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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After having dealt with the issue when software may be considered a medical device according to its intended purpose (in <a target="_blank" href="https://lifesciences.mofo.com/topics/Software-as-Medical-Device-in-Eu--New-Reg-Enter-into-Force--Part-2-of-6.html">part 2</a>) and the implications of the new risk classification regime (in <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">part 3</a>), in this part 4 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 on Software as a Medical Device in Europe</a>, we will now explore key changes to the quality assurance and documentation requirements for stand-alone medical device software (“MDSW”) under the new <a href="https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32017R0745&from=EN" target="_blank">EU Medical Device Regulation 2017/745</a> (“MDR”).<h4>INTRODUCTION: A NEW LIFE CYCLE-FOCUSED APPROACH</h4>While 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”) primarily focusses on the pre-approval stage of a medical device and how the manufacturer can obtain the CE marking, the MDR deploys a product life cycle-focused approach, aiming to establish responsibilities of medical device companies throughout the life cycle of the product. While not all requirements are new, to ensure conformity of the MDSW with the MDR, detailed and partly enhanced requirements concerning quality management, risk management, clinical evaluation, and technical documentation must be complied with post-market for the time the MDSW is in service.<h4>1. QUALITIY MANAGEMENTS SYSTEMS</h4>Article 10(9) of the MDR has extended the scope of the Quality Management Systems (“QMS”) required to be in place for MDSW. Key changes include:<ul><li>Document Control. More so than the MDD, the MDR requires continuous alignment and updating of the documentation with regard to available data, records, and post-market surveillance (see, e.g., Article 83(3) and Annex IX, I 2.2 (c) MDR). This will require the manufacturer to maintain a seamless system of data and information, ensuring that documents are generated and updated in a coordinated and coherent way throughout the organization.</li></ul><ul><li>Post-Market Surveillance: According to Articles 83 and 84 of the MDR, for each device, the manufacturer shall implement, maintain, document, and update a post-market surveillance system that shall be suited to actively and systematically gather, record, and analyze relevant data on the quality, performance, and safety of a device throughout its entire lifetime, and to draw the necessary conclusions and take preventive and corrective actions. This includes continuously updating the risk assessment and technical files of the MDSW. The post-market surveillance system shall be based on a post-market surveillance plan, the requirements for which are set out in Section 1.1 of Annex III.</li></ul><ul><li>Periodic Safety Update Report. Manufacturers of class IIa, class IIb, and class III devices have to prepare a Periodic Safety Update Report (“PSUR”) for each device (or category or group of devices, as applicable), summarizing the results and conclusions based on the post-market surveillance data and any preventive and corrective actions taken (Article 86 of the MDR). For class IIb and class III devices, the PSUR shall be updated at least annually.</li></ul><ul><li>General Safety and Performance Requirements. The “essential requirements” under the MDD have been replaced by the “General Safety and Performance Requirements” (GSPR). GSPR for software are included in the new Section 17.2 of Annex I. According to this provision, software shall be developed and manufactured in accordance with the state of the art, taking into account the principles of development life cycle and risk management, including information security, verification, and validation. According to Article 8 of the MDR, compliance with so-called harmonized standards creates the presumption of conformity with the GSPR of Annex I. While there are over 250 harmonized standards for the MDD, there are currently no relevant harmonized standards for the MDR. Manufacturers will need to adhere to existing relevant standards (e.g., IEC 62304:2006 – Medical device software – Software life-cycle processes) but should pay close attention to any upcoming harmonized standards.</li></ul><ul><li>Supply Chain. Under the MDR, required scrutiny with regard to suppliers and outsourced processes is increased. The documentation requirements pertaining to the supply chain are stipulated in Article 25 of the MDR. While manufacturers already have responsibilities for stand-alone MDSW under the MDD, the MDR sets out specific new requirements for other economic operators like authorized representatives (Article 11 and 12), importers (Article 13), distributors (Article 14), and sterilizers and packaging (Article 22) in this regard. Manufactures have to ensure that everyone in the supply chain of its MDSW who is considered an “economic operator” under the MDR understands the key changes to quality management and has a plan in place for compliance with their specific responsibility under the MDR.</li></ul><ul><li>Document Retention. The period during which manufacturers have to store technical documentation has extended from five to 10 years after the last device has been placed on the market (Annex IX Section 7 MDR). For implants it is, and has been, 15 years.