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Steve Davis Talks About Tapecon’s Medical Device Business

by Alan Rosenhoch, Buffalo Niagara Enterprise

Steve Davis, Vice President of Tapecon

Steve Davis, Vice President of Tapecon

Headquartered here in Buffalo, NY, and in business since 1919, Tapecon is a highly technical and specialized printing and converting company. Through the years, Tapecon has positioned itself as an industry leader in niche markets with unique value propositions and technologies. It has achieved this through a mix of in-house services – driven by experienced and innovative employees -matched with manufacturing platforms that deliver superior products. Five generations of family ownership have proven to be nimble, open to change and invested in innovation.

Tapecon currently focuses on Medical/Medical Device, Industrial OEM, Electronics and Military/Aerospace markets. Long-term vendor and customer partnerships are paramount. Products include:  single-use medical diagnostics, printed electronics, custom converted functional parts & shields, product identification, and other printed markings. Tapecon’s services platform includes: in-house industrial & electronics engineering, commercialization services, validation services, graphic design, prototypes, and supply chain maximization. Their mix of competencies drive value for their customers.

Tapecon is ISO 9001:2008 & ISO 13485:2003 Registered, and cGMP Compliant.

Steve is a passionate advocate for operational continuous improvement, and has worked to create and sustain a progressive culture of change and innovation within Tapecon. He graduated from Clarkson University in 2001 with a Bachelors in Engineering and Management & MBA in International Business at St. Bonaventure University. In 2005 Steve returned to Buffalo to join Tapecon Inc. as a Manufacturing Engineer.  He was promoted to Director of Manufacturing in 2007 and again to his current role as Vice President in 2009.

I had the opportunity to ask Mr. Davis a few questions:

Q. Tapecon offers the ability to work with a client’s concepts. Who are some of your clients and what have been your most unique projects?

A. We are an extension of our customer’s design and manufacturing process.  We help our customers design, grow, and improve their products.  3M Medical and GE Healthcare are a couple of key clients. We have had a strong partnership with 3M for over 40 years. tapecon featured products

As part of our expansion project we worked with 3M on various improvements and process validation to improve process capability across their product lines.

Q. How has a Buffalo Niagara headquarters, the local manufacturing industry, and our workforce affected Tapecon’s success?

A. Our location offers value from a sales and logistics standpoint by allowing quick access to different regions by air or ground.  Our airport is convenient in bringing customers in or getting our sales staff out with competitive rates. The open communication among manufacturers in our region has promoted shared education of best practices and allows us to compete more effectively as a region.

Q. With Tapecon customers in numerous industry sectors; how much of your business is concentrated in the medical/medical device sector?

A. About 35% and growing. 

Q. Was targeting the life science industry always part of your business plan?  If not, how did you identify it as an opportunity for growth?

A. Not always.  In 2011 we took a strong look at the industries we were serving and put a strategy in place to target more in the medical and life science industries.  We have produced single use medical diagnostics for many years but saw the opportunity to grow within the industry using our full capability.

Q. Tapecon’s medical products fall under the advanced manufacturing umbrella as well. Advanced manufacturing has a long rich history in Buffalo Niagara, as does Tapecon. The industry has evolved with time and Tapecon has been able to stand the test. What would you say are the key factors that have sparked Tapecon’s growth over the years and ability to shift directive?

A. I think that over the years we have learned to focus on strong partnerships and collaborations with vendors and customers.  As our customers’ needs change we adapt and change with them to continue to add value.  Open collaboration and a team approach are core values that drive this.  Change is a constant at Tapecon and all of our employees expect it and participate in the change.

Q. What collaboration work, if any, do you (Tapecon) participate in with other local institutions or companies?

A. We are an active member of the Buffalo Niagara Partnership and participate with the Manufacturing Council which hosts educational events and local factory tours. We also help support the Dream It Do It campaign lead by the BNP.  We also support the Niagara Frontier Industry Education Council by hosting teacher tours and participating in career fairs aimed at raising awareness of careers in advanced manufacturing.

Q. The life sciences and advanced manufacturing industries in Buffalo Niagara today are drawing a young professional, smart and creative workforce. What do you think Buffalo Niagara has to offer this distinct workforce both personally and professionally?

