about some of my thoughts as to the process of developing your ideas and some of the things I've learned about licensing your patents. These are my disclosures and they're available on the ANA website. So surgeons have traditionally had a leading role in innovation, which really makes sense. We understand the issues and the needs in the operating room. We know what works and doesn't work in the OR. So our knowledge is essential to this process. And our association, the Arthroscopy Association, was founded on innovation, the innovation of the arthroscope, of course. So we have the insight that's critical. And when we think about innovation, many people think about implants, but really innovation can take place in any of the areas that we touch in our practices, from instrumentation on down. Obviously, a very hot topic right now are the area of biologics and software as well. And you'll hear a talk today about starting a software company from one of our speakers. I can never give a talk about innovation without giving a nod to my mentor, Dick Caspary. Dick was a great thinker, an incredible innovator, and he taught the lesson of thinking of not what is, but what can be. He encouraged all of his students to think about how you could do things better, not how well you just did something, and to think outside the box, to think what we need and how can we make things better for ourselves. So these are the key steps that I see in the idea development process. The first step, I think, is being perceptive. And one of my other mentors, Yogi Berra, said that you can observe a lot by just watching. And I think that that's critical, to kind of keep an eye on what we're doing and think about how can we make things better. There's always that moment of inspiration, where you need to be able to see what everyone else has seen, but think what no one else has thought. But it doesn't end there. It takes persistence and patience and time, and you'll hear about some of the roadblocks and barriers that many of us have experienced in this process and share that with you. There are lots of types of ideas. The game changer is actually a rare idea, what Steve Burkhardt calls the paradigm shift idea, the first of its kind, something that really changes the field. Those are very rare. But all these other ideas, all these other types of ideas are important. And we often advance in a stepwise fashion, so incremental improvement, things that will save time, cost reduction, improve safety, improve outcomes. All these are critical steps. So as you're thinking of new ways to advance our field, it can be a variety of different ideas. And in addition, the totally original idea is very rare. I have a couple of pictures of some of the totally original ideas, I think, at least in my recent memory. But many ideas are really an adaptation of older ideas, or adding a new idea onto an old idea. So one of my first commercialized products was actually an addition of new ideas onto an old idea. The suture anchors had just come out. This is a G2 anchor on the left. And I came up with the idea to create a knotless suture anchor, the first one of its kind, where we replaced the strands of suture with a loop of suture and put a notch on the tip of the anchor, and we had the first knotless suture anchor. And then I continued to develop that when absorbable materials came out. We had a push-in anchor that we modified to create the first bioabsorbable anchor. And when we felt there was a need for multiple sutures on an anchor, we just modified the construct and placed multiple sutures onto that same construct. So adaptations of an old idea onto a new idea, or a new idea onto an old idea, are methods that we can use to innovate. But it doesn't come without failure. Prior to the development of that first commercialized product was one of my failures. This was my first patent where we had the loop of suture, but we didn't think of having a notch at the tip of the anchor. And it took us almost two years and a lot of persistence and testing before we came up with the idea of just adding a simple notch in the tip of the anchor. We almost canceled the project several times, but we came up with another idea. My buddy Stu wrote another patent, and we had one that actually worked. So I learned the lesson of persistence. As Thomas Edison said, I haven't failed, I've just found 10,000 ways that won't work. So the emphasis of this ICL is to talk about how can you get your idea from the napkin sketch to commercialization. And you'll hear several speakers today about the various paths that they've taken. So Ralph Waldo Emerson makes it sound very simple, that if you build a better mousetrap, the world will beat a path to your door. But in reality, that's really not true. If you look at the mousetraps that have been patented through the patent office, more than 4,000 patents have been issued. But only about two dozen have made their inventors any money. So it takes a bit more than just cool technology. So the key to success is also to understand the market need, have a clear execution path, and development team. And I think you'll hear a lot about that from the other speakers. So the development pathway is to understand the clinical need, you need to understand the market size, the potential market penetration, development costs, product costs, and the profitability. Now, whether you do this independently as you start a company that you'll hear from some of our other speakers, or if you license the idea, many of these issues are taken up by the company that you license to. But all of these things will be assessed. It's not just the technology that's important. Of course, it's also all of these other issues. Understand that there are barriers to entry. What we have on a napkin sketch sometimes doesn't work out in the engineering lab. There are going to be engineering challenges. You need to be sure to protect your intellectual property. The