</li></ul><ul><li>Incident Reporting. The deadline for reporting serious incidents involving medical devices made available on the EU market to the competent authorities has been shortened from 30 days (for incidents not amounting to serious public health threats, death, or serious deterioration in health) under the MDD (MEDDEV 2 12-1, Section 5.1.7) to 15 days under the MDR (Article 87(3) MDR).</li></ul>Manufacturers of MDSW find a framework for QMS in <a href="https://www.iso.org/standard/59752.html" target="_blank">ISO 13485</a>, which provides a safe and easy way to prove conformity. While certification under this already-established standard will be the main path to establish QMS compliance under the MDR, manufacturers of MDSW with an existing QMS must ensure that the new and amended requirements under the MDR are covered by their existing QMS. Manufacturers should note that all QMS requirements must be met as of May 26, 2021, even if certain medical devices offered by them fall under a transition period.<h4>2. CLINICAL EVALUATIONS</h4>All manufacturers of medical devices are obligated to conduct a clinical evaluation. The MDR provides for requirements that are more precise as compared to the MDD regime, particularly regarding the post-market obligations. Clinical evaluation means a systematic and planned process to continuously generate, collect, analyze, and assess the clinical data pertaining to a device in order to verify the safety and performance, including clinical benefits, of the device when used as intended by the manufacturer. A sufficient amount and quality of clinical data have to underpin scientific validity, technical, and clinical performance. The Post-Market Clinical Follow-up (“PMCF”) that already existed under the MDD is now specified in more detail in Annex XIV Part B. A newly introduced requirement is the PMCF evaluation report, which shall provide analyzed findings of the PMCF. A template for the PMCF evaluation report can be found <a href="https://ec.europa.eu/docsroom/documents/40906" target="_blank">here</a>. The Medical Device Coordination Group provides guidance on relevant aspects regarding MDSW, focused on international standards (<a href="https://ec.europa.eu/health/sites/health/files/md_sector/docs/md_mdcg_2020_1_guidance_clinic_eva_md_software_en.pdf" target="_blank">MDCG 2020-1</a>). The MDCG 2020-1 identifies three key components that need to be taken into account when compiling clinical evidence for every MDSW:<ul><li>Scientific Validity (Valid Clinical Association). There needs to be a valid scientific association between the output of the MDSW (calculations, recommendations, etc.) based on the input and algorithms selected on the one hand and the targeted physiological state or clinical condition on the other hand. For example, if the MDSW is designed to detect a certain disease by analyzing abnormal measurement values, there needs to be a valid clinical association between the analyzed measurement values and the disease in question. The association must be well founded or clinically accepted. This component seeks to establish that the use of the MDSW is based on sound scientific principles.</li></ul><ul><li>Technical Performance (Analytical Performance). The MDSW must be able to accurately, reliably, and precisely generate the intended output from the input data. Evidence of this can be generated through verification and validation activities.</li></ul><ul><li>Clinical Performance. For those features of the MDSW that claim a specific clinical benefit, the manufacturer must demonstrate that the MDSW can achieve clinically relevant output in accordance with the intended purpose. For the validation of an MDSW’s clinical performance, the MDSW must have been tested (i) for the intended use(s) on the target population(s), (ii) under the use condition(s) and operating and use environment(s), and (iii) with all intended user group(s).</li></ul><h4>3. TECHNICAL DOCUMENTATION</h4>Requirements for the technical documentation of the MDSW are now explicitly addressed in Article 10(4) and Annexes II and III of the MDR. With regard to the technical documentation, the MDR brings about increased requirements, along with more details on how technical documentation has to be carried out and structured. The technical documentation has to be drawn up in a “clear, organized, readily searchable and unambiguous manner.” Annexes II and III of the regulation list elements to be contained, which in the pre-market phase include (i) information on device description and specification, including variants and accessories; (ii) information to be supplied by the manufacturer; (iii) design and manufacturing information; (iv) general safety and performance requirements; (v) risk-benefit analysis and risk management; and (vi) product verification and validation. As outlined above, any MDSW that is available on the market must be covered by a post-market surveillance plan according to Article 84, a post-market surveillance report according to Article 85, and a periodic safety update report according to Article 86 (PSUR) if class IIa or higher. The newly introduced PMCF evaluation report shall form part of the PSUR.<h4>CONCLUDING REMARKS</h4>The new life cycle-oriented approach under the MDR requires manufacturers of stand-alone MDSW to reassess their current quality management and documentation strategy and to set up a comprehensive process that encompasses, among other things, QMS and technical documentation post-market surveillance procedures. As it might take months to have a complying QMS in place, suppliers of MDSW need to be working on this now if they have not already done so.