A. There are a lot of opportunities for professional development through programming and networking from a variety of organizations.  Educationally we have it all – from certification programs to degree programs.  There are so many options to take advantage of, it’s just a matter of keeping up with it.  From a personal perspective when I need to balance my life it isn’t hard given all of the different festivals, music, sports, cultural diversity and natural resources in the region.OLYMPUS DIGITAL CAMERA

Q. What Life Sciences organizations, events, campaigns, or community outreach do you personally or professionally participate in, at what level, and why – if any?

A. I graduated from the UB Center for Entrepreneurial Leadership  (CEL) Core Program in 2011 and am now an active board member in the alumni association (CELAA).  I enjoy helping to engage all of the entrepreneur spirit in the area.  The High-Tech CEL program is aimed at early stage and Life Science companies and is a great resource.  The collaboration is what makes the innovation come alive.   I also enjoy attending the Life Sciences Commercialization Lecture Series and recently participated in the Innovation Center open house, which was excellent.

Q. What is your outlook for the growth of the Life Sciences industry, in Buffalo Niagara over the next 5-10 years?

A. That depends a lot on how the commercialization process occurs for the research capacity that is being developed here, as well as how you define successful growth.  Funded research won’t bear economic fruit without a market or without good product and process development.  Tapecon is just one company locally that plays a role in the “extension” of a concept through to a scalable manufacturing process that meets quality standards.  The commercialization process, intellectual property, and ultimately the sustained jobs need to stay and grow in Buffalo Niagara to consider the investments successful for our region. I’m optimistic that we can pull it all together.

Interested in learning more about Tapecon? Register to attend a tour on May 9 hosted by the Buffalo Niagara Partnership.

Click to learn more about Advanced Manufacturing and Life Sciences in the Buffalo Niagara region.

Interview with Brandon Hoffman, VP, Graphic Controls

By Alan Rosenhoch, BNE Business Development Manager

Graphic Controls

Graphic Controls

Headquartered right here in Buffalo, NY, Graphic Controls is a global corporation with manufacturing operations and sales offices in the USA, Canada, Belgium, Germany, France and the UK.  With its Medical Division, Graphic Controls is the leading manufacturer of medical recording chart paper, offering the widest assortment of chart papers for all hospital departments – from cardiology to the blood bank.  They have recently introduced a new line of patient monitoring supplies and an Emergency Medicine product line.  Graphic Controls recently acquired an operation in Germany that specializes in standard and custom filtration products in the laboratory/diagnostic and pharmaceutical space.  They continue to expand that business in Europe and are introducing those products into North America.

Mr. Hoffman has been with Graphic Controls since 2001, overseeing various aspects of the business and as vice president for the last three years. He holds a BS Engineering degree and a MBA from the State University of New York at Buffalo. He also attended the Darden graduate School of Business Administration. Mr. Hoffman actively participates in the regional Medtech organization and in various events at the Buffalo Niagara Medical Campus. His personal time is well spent with his wife and two young daughters.

I had the opportunity to ask Mr. Hoffman a few questions:

Q. You have just announced a major expansion of your medical manufacturing division at your Buffalo headquarters location. Tell me a bit about what this expansion entails.

A. We have added staff, constructed a clean room within our Buffalo manufacturing facility and invested in additional production equipment to dramatically increase capacity for our filter business, which specializes in laboratory and pharmaceutical applications.  Customer demand had caused us to run well over 100% capacity in our German manufacturing facility last year.  Our Buffalo cleanroom provides a remedy for this capacity issue as well as enabling better service for the North American market.

Q. Graphic Controls has locations all around the world; what made Buffalo the ideal place for this significant investment?

A. Graphic Controls has a long tradition in the Buffalo area dating back the early 1900’s when it was located in the Larkin building.   We have made a concerted effort to establish Buffalo as our world-wide headquarters and flagship manufacturing plant because of this long time presence.  Our employees continue to provide us with a competitive advantage and we have a very good mix of new and experienced staff.  Average years of service for our employees is 16 years, and most notably in recent years we have been recognizing employees who have worked here for over 40 years.

Q. When did Graphic Controls enter the medical arena? How has your participation in this industry changed over the years?