next talk that you'll hear is about patents and patent protection. So many times we'll have ideas that we think are unique, and we run into challenges with intellectual property or needing to license other patents. Manufacturability is a very important issue. Sometimes we can make things on a small scale that actually work, but the companies are going to have challenges in manufacturing and mass producing. And then, of course, regulatory and reimbursement, and you'll hear a lot about this in some of the other talks. So collaboration is key. Regardless of the path you take to commercialization, you're going to need to be involved with patent attorneys, engineers, industry partners, and then understanding the need for the business and financial partners. So the team is critical. As they say, bet on the chalky, not on the horse. So what are the options for commercialization? You can start a company, and I'll leave that to three of the other speakers tonight. This morning we'll be talking about their experience in starting companies. You can sell your patent, or you can license your patent. So selling and licensing the patent is a shorter time to market because you're obviously utilizing the corporate R&D. There are less financial risks, lower startup costs. Many times the patent costs can be taken on by the company that you license to, and there's less of a time commitment typically than it will take to start your own company. But understand that if you sell your patent, it's a permanent sale. We relinquish all rights to that patent. I'm getting some feedback here. You really need to get the... There we go. Okay. So if you sell your... Sorry about that. I didn't think my voice was that booming. If you sell your patent, you relinquish all rights to that patent. It's usually for an upfront payment, and the buyer will then pay all the patent costs, and often you can continue consulting. But you relinquish all rights and control of that patent. Licensing your patent has traditionally been a good method for orthopedic surgeons in that you maintain ownership of the patent. You typically will get royalties based on sales, but you do relinquish marketing rights because typically the companies will be asking for an exclusive licensing agreement, and they will want to control the direction that that patent goes. So what are the challenges in licensing? First is to find a corporate partner. We've all been to the exhibit hall here, and you can see there are numerous companies, large and small, and there are challenges that come with finding the right partner that's interested in your idea that has a gap in their portfolio that you can fill with your ideas. The other challenges are being sure to get patent protection, and you'll hear the next talk about patenting your ideas and the importance of that, to be sure that you can protect any innovation that you've developed. It's sometimes challenging to communicate the benefits of your idea. You're dealing with companies, and they have an understanding, but the depth of understanding is often not the same as the surgeon's understanding, and sometimes the surgeons that are advising those companies may have different ideas or conflicting interests that can cause challenges to you being able to license an idea to a company. There are restrictions on corporate budget, and I think that's become more of an issue in recent years, and in recent years, particularly with the larger companies, there's a trend towards merger and acquisition rather than collaborating with surgeons and licensing ideas. They often will want to develop their ideas in-house or acquire companies rather than taking a chance on development of your ideas. There are several types of licenses. Most companies will look for an exclusive license where once you've licensed it to them, that they and only they can develop the idea and commercialize the patent. When you do that, you have to be sure that you've negotiated good terms. You often can negotiate an upfront license fee, and a critical component, I think, is to be sure that your license is time-limited because you don't want to license an idea to a company that then puts it in a back drawer, and you don't have the opportunity to develop it elsewhere if that company isn't really going to develop in earnest. You can often put in your licensing agreement a development period where they have benchmarks that must be met. You can have that time lapse on that license so the rights revert back to you if you've got a solid patent, and to be sure that that ownership will revert back to you as the inventor so that you can go elsewhere and develop it in other ways. Your license agreement will include royalty rates, and that'll vary depending on the type of device or product that you're working on. The time frame is critical. Most will be a fixed number of years or for the length of the patent. Sometimes you can try to negotiate for the length of the product, which often is longer than the length of the patent, so that's something that should be kept in mind. You can sometimes negotiate minimal annual royalties to be sure that the company is marketing the way that they should be. You can have performance obligations, encourage the companies to take on the patent fees, which can become significant, particularly if you start to get international protection. In smaller companies, you can sometimes negotiate in addition or in lieu of royalties some equity in those smaller companies. So this is just an overview, and we'll hear more details about some of the other aspects, other commercialization options. It is a scenic and windy road, but it can be enjoyable, can be profitable, and can keep us thinking. So as Thomas Edison said, opportunity is missed by most people because it's dressed up in overalls and looks like work, but I encourage you to take on the journey. So thank you.

medical field

idea development

licensing patents

surgeons

innovation