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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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.

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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

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.

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Software as a Medical Device in Europe – New Regulatory Regime About to Enter into Force – (Part 4 of 6)

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

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After having dealt with the issue when software may be considered a medical device according to its intended purpose (in part 2) and the implications of the new

Software as a Medical Device in Europe – New Regulatory Regime About to Enter into Force – (Part 4 of 6)

The European Union (“EU”) and its Member States are struggling with the pace of their vaccination programs. This is partly due to shortages of vaccine availability. Germany, like the rest of the EU, is scrambling to obtain vaccine doses as the pharmaceutical industry slows down deliveries due to manufacturing issues. Yet, time is of the essence when it comes to vaccine rollouts, particularly amid a surge in cases due in part to the emergence and potential future emergence of variants of SARS-CoV-2, the virus that causes COVID-19.Against this backdrop, it comes as no surprise that certain political voices in Germany are calling for state intervention in the vaccine manufacturing process (see, i.e., the coverage by Central German Broadcasting, in German language). However, the idea that the state could take over production of highly complex vaccines or allow third parties to manufacture their competitors’ proprietary pharmaceuticals faces factual and legal challenges. In this article, we discuss whether German law provides the necessary means for state intervention in vaccine production and what stakeholders should bear in mind.<h4>What would be the basis for state intervention in Germany?</h4>The German legislator amended the German Infection Protection Act (Infektionsschutzgesetz – “GIPA”) at a very early stage of the pandemic, among other things to allow quicker decision‑making processes that will reduce requirements for participation of the German Federal Parliament (Bundestag). It thereby authorized the German Ministry of Health (Bundesministerium für Gesundheit – the “Ministry of Health”) to autonomously[1] take “measures to ensure the supply of medicinal products, including vaccines,” in an epidemic situation of national importance (sec. 5 (2) no. 4 GIPA).The authorizations vested in the Ministry of Health are comprehensive. In the case that the German Federal Parliament declares an “epidemic situation of national importance,” the Ministry of Health can issue statutory decrees, e.g., to:<ul><li>Allow exceptions from provisions of the German Medicines Act (“GMA”) with respect to manufacturing, labeling, approval, clinical testing, use, prescribing and dispensing, import and export, and transfer and liability; </li><li>Order the securing and the use of vaccines; or</li><li>Maintain, convert, open, or close production facilities or individual operating sites of enterprises producing the abovementioned products.</li></ul>The aforementioned list in sec. 5 (2) no. 4 GIPA is exemplary and not exhaustive. Other measures are thinkable, too. In light of the extremely broad competences given to the Ministry of Health, such order could even encompass the manufacturing of vaccines by a new third‑party manufacturer to ensure continuous vaccine supply to the German population.<h4>What are the requirements for such an order?</h4>As the COVID-19 pandemic was already declared an “epidemic situation of national importance” in Germany on March 25, 2020, the only further requirement that would have to be fulfilled is that any of the listed measures would have to be proportionate to reach the purpose of ensuring the supply of the population with medicinal products as part of the maintenance of healthcare. The proportionally test involves three prongs. The question is whether the individual measure is suitable and necessary, as well as appropriate to reach this purpose.[2]The suitability for the intended purpose already faces serious doubts, as it requires that the envisaged measure can at least facilitate such purpose, i.e., accelerate the production of vaccines as part of the maintenance of healthcare. The production of vaccines is an extremely complex process that cannot simply be assigned to any new third party. From a practical point of view, the transfer of vaccine production is highly complex and by no means a fast process. In an interview with the German newspaper Rheinische Post, Dr. Hans-Georg Feldmeier, the chair of the German Pharmaceutical Industry Association (“BPI”), states in this context: “[. . . ] out‑licensing to other manufacturers, regardless of the legal implications, according to our estimations would take at least 12 months or longer for vaccines to become available from this [third-party] manufacturing.” Against this backdrop, it is indeed questionable whether Germany can reach an acceleration in overall production capacity of vaccines by trying to integrate third parties into the process.Even if the answer to this question would be yes, however, the next challenge will be to show the necessity of these measures. This may be difficult as there are likely equally effective options available to the Ministry of Health with fewer limitations of the fundamental rights of the stakeholders involved. First, when looking at the examples of Israel, the United States, and the UK, it is obvious that there are ways to carry out vaccination programs more effectively, short of direct government intervention into vaccine production. Second, it remains possible that simply undertaking higher spending for vaccine purchases now or funding of the establishment of additional production capacities would also be a viable path to resolve the problem. The EU and Germany have applied restrictive policies of vaccine purchases while others were willing to spend significantly more for early shipments (see <a target="_blank" href="https://www.bmj.com/content/372/bmj.n281">here</a>). Third, options to incentivize voluntary cooperation between vaccine developers and candidates for third-party manufacturing as a long-term plan should also be looked at and may be an alternative to unilateral government orders.Regarding the appropriateness of the described measures, it is clear that the vaccine proprietor will suffer extensive interferences with their fundamental rights (i.e., property rights) if they are ordered to enable a new third party to help with the production. For such interferences to be appropriate, the achievement of the pursued purpose of the measure must be highly likely. Yet, it is questionable whether