatic assignment to the Sponsor of all future interests in the improvements at the time of its creation. The phrase “hereby assigns in advance” is commonly appropriate, depending on the applicable circumstances.2. ALLOCATING PROJECT IP CAN BE CHALLENGINGA Sponsor may request complete ownership of the new intellectual property developed during the research project (commonly referred to as foreground IP). Unless the SRA is a services agreement, research partners commonly push back and seek to assert ownership rights to foreground IP. This is particularly true if the research partner is a university because it may want the public to have access to the IP, if the research is partially funded by the government or if the foreground IP is developed based upon the research partner’s background IP.As a consideration for the Sponsor’s ownership of foreground IP, the research partner may ask for a license to use foreground IP for its own research and non-commercial purposes. It’s also true that research licenses may be mandatory in sponsored research projects conducted in the EU due to antitrust laws. Attention should be paid to the language of such research license to ensure that it does not interfere with the Sponsor’s right to grant licenses in the future and, to the extent admissible, that it excludes any direct or indirect commercial use. When universities require ownership of foreground IP, Sponsors commonly seek an exclusive license to use and commercialize the foreground IP. If further concessions need to be made to the research partner, exclusivity can be limited to specific field of use. In any license scenario, Sponsors should pay close attention to diligence requirements associated with licenses from research partners. These provisions often provide a step down from exclusivity to non-exclusivity or, eventually, a termination of the license, if the Sponsor neglects to use the foreground IP or fails to meet certain milestones.Sponsors and research partners may also consider joint ownership of foreground IP. Joint ownership provisions need to be carefully crafted to address the type of IP involved and the abundantly different requirements for joint ownership in various jurisdictions. For example, whereas in the United States each patent co-owner can freely grant licenses to third parties without a duty to account, under German law, a license will generally require the consent of the co-owner and may involve sharing of proceeds. While often complex and heavily negotiated, joint ownership of foreground IP is an option for Sponsors and research partners.Finally, Sponsors must also obtain adequate access to the research partner’s background IP, if contained in the research results or otherwise necessary to use research results or any of the foreground IP, in order to avoid being blocked from use and exploitation.3. BEWARE OF THE LIMITATIONS ON FEDERALLY FUNDED RESEARCH AND STATE AID LAWSIn the United States—and even more so in the EU—research institutes, like universities, are often state owned or state funded. Public funding and additional restrictions and obligations in an SRA commonly go hand-in-hand.In the United States, if the research is partly funded by the federal government, the Sponsor should be aware of the restrictions and the federal government’s rights to the resulting inventions and its university partner under the Bayh-Dole Act, which is the federal legislation that permits ownership of patents resulting from federally funded research to remain with inventors and their employers. One particular restriction to note, inventions resulting from the project will have to be manufactured substantially within the United States. Furthermore, the funding federal agency will have a nonexclusive license to the research inventions and the “march-in rights” to grant a third party an exclusive or non-exclusive license if the university does not take reasonable steps to use or commercialize the inventions or if the inventions will not be manufactured substantially in the United States.If the research does not require government funding, the Sponsor should obtain a representation from the university that the university will not use any government funding for the research. If government funding is necessary, SRAs commonly include a mechanism to separate the government-funded research from the research funded entirely by the Sponsor.In the EU, to the extent patentable inventions are concerned, there is a trend that publicly funded universities oppose an upfront buyout and assignment of foreground IP and instead merely offer an option to acquire rights in such inventions at fair market value. There are similar trends with respect to access to background IP. The reason for this is that these institutions are concerned that fully paid-up upfront assignments (or licenses to background IP) will be considered illicit state aid. Sponsors are well-advised to have a solid understanding of the anticipated value created by the research partner and fund their projects appropriately.Moreover, if the SRA is part of a wider EU or German government grant, the grant conditions may add more limitations on the Sponsor’s ability to dispose of the research results. Examples are mandatory use and exploitation requirements within the EU or Germany and approval requirements for exploitation of research results outside the EU.4. UNFETTERED PUBLICATION RIGHTS MAY AFFECT THE PATENTABLITY OF THE RESEARCH INVENTIONS AND LOSS OF TRADE SECRETSUniversity partners commonly seek the right to publish or publicly present the results or study data from the research under an SRA to maximize public access to the data. Without a mechanism in place to control the scope and forum of such disclosure, a Sponsor may risk losing the confidentiality and trade secret status of its proprietary information. Furthermore, the publication may be deemed a prior art disclosure, which may severely affect the patentability of the research inventions. A Sponsor often requests that a procedure be in place that requires the university to provide the Sponsor with the content of the publication well in advance, a right to review such content over a specified period of time, and the right to request, and often require, the removal of any of the Sponsor’s confidential information or trade secrets contained within the proposed publication. Sponsors may also seek to impose an “embargo period,” which is a specified period of time during which the university cannot publish the research results. The embargo period would be a sufficient period to allow the Sponsor to evaluate and file patent applications for the resulting inventions.Sponsors commissioning research in the EU should also be aware that in certain EU countries (e.g., Germany), if not contracted away, university scientists may have statutory rights to either publish their research results or to elect not to disclose their research results at all.5. CONSIDER LIMITING SPONSOR’S INDEMNITY OBLIGATIONSOverlooking indemnification provisions, often considered boilerplate, can be a serious mistake for a Sponsor. Failing to pay attention to an indemnity provision in terms of application and scope may result in Sponsor’s indemnity obligations extending to indemnification of all costs and expenses incurred by the university resulting from third-party claims and direct claims. In that case, the Sponsor may have to cover attorney’s fees and litigation expenses for its research partner in direct lawsuits between the research partner and the Sponsor. Additionally, Sponsors shouldn’t overlook the scope of the indemnification (i.e., from the Sponsor’s use or sale of the embodiments of the project research only) and include carve‑outs that exclude damages caused by the university’s gross negligence, intentional misconduct, or the illegal actions of the university’s principal investigator. It is also common to include the Sponsor’s right to control the defense and settlement of the indemnified claims.6. CONSIDER IMPACT THAT A CHANGE OF CONTROL HAS ON THE SRASponsors are often emerging growth companies, venture-backed companies, or companies who are otherwise anticipating some sort of exit in the future. These companies may likely go through different rounds of funding, asset sales, and public offerings during their life cycles. It is important that these significant events not be delayed, impacted, or conditioned by the requirement to obtain consent from a research partner pursuant to an SRA. Sponsors should be mindful to draft assignment clauses in order to permit the Sponsor to assign the SRA freely in important events such as an equity sale, asset sale, merger, or an assignment by operation of law.7. PAY ATTENTION TO THE EFFECTS OF TERMINATIONWhile it is important to pay attention to the scenarios pursuant to which an SRA may be terminated, termination provisions also commonly address the consequences following the termination. Ideally, the SRA should require the automatic reversion of any background IP licenses granted to the research partners. If the research partner needs to use the Sponsor’s background IP for wind-down activities following the termination, the parties should clarify the scope and limited term of the license for those activities. Additionally, consider what obligations will survive the termination of the SRA. For example, as a market standard, Sponsors and research partners often agree to a continued term, of a specified period of time, for the confidentiality obligations to the exchanged confidential information (other than trade secrets, the confidentiality of which commonly continues as long as the information remains a trade secret or as long as permissible under applicable law). Additionally, restrictions on publication of the study data often survive the termination of the SRA.8. CONSIDER NONDISCLOSURE AGREEMENTS BETWEEN THE RESEARCH PARTNER AND ITS THIRD-PARTY ADVISORS AND CONTRACTORSResearch partners often require the ability to disclose the Sponsor’s proprietary information to its third‑party advisors or contractors, often in order for the research partner to support the project pursuant to the statement of work or other scope document that is part of the SRA. Sponsors should take care to expand the scope of information subject to the confidentiality obligations of the SRA to include all of the information disclosed by the Sponsor to the research partner, whether or not the information is marked “confidential,” “proprietary,” or with some other similar marking. Additionally, Sponsors can limit the disclosure by the research partner to any third party to a “need-to-know” basis and only in order for the research partner to fulfill its obligations and requirements pursuant to the SRA. Additionally, SRAs often include a requirement that there be a confidentiality agreement between the research partner and each recipient of the Sponsor’s confidential information that is at least as protective of the Sponsor’s confidential information as the terms of the SRA. Note that absent such an agreement, a third-party consultant or advisor may freely disclose the Sponsor’s confidential information, trade secrets, and patentable subject matters.9. RIGHT TO CONTROL PATENT PROSECUTION AND ENFORCEMENTIt is important to ensure that the SRA provides clarity with respect to whether the Sponsor or the research partner will control patent prosecution and enforcement actions and how the costs and awards resulting from enforcement actions will be allocated. When allocating the rights to control patent prosecution and enforcement, note that it is common that the owner of the applicable intellectual property have the first option to take control over the prosecution process and any associated enforcement. Furthermore, if the parties agree on joint ownership of foreground IP, consider including in the SRA obligations of both parties to cooperate and join in an infringement lawsuit.10. ESTABLISH PROPER IP ASSIGNMENT AGREEMENTS BETWEEN THE RESEARCH PARTNER AND THE IP CONTRIBUTORSA university often involves its faculty members, staff, or contractors in conducting the research under an SRA. If there are no IP assignment agreements between the university and the IP contributors, the contributors may claim rights or ownership interests in the Sponsor’s intellectual property. Consequently, SRAs often contain representations from the research partner that it has properly entered into assignment agreements with individuals and entities involved in the research, which enable the transfer of rights or the license of IP from the research partner to the Sponsor. In some cases, the Sponsor may ask the university to provide forms for IP assignment agreements entered into between the university and its IP contributors as part of the diligence process.In the EU, and particularly in Germany, it is also common practice for Sponsors to enter into an additional agreement with faculty members of the university research partner that are crucial for the research project. This is due to certain research privileges that prohibited the university to assign research scientists to a specific project and to seek waiver of the right to conceal research results (see section 4). Stay up-to-date with the latest <a href="https://www.mofo.com/capabilities/life-sciences-transactions-licensing.html" target="_blank">Life Sciences Transactions + Licensing</a> developments by subscribing to MoFo’s <a href="https://lifesciences.mofo.com/" target="_blank">Life Sciences</a> blog.