International News: Spotlight on Innovation - McDermott Will & Emery

Overview


Innovation fuels business growth and ushers in success, yet it brings its own set of challenges. In our latest issue, we explore innovative products and processes including:

  • The EU’s new Unified Patent Court simplifying patent protection with a single application process, a significant leap from the previous system’s complexity.
  • Custom new financial instruments, like junior capital and revenue-based financing, catering to the unique needs of startups and expanding businesses.
  • The recent EU Artificial Intelligence Act introducing a stringent regulatory framework for AI, with substantial implications for innovation in the health and life sciences sectors.
  • Advisors in the legal field harnessing new technology to provide bespoke technological solutions that yield considerable savings in time and money.

Articles

Unlocking Potential: Alternative Funding Sources for Growing Companies


Aymen Mahmoud | Sophie Rezki

The now-standard model of cashflow lending is often inadequate for business bringing innovative products and services to market. It relies on historical earnings, and multiples driven by those earnings, limiting fast-growing early-stage businesses. Alternative sources have evolved to provide key support for game-changing businesses on their path to profitability.

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Leveraging Global Clinical Trial Data: Navigating Domestic Regulations


James R. Ravitz | David Quinn Gacioch | Sharon Lamb | Marissa Hill Daley | Bella North

The US Food and Drug Administration (FDA), the European Medicines Agency, and the UK Medicines and Healthcare products Regulatory Agency all have similar data standards and expect foreign data to meet similar standards of quality, reliability, and integrity as data generated domestically. But variations in trial design, patient demographics, and regulatory requirements across countries can complicate approval processes.

In most jurisdictions, sponsors must demonstrate that the trial data is applicable to the relevant population and complies with the International Council for Harmonisation (ICH) Guidelines for Good Clinical Practice standards. In the United States, pre-submission meetings with the FDA can help clarify expectations and address any concerns regarding the foreign data. Sponsors, CROs, and other clinical trial service providers (collectively “conducting parties”) should meticulously document the conduct of global trials, including protocols, informed consent forms, and adverse event reports.

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Protecting Employees’ Tax Position After a Spin-Off


Rob Marshall

The ability to obtain tax-free treatment in the United States for both the company and shareholders in a spin-off is often attractive. However, the transaction is not always tax-free for shareholders located outside the US. When local country criteria are not met, the distribution of spin-co shares is taxable for shareholders.

Significantly, employees holding equity award and company shares can be negatively affected by a spin-off, which can have a significant impact on morale at a very sensitive time in a spin-co’s evolution.

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The Impact of The New EU AI Act on The Medtech and Life Sciences Sector


Sharon Lamb | Dr. Deniz Tschammler | Lorraine Maisnier-Boché

As technology continues to advance almost every aspect of healthcare, so the use of AI has become an increasing focus for developers and the regulators who are racing to keep pace with rapid advancements in technology.

Software (including AI) with a medical purpose is already regulated in Europe and the United Kingdom as a medical device and requires comprehensive assessment before it can be placed on the market under EU Medical Device Regulations 2017 (MDR) and the EU In Vitro Diagnostic Medical Devices Regulation (IVDR).

Despite the existing comprehensive regulatory requirements, there has been concern that the current framework does not fully address the ethical and transparency risks associated with AI. The European parliament is leading the way with the Act, which applies to all sectors but will have significant implications in the life sciences sector, particularly for AI medical device manufacturers. Click here for our general overview of the Act.

Like the General Data Protection Regulation, the Act has global reach; it will apply to providers wherever they are in the world if they place, or put into service, an AI system in the European Union. The Act is also only one piece in the puzzle of new AI-related legislation and will need to be read in the context of changes proposed on product liability and AI liability.

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The Unified Patent Court: A Revolution in Patent Protection


Hon.-Prof. Dr. Henrik Holzapfel | Charles (Chuck) Larsen | Dr. Laura Katharina Woll, LL.M. | Charles de Raignac

The Unified Patent Court (UPC) became operational on 1 June 2023; it has jurisdiction over patent infringement and validity matters in the 17 Member States of the European Union where the Agreement on a Unified Patent Court (UPCA) is in force. Its launch marked a pivotal moment for the protection of intellectual property in Europe and globally.

Companies with business activities in Europe were previously forced to register a “bundle” of national patents across the 27 EU Member States plus countries such as the United Kingdom, Switzerland, or Turkey, which needed enforcement or invalidation campaigns on a country-by-country basis. Now, by submitting a single request to the European Patent Office, the Unitary Patent enables innovators to obtain patent protection in (currently) 17 EU Member States at once, with Ireland, Poland, and other countries possibly joining the UPC system soon. The UPC deals with the infringement and validity of Unitary Patents in addition to conventional European “bundle” patents, thereby creating a fast and cost-effective single enforcement and invalidation mechanism for patents in the Member States that have ratified the UPCA.

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