an order by the Ministry of Health could effectively reach the purpose of swiftly ramping up production capacities by involving new third‑party manufacturers. This is because the latter will need to have access to the specific composition and formula of the vaccines. Albeit, this information is part of the dossier that must be filed with the competent authority in the marketing authorization process. This part of the dossier is subject to confidentiality requirements, the so-called data exclusivity. Whether the Ministry of Health could legally base a demand for disclosure of such information simply on sec. 5 (2) no. 4 GIPA may be doubtful. However, even if a general provision like sec. 5 (2) no. 4 GIPA the Ministry of Health could justify such a severe interference with the vaccine proprietors constitutionally protected property rights, the Ministry of Health would face additional factual hurdles. In particular, with regard to the newly developed mRNA-vaccines, specific manufacturing know-how may be required. If such manufacturing know-how was not disclosed as part of the marketing authorization application dossier (e.g., because it has never been put to writing), it is again questionable if sec. 5 (2) no. 4 GIPA will be able to justify a request for disclosure of such confidential information from the vaccine proprietor.<h4>What impact does patent protection have in this respect?</h4>In context of state intervention relating to vaccine manufacturing, patent law exemptions are often praised as salvation. And indeed, as previously <a target="_blank" href="https://www.mofo.com/resources/insights/200414-patent-exceptions-cure-covid-19.html">reported</a>, sec. 5 (5) GIPA[3] authorizes the Ministry of Health to issue administrative orders to use patented technology relating to COVID-19-relevant pharmaceuticals and medical devices. Of course, these instruments will likely be necessary means to circumvent vaccine proprietor’s patent protection relating to the general technology underlying their vaccine (e.g., a type of general mRNA‑related technology). Yet, with respect to the COVID-19 vaccine’s specific features, sec. 5 (5) GIPA orders may not be necessary, at least, if the respective patents are still in the application stage. This is because patent applications do not exclude third parties from using their relevant discoveries and until publication do not even trigger compensation claims.<h4>Will the affected party be compensated?</h4>The Ministry of Health is required to provide for a compensation to be paid to the affected party for any measure that results in expropriation or expropriation-like interference with the affected party’s rights. Such compensation is to be obtained directly from the government and not from third parties authorized by the Ministry of Health or its subordinates to produce or sell the vaccine. The Ministry of Health must lay down the type and scope of such compensation in the underlying statutory decree. Above all, however, the compensation will need to be appropriate. It will be subject to discussion what “appropriate” in this context means. As a statutory decree ordering the manufacturing of a vaccine proprietor’s product by a third party (even if not or not yet protected by patent right) is very similar to the order of a compulsory license to a pharmaceutical patent, it seems worth thinking about adapting the established case law of the German Federal Patent Court (Bundespatentgericht) on drawing upon the concept of an average license fee.  <h4>Who will be liable for damages caused by the vaccine?</h4>If third-party manufacturers operating under an order of a state authority cause harm to others, the question of liability arises. So far, no case law directly relevant to the constellation described herein exists, but it is likely that the competent German Civil Courts will assess damage claims based on the assumption that these manufacturers are so-called “administrative assistants.” In this scenario, if manufacturers cause damages following the Ministry of Health’s order, they cannot be held liable personally; instead, claims must be brought directly against the Ministry of Health (sec. 823 (1) of the German Civil Code and Article 34 of the German Basic Law).<h4>How can an order based on a sec. 5 (4)no. 4 GIPA statutory decree be challenged?</h4>Challenges against an order that is based on the Ministry of Health’s statutory decree issued in accordance with sec. 5 (2) no. 4 GIPA must be brought before the German Administrative Courts. In order to reach a suspending effect, the affected party will need to file for a specific order for interim relief as sec. 5 (4) sentence 5 GIPA provides for the immediate enforceability of any measure ordered by the Ministry of Health. Challenges of the inadequacy of compensation must be brought before the German Civil Courts.<h4>Outlook</h4>It seems as though sec. 5 (2) no. 4 GIPA can pave the way for the Ministry of Health to procure production of COVID-19 vaccines by new third-party manufacturers. However, at a closer look, the complexity and duration of the transfer of production as well as the available alternative means to accelerate the production and availability of vaccines cast serious doubts as to the likelihood and legality of such measures. Yet, as it has always been the case with state intervention, the mere existence of the possibility of a sovereign to intervene can be a persuasive means to leverage market players into increasing their capacities for delivery. If the pandemic has shown one thing so far, it is that cooperation is a key factor in successfully combating the virus and that the stakeholders in the pharma industry are principally willing to work together to deliver on their promises. Thus, it can be expected that an incentive-based strategy would likely lead to increased level of cooperation among key players and subsequently to a higher availability of vaccines while simultaneously protecting the rights of the stakeholders. Either way, now may be a good time for pharmaceutical manufacturers to hold prospective vaccine production capacities out and to brace themselves for potential negotiations and engagement in the production of vaccines, either based on a state order or on licensing deals with vaccine proprietor’s or current manufacturers of COVID-19 vaccines.    [1] Due to the impact on commerce, these statutory decrees are issued in consultation with the Federal Ministry of Health for Economic Affairs and Energy (Bundesministerium für Wirtschaft und Energie).[2] It must be noted that sec. 5 (2) no. 4 GIPA has already been used by the Ministry of Health to enact a number of administrative decrees during the pandemic, which, e.g., allow for facilitated procurement of medicinal products or order hospital pharmacies to stockpile such products for intensive medical care.[3] In conjunction with Section 13 of the German Patent Act (Patentgesetz).