A. We are what I like to call a new-old medical company.  Prior to the acquisition of Graphic Controls by Tyco Healthcare in 1998, we had a significant presence in medical devices specializing in disposables/consumables.  The Tyco integration took the medical business out of Buffalo and left behind our industrial division.  A few years after our buy back from Tyco in 2004 led by our CEO, Sam Heleba, we began to reinvent ourselves as a medical company.  The oldest part of the medical business is patient monitoring charts that we are now printing again in our Buffalo facility.  Aside from medical charts we continue to look to re-invent our business in the area of life sciences consumables and disposables.  We have recently launched a line of Emergency Medicine devices and supplies geared towards ambulance services and trauma centers, and of course our filtration line.  We are expanding the Buffalo manufacturing facility to accommodate its introduction into the North American market.

Q. Overall, what do you think are Buffalo Niagara’s greatest strengths and assets as they relate to the Life Sciences/Medical Device industry?

A. In recent years with the development of the downtown medical corridor and the renewed interest in entrepreneurship in Life Sciences the region has become much more exciting.  Our close proximity to the medical campus is a great asset and we look forward to access to new opportunities developing from that area.

Q. The medical sector of your company has experienced some major growth over the past three years; to what factors do you attribute this success?

A. We have grown significantly since our return to the medical market in 2008 and we continually strive to foster an entrepreneurial environment.  As most know, it isn’t easy to grow a business, but our employees and management team continue to learn, adapt and change in our pursuit of growth.  We have also been lucky to be associated with great investors who have shared our vision to grow.   While we have made our fair share of missteps, as every company does, in all we have been able to measure the percent growth of our medical division every year well into the double digits.

Q. Do you export to the Canadian market? If so, how does Buffalo’s location on the US/Canada border affect this international business?

A. Yes, we export to the Canadian market and are also incorporated in Canada.  We seamlessly ship across the border everyday accessing most points in Ontario within one to two business days.  Our proximity to the Canadian border has allowed us to service all of Canada at a very high level and it continues to be one of our best markets.

Q. What is your outlook for the growth of the Life Sciences industry, in Buffalo Niagara over the next 5-10 years?

A. In a period of what we all have come to know as economic uncertainty and add the dynamic nature of healthcare reform in the US we are measured but optimistic.  We have that we can grow our medical business rapidly and we look forward to continued expansion.

“My life works in Buffalo Niagara because as a native Western New Yorker I enjoy creating new business opportunities in my home town.” – Brandon Hoffman

To learn more about the medical device industry in Buffalo Niagara, visit our minisite or sign up to receive our monthly e-newsletter.

Private Sector Investment on the Buffalo Niagara Medical Campus

By Alan Rosenhoch, Business Development Manager

Conventus redering by Kideney Architects

Conventus redering by Kideney Architects

Conventus (Latin for “coming together”) is a brand new seven-story medical building being developed by Ciminelli Real Estate Corporation at the northern gateway of the Buffalo Niagara Medical Campus (BNMC). Designed to be a center for collaborative medicine, it will be anchored by Kaleida Health and UBMD. Ciminelli expects to open the building in the spring of 2015.

I had the opportunity to ask the President and CEO of Ciminelli Real Estate Corporation, Paul F. Ciminelli, a few questions:

Q: You recently began site preparation work on the Conventus project; what does this project represent for the BNMC and the region’s life sciences industry?

A: There are two aspects of this project that represent major milestones in the development of the Medical Campus. First of all, Conventus is the first significant private investment on the campus, which is indicative of our strong commitment to the BNMC and our belief in its vision. Private dollars send a strong message to our community and to other markets that the Campus is a viable initiative and worth the investment.

Secondly, Conventus’ adjacency and physical connections to the new Children’s Hospital and the new UB School of Medicine, is groundbreaking in its collaborative approach to the needs of the patients, physicians, researchers and students. Coupled with its location at the northern gateway to the Campus, Conventus facilitates a seamless connection among all of the major medical-related facilities at the northern end.

Q: How much space will be taken by the two anchor tenants, Kaleida and UBMD, and how much space will remain for future tenants?

A: Kaleida will occupy approximately 85,000 sq. ft. on the 2nd and 3rd floors, which are the floors where connections will be made to Children’s and the Medical School, as well space on the ground floor for their Blood Draw and Pharmacy. UBMD will occupy 60,000 sq. ft. on the 4th floor and a portion of the 5th floor. A major regional bank will occupy a portion of the ground floor as well. Based on the inquiries we have had to date, we expect to have tremendous interest in the remaining square footage, and that full occupancy will be achieved quickly.