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COVID-19: State Intervention in Times of Vaccine Shortages

Using Waivers to Curb COVID-19 Legal Exposure

The European Union (“EU”) and its Member States are struggling with the pace of their vaccination programs. This is partly due to shortages of vaccine availabil

COVID-19: State Intervention in Times of Vaccine Shortages

Session 11 of the GSAS Harvard Biotech Club and Morrison & Foerster course on <a href="https://www.mofo.com/resources/events/201111-legal-topics-scientists.html" target="_blank">Legal Topics for Scientists, Entrepreneurs, and Start Ups</a> was led by <a href="https://www.mofo.com/capabilities/life-sciences-transactions-licensing.html" target="_blank">Life Sciences Transactions + Licensing</a> partner <a target="_blank" href="http://www.mofo.com/people/wolfgang-schonig.html">Wolfgang Schoenig</a> focusing on key EU Intellectual Property. Wolfgang discussed Intellectual Property Rights, GMOs, and Employee inventors’ rights in the EU sharing that "it was fun to highlight some of the starkest differences between the U.S. and EU when it comes to patentable subject matter, policies around GMO, and inventor remuneration to such a talented group of researchers and entrepreneurs."<a href="https://www.mofo.com/capabilities/patent-litigation.html" target="_blank">IP Litigation</a> partner <a href="https://www.mofo.com/people/mark-whitaker.html" target="_blank">Mark Whitaker</a> followed in session 12, providing a trade secrets overview and best practices including strategies for reviewing specific trade secrets and how to protect trade secrets overseas involving the ITC. Mark commented that "a thorough knowledge of federal, state, and international trade secrets laws, directives, and best practices is critical for inventors, entrepreneurs, and companies to adequately protect their intellectual property regardless of where they sit in the development life cycle. I hope that our session raised the participants’ awareness of these indispensable tools."This Wednesday, we’ll turn to Plant Intellectual Property Protection with <a target="_blank" href="https://www.mofo.com/people/cory-ellison.html">Cory Ellison</a>.

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Mark Whitaker is co-chair of the firm’s Intellectual Property Litigation Practice and has more than 30 years of experience crafting legal strategies in high-stakes patent and trade secret litigation.

Mark Whitaker

Mark’s clients benefit from his more than 29 years of experience as a trial lawyer, crafting litigation strategies in high-stakes patent and trade secret litigation. Mark sees the whole board for each of his clients, and works closely with them to define a successful litigation outcome, and determine the best path to achieve that goal.

Mark L. Whitaker

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Key EU Intellectual Property and Trade Secrets

GSAS Harvard Biotech Club and Morrison & Foerster’s Patent Course Off to a Roaring Start!

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Session 11 of the GSAS Harvard Biotech Club and Morrison & Foerster course on Legal Topics for Scientists, Entrepreneurs, and Start Ups was led by Life Sciences

Key EU Intellectual Property and Trade Secrets

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.

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

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)

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.

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)

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.