Q: What types of tenants are you seeking for the balance of space? For what type of company would you consider Conventus to be ideal space?

A: As with all of our projects, we will identify potential tenants that are synchronous with the existing tenant base and with the overall vision of the Campus. We refer to Conventus as a “center for collaborative medicine” because of the multiple disciplines that will be housed in and facilitated by our physical connections to the Hospital and UB’s School of Medicine. We look forward to accommodating clinical, educational, practical and research components at Conventus, as well as other healthcare-related tenants.

Q: You are targeting LEED Gold Certification for this project; why is sustainable design, building elements and operation so important to Ciminelli?

A: In 2008, Ciminelli made a commitment to pursue LEED certification with all of our projects going forward because of our commitment to minimizing our environmental footprint and to developing high-performing buildings. From an ownership standpoint, it has a definite positive impact on the long-term operating efficiencies of the building. From a tenant’s perspective, LEED certification translates to a healthier, more efficiently run environment in which to work. It’s a win-win.

Q: Conventus is not planned to be a one-shot project for Ciminelli on the BNMC; what else do you have on the drawing board for the near and long-term future?

A: The core of our business is being able to see the big picture; the ability to put pieces of a puzzle together and create synergies within every development project we undertake. This is what our company does best, and why we are committed to supporting the BNMC’s vision. We have purchased additional property at 33 High Street directly across from Conventus and Children’s Hospital and adjacent to UB’s site for the Medical School in anticipation of continued growth. As things continue to evolve on the Campus and we see possibilities for future needs there, we will pursue strategic developments to support those needs.

Q: Plans call for Conventus to connect to the Allen Street NFTA Metro Rail station; how does this fit into your overall plan to connect different parts of the region?

A: Ciminelli is a strong proponent of transit-oriented development, as evidenced by our two current projects under construction: Bethune Lofts (Main Street and Hertel Avenue), and Conventus. Developing along our transit lines facilitates connectivity among vibrant areas of Buffalo Niagara such as the UB South Campus University District, the Hertel Avenue district, the Medical Campus and Canalside. As it stands today, the NFTA Metro Rail station will be connected to the new UB School of Medicine at Allen Street. It should be noted that, while there is a connection from that building to Conventus, its use will be somewhat restricted.

Q: Conventus represents the first significant for-profit private sector-led development on the BNMC; what makes your company so bullish on the future of the campus?

A: Ciminelli has owned property on the Campus for 20 years, so we’ve been a part of it since its early stages. We saw things begin to evolve as the plan was rolled out. We’ve seen similar models succeed in cities of comparable size and demographics to Buffalo, so we knew it could work here, especially with it being so close to our Central Business District and being on a main transit line. All of the components were there; all it needed to take it to the next level was significant private sector investment. We were the first, but we know we won’t be the only ones. Additional private sector support will happen on and around the Campus.

“My life works in Buffalo Niagara because of the tremendous quality of life we have in a relatively low-cost environment, the great educational institutions that supply a talented workforce, and because of the friendliness of its people. I love it here!”

- Paul F. Ciminelli

Roswell Park Opens New $23.6M Center for Personalized Medicine

Center for Personalized Medicine

Center for Personalized Medicine

By Alan Rosenhoch, Business Development Manager

Roswell Park Cancer Institute (RPCI) recently made headlines by announcing the opening of its brand new Center for Personalized Medicine (CPM).  The CPM is a new facility that uses state-of-the-art “next-generation” genetic sequencing tools to decipher people’s individual genetic codes.  The facility and its research will support the development of targeted medical therapies that are custom-tailored to a person’s unique genetic characteristics.

The Center is the result of an impressive public-private-partnership.  Kick-started by a $5.1 million grant from New York State, awarded through Governor Andrew Cuomo’s WNY Regional Economic Development Council (REDC), Roswell Park has invested an additional $16 million in equipment and infrastructure.  Further adding to the collaborative nature of this Center, Buffalo-based Computer Task Group (CTG) has pledged $2.5 million to provide electronic medical records expertise and bioinformatics/clinical analytics support services.  CTG, a board-level investor in Buffalo Niagara Enterprise, is a leading developer of bioinformatics computing and software.

This announcement is especially exciting for me personally (pun only slightly intended), as I had the pleasure of leading the WNY REDC’s Health/Life Sciences Work Group that identified the CPM as a “priority project” for the REDC to recommend for funding.  Working closely with RPCI President & CEO Dr. Donald Trump and Deputy Director Dr. Candace Johnson was a rewarding experience, but having the opportunity to witness this vision come to fruition barely 12 months later is far more gratifying.

The Center is utilizing 5,000 square feet of space in RPCI’s Center for Genetics and Pharmacology at 645 Virginia Street on the Buffalo Niagara Medical Campus.  It will have 21 staff members to start, growing to 42, along with 35 faculty members.  Click here to read RPCI’s CPM fact sheet (pdf).  The Center’s mission encompasses both research and clinical applications.

The CPM has the capacity to sequence more than 300 complete genomes per year.  This is a staggering number considering the original Human Genome Project took 13 years and $2.7 billion to complete the first human genome sequence.  Less than 10 years later, the technology has advanced to the point where the CPM can sequence over 300 genomes at a tiny fraction of the time and cost.

New Year…New Medical Device Tax

Just about every stakeholder in the medical device industry has heard something about the new medical device excise tax that recently went into effect.  Very few, however, have a solid grasp on the details of the so-called ‘device tax’.  Thankfully, the Buffalo Niagara region has experts who have been working diligently to unravel these details.  One such expert is Bethany Trachtenberg of the law firm Hodgson Russ LLP, who shares some of her thoughts with you today:

New Year, New Medical Device Tax: Key Questions Answered

On January 1, 2013 an excise tax of 2.3 percent on total revenues from manufacturers of medical devices in the U.S. took effect, impacting not just device makers –small and large- but also impacting the medical institutions and professionals that interact with device makers.  The IRS released the final rule on December 5, 2012 with an accompanying guidance document, leaving little time for the industry to fully grasp and correctly implement the burdensome requirements.

The applicability of this excise tax, added to the Internal Revenue Code as part of the Affordable Care Act (ACA) in 2010, has raised a number of questions for medical device companies.  Luckily, the IRS has indicated that it would not penalize companies for incorrect tax payments for the first three calendar quarters of 2013, a clear acknowledgment that it will take the industry some time to transition into compliance.  A number of issues remain unresolved even at this point.  But perhaps the most challenging question to be addressed is the threshold question of which entity in the chain of production of the taxable device is required to collect the tax.

Specification Developer or Contract Manufacturer to Collect the Tax?  The device excise tax is imposed “on the sale of any taxable medical device by the manufacturer, producer, or importer of the device.”[1]  The preamble to the IRS final rule responded to a request by a commenter that the IRS specifically link the “manufacturer” definition to the FDA’s listing requirements by stating “whether a person is considered a manufacturer or importer for FDA purposes is not relevant.”  The IRS has decided to apply existing manufacturer excise tax rules to the medical device industry despite the complexity of the current medical device distribution channels and the additional layer of FDA regulation.

The existing IRS rules define the term manufacturer to include “any person who produces a taxable article from scrap, salvage, or junk material, or from new or raw material, by processing, manipulating, or changing the form of an article or by combining or assembling two or more articles.”[2]  Those familiar with the device industry will see immediately that in most instances this definition describes the entity who is contract manufacturing the product based on a customer’s specifications and under the customer’s quality requirements.  The existing IRS rules do contemplate a scenario where one party provides the materials to another under an agreement for manufacturing where the person providing the materials retains title, and states  that “the person for whom the taxable article is manufactured or produced, and not the person who actually manufactures or produces it, will be considered the manufacturer.”[3]  Unfortunately, the majority of the contract manufacturing or supply agreements we have seen do not have the specifications developer providing the materials or retaining title to materials for manufacturing.

The IRS has not yet addressed the role of contract manufacturers in the medical device industry and as manufacturers for purposes of this new tax.  Medical device companies, whether specification developers or contract manufacturers, should consult with their legal counsel to obtain a facts-and-circumstances dependent legal conclusion as to whether the principal or the contract manufacturer is the “manufacturer” and thus responsible for the tax.

Additional Twists to the New Tax

A couple of little known provisions within the IRS final rule that are also worth highlighting are:

(1) Retroactive Tax on Lease, Installment and Long-Term Sales Contracts: The new medical device tax will apply to lease payments, installments and long-term contract payments after Jan. 1, 2013 even if the lease or contract was signed before Jan. 1, 2013. Only those agreements that were in place before the ACA was enacted in March 2010 will be allowed to continue without a tax.

(2) “Taxable Medical Device” Applicability to Software:  Under existing FDA rules, certain software will be considered a medical device as defined in section 201(h) of the Federal Food, Drug, and Cosmetic Act and thus will be a “taxable medical device” under the new IRS rules.  According to the IRS’ interim rule, it will treat a license of a taxable medical device, including software, as a lease of that taxable medical device as of the date both parties entered into the license agreement.[4]  Finally, software service and/or maintenance contracts are not themselves a “taxable medical device” and therefore the tax only attaches to that portion of the manufacturer’s sale price of the unit that is properly allocable to the taxable article.  Thus, software and service bundles that are not listed with the FDA as a bundle require additional assessment to properly allocate the tax.

Conclusion

Although the IRS has proved reasonable in granting some penalty relief as this new tax rolls out in 2013, medical device companies should be proactive in evaluating its applicability to their products and business during the first quarter of 2013.

Click here to learn more about the medical device industry in Buffalo Niagara.

[1] 26 CFR § 48.4191-1(a).

[2] 26 CFR § 48.0-2(a)(4).

[3] 26 CFR § 48.0-2(a)(4)(ii).

[4] See IRS Notice 2012-77.

Buffalo Niagara Region’s First Formal Angel Fund

The next big step in the evolution of Buffalo Niagara’s angel capital ecosystem is underway.  Buffalo Angels, LLC recently issued a private placement memorandum to form the region’s first formalized angel capital investment fund, giving early-stage companies in Buffalo Niagara a fantastic new opportunity to access capital at a critical stage in company development.  Angel capital is defined as equity investment in high growth, early-stage ventures made by formal angel groups or individual investors.  Angel investments are typically made in the gap in a venture’s development between the company’s seed or pre-seed capital raised from “family & friends” and when an institutional venture capital firm is ready to invest.  Buffalo Angels, LLC will provide a more formal and defined approach to funding these ventures, according to Jack McGowan, Executive Director of Buffalo Angels, LLC.

To date, angel investing in the Buffalo region has been administered under the network approach, whereby investors individually make a decision on companies in which they will invest.  The Buffalo Angel Network has worked closely with the Western New York Venture Association (WNYVA), utilizing the group’s bimonthly meetings as its primary screening process.  In addition to companies that have presented at a WNYVA meeting, the new Buffalo Angels, LLC will have its own screening process and will also hear from companies that have not presented at a WNYVA meeting.  Instead of having each individual angel decide whether or not to invest or co-invest with other individuals, Buffalo Angels, LLC will make its investment decisions based on a majority vote of its members.  The fund will have a defined range for investment amount, typically from $100,000-250,000, with an additional $100-250k reserved for a follow-on round.

The fund plans raise a minimum of $2 million with investment units of $25,000 each.  It is open only to accredited investors*.  While the fund is not restricted to investing only in regional companies, its stated focus is on companies in Buffalo/Upstate New York and Southern Ontario.   Investments made outside this region will primarily be those that are co-invested with other qualified angel groups or funds, an opportunity for multi-region collaboration that is far more difficult under the existing network approach. This fund model is a trend that has slowly been growing around the US.  The Seed Capital Fund of Central NY is an example of such a formalized angel group.

For more information on Buffalo Angels, LLC, please contact Alan Rosenhoch at arosenhoch@buffaloniagara.org.

*”Accredited Investor” as defined in the Securities Act of 1933 for individuals means a natural person who has individual net worth or joint net worth with the person’s spouse that exceeds $1 million at the time of the purchase,” OR “a natural person with income exceeding $200,000 in each of the two most recent years or joint income with a spouse exceeding $300,000 for those years and a reasonable expectation of the same income level in the current year.”

The Cost of Conformity: Patent Reform for Small Business Entrepreneurs

For many early stage life science, biotech and other tech companies, intellectual property is the entity’s most valuable asset and protecting that asset is tantamount to success. U.S. Federal patent law is set to change dramatically in the coming months and a clear understanding of how this affects your company is critical. The following offers a snapshot of the key changes upcoming through patent law reform. – Alan Rosenhoch, BNE Business Development Manager

The Cost of Conformity:

Patent Reform for Small Business Entrepreneurs

By Randolph V. Clower, J.D., Ph.D., Associate, Phillips Lytle LLP

Considered by many to be the most comprehensive revision to the United States patent system in over 50 years, the America Invents Act (“AIA”) represents progressive legislative reform intended to align U.S. patent policy with global precepts, i.e., systems which reward the “first to file” a patent application. Many AIA provisions modify–or completely change–the current patent system, but the most immediate and conspicuous AIA component establishes a filing-based system in the U.S. as of March 16, 2013.

The U.S. patent system currently operates under the rubric of “first to invent,” awarding priority to the first in time to invent. On March 16, 2013 (the transition date), however, U.S. patent law will transition away from the strictures of a first to invent system in favor of rules similar to the prevailing international model, albeit not in toto. This new patent regime, termed the “first inventor to file,” affords priority to the first inventor (or assignee) to file for patent protection. While the implications ascribed to this paradigm shift are considerable, the recurring theme for small business entrepreneurs concerns the cost of conformity.

The first inventor to file system has no retroactive effect. Thus, obligatory exceptions to the rule notwithstanding, U.S. patent applications having a priority date prior to the transition date will be examined under the current rules, while applications with priority dates on or after the transition date will be covered by the new provisions of the AIA. In this regard, general consensus within the patent community holds that the new rules afford less protection for small business entrepreneurs. While the reasons for this are nuanced in many respects, the overarching consideration relates to the cost of applying for a patent, which can run anywhere from $5,000 to $15,000 or more.

To this end, current U.S. patent law provides for a “grace period” which allows an inventor to file a patent application for up to one year after his or her invention is publicly disclosed, e.g., published, thereby providing a “patent cost deferral” option until it is absolutely necessary to file. Moreover, this one year window allows small entities such as universities and sole inventors to disseminate their research and discoveries without fear of another party–who invented second, but filed first–securing an earlier priority date. This is no longer the case under the AIA, which contains a significantly diluted version of the current grace period.

Consequently, with respect to obtaining the earliest possible priority date, filing early and often is the key to minimizing risk while optimizing patent protection under the AIA. This new regime therefore appears to favor business enterprises with unlimited patent budgets at least insofar as prompt and frequent patent filings are status quo for larger corporations. While such reform may not stymie innovation per se, it is likely to exacerbate the cost-related obstacles associated with patent procurement for smaller business concerns and individuals. Time will tell.

Other Notable AIA Provisions
Post Grant Review Proceedings
False Marking Statutes
Prioritized Examination
Supplemental Examination
Third Party Pre-Issuance Submission
Prior Commercial Use Defense
Inter Partes Reexamination

New Grant Monies to Help Local Medical Device Manufacturers Export to China

By Alan Rosenhoch, business development manager, Buffalo Niagara Enterprise

Buffalo Niagara’s medical device manufacturing companies will soon have a new set of tools available to help them export to a very attractive foreign market.

Last month, World Trade Center Buffalo Niagara (WTCBN) announced that it will receive $682,000 in grant funding, including $218,000 from the U.S. Department of Commerce (DOC), to help local medical device manufacturers open new market opportunities through export of their products to China.

Titled “Accelerating Upstate New York’s Competitiveness and Exports in the Global Economy,” this grant represents yet another asset for medical device manufacturing companies currently located in the Buffalo Niagara region as well as those that might be considering expansion into our region.

The grant is intended to help companies export their products to China successfully, while avoiding common problems and pitfalls. Assistance is available to help companies: market products and develop strong, reliable distribution partners; maneuver through China’s regulatory system; finance their export efforts; and, protect against intellectual property problems.

Monies for the grant come from the DOC’s Market Development Cooperator Program (MDCP) and must be administered within the next three years.

The partner institutions under the program plan to offer training and expertise to least 40 local manufacturers, teaching them how to navigate Chinese import laws, how to effectively market their products in China and the logistics of shipping goods there. They will also provide access to export loans and credit insurance.

China is the second-largest market for medical equipment and services in the world, trailing only the U.S., making it a prime market opportunity. To date, this market has not been well tapped by Buffalo Niagara medical device companies, many of which export only to Canada, according to WTCBN. This grant should help change that.

“This three-year project will serve as a template for a greater regional export strategy,” said Chris Johnston, president of WTCBN, in a prepared statement.

To be eligible, companies must be incorporated in the U.S. and the products being exported must have 51% U.S.-content. Furthermore, companies utilizing the program cannot do so with the intention of moving any jobs overseas; the goal is to create more jobs here in Buffalo Niagara by opening up new markets for area employers.

Exporting companies are encouraged to use the MDCP grant in conjunction with the DOC’s existing Gold Key Matching Service, a program that provides pre-screened contacts with potential sales agents, distributors, professional associations, government contacts and/or licensing or joint-venture partners.

Q&A: The Life Science Community in Orchard Park, NY

by Alan Rosenhoch, Director of Business Development, BNE

Interview with Ben Harp, COO, Polymer Conversions

There is a cluster of Life Science companies growing in Orchark Park, just twenty minutes from downtown Buffalo. One of those companies is Polymer Conversions. Polymer Conversions specializes in medical cleanroom plastic injection molding, assembly and packaging. They provide full-service contract manufacturing in certified, portable Class VII (10,000) & VIII (100,000) cleanroom environments.  Polymer Conversions is opening a 15,000SqFt expansion of brand new Class VIII certified manufacturing space this month.

Ben Harp is COO of Polymer Conversions.  The company has been a longtime member of the MedTech Association and Mr. Harp now sits on its Board of Directors. Mr. Harp is also heavily active in the region’s Boy Scouts, Little League, and Chestnut Ridge Park as a founding member instrumental in creating Chestnut Ridge Conservancy. Mr. Harp hopes his involvement in our region inspires others to make the same positive impact.

I recently had the pleasure of asking Ben Harp a number of questions about Polymer Conversions and the local Life Sciences Industry.

Q. Polymer Conversions has customers in numerous industry sectors; how much of your business is concentrated in the life sciences/medical device sector?

A. Polymer’s business growth has been strong.  The life science/medical device sector now constitutes 95% of our overall business.  We contribute our growth rate and high concentration in the healthcare sector to our continued high level of investment into our employees, plant, and equipment.  Our newest clean room expansion opens August 2012.  Additionally, our focused concentration on process control and process repeatability really excites the healthcare sector – learn more.  Our focus has been to see how good we can be!

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Q&A: Dr. Glick on the Dental Industry in Buffalo, NY

By Alan Rosenhoch,
Business Development Manager

Interview with Dr. Michael Glick

Dean of the University at Buffalo School of Dental Medicine

Dr. Michael Glick, who became UB School of Dental Medicine (SDM) dean in December 2009, is the past president of the American Board of Oral Medicine and serves as the editor of the Journal of The American Dental Association (JADA), the premier, peer-reviewed journal in dentistry. He has twice been the recipient of the American Dental Education Association’s William J. Gies Foundation First Place Editorial Award. He also has received the Edward B. Shils Entrepreneurial Education Award for his innovative, medicine-oriented approach to dental care. Most recently, Glick received the prestigeous Samuel Charles Miller Award, the highest academic award given by the American Academy of Oral Medicine (AAOM).

Glick has authored more than 200 journal articles and numerous book chapters, and has co-edited several textbooks, including “Dental Management of Patients with HIV” and “Burket’s Oral Medicine: Diagnosis and Treatment,” a standard, internationally recognized textbook. He serves on several national and global committees, including as chairman of the science committee for FDI, the World Dental Federation.

On a personal note, Dr. Glick is a member of the West Side Rowing Club.

Q. Overall, what do you think are Buffalo Niagara’s greatest strengths & assets as they relate to the Dental industry?

A. As a region, our greatest strength is our talent. Buffalo Niagara is known for producing and maintaining pioneers in oral health. Through public and private collaboration, we’re making significant strides in the areas of education, research and service that has a local impact and global reach.

Q. Do all graduates of the SDM go on to become practicing dentists? If not, what other career paths might they pursue?

A. Most but not all; some focus their attention on research, while others are driven towards education and industry.

Q. How does the UB SDM collaborate and partner with private companies in the dental industry?

A. From benchside to chairside, the School of Dental Medicine’s research and scholarship contributes to the prevention, diagnosis, and treatment of oral disease. We continue to disseminate discoveries to both the professional community and the public through technology transfer in partnership with industry, through contributions to the scientific literature, and through oral health promotion and disease prevention programs.

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