Protecting the AI Advantage: Why Patents Are a Critical Growth and Risk-Management Tool for Digital Health Platforms
In the rapidly evolving landscape of digital health, the importance of patents has shifted dramatically. For CEOs, general counsels, and CTOs, the critical question is not whether patents matter, but whether their company has a deliberate strategy to identify, capture, and utilize intellectual property in alignment with corporate goals.
The Digital Health Revolution
Digital health companies are establishing foundational healthcare infrastructure with innovations such as AI-driven clinical decision support, remote monitoring platforms, and digital therapeutics. These systems are no longer experimental; for many organizations, they represent the core of their product offerings. Consequently, protecting these technologies with patents is essential.
Unfortunately, many digital health firms still view securing patents as a secondary priority, postponing it until after achieving product-market fit or securing additional funding. This approach poses significant risks. In today’s AI-enhanced healthcare market, patents serve not as optional artifacts but as strategic assets that safeguard enterprise valuation, enhance defensibility, and fortify competitive positioning.
The Shift From Code to Capability
Historically, digital health companies often adopted a first-to-market approach, relying on speed and trade secrets while minimizing patent protection. They assumed that the rapid pace of technological advancement rendered patents impractical. This assumption has proven outdated.
Patents uniquely protect functional capabilities rather than specific code. They secure rights over how a system operates, thereby safeguarding innovations at a functional level. Well-designed patents in digital health protect system-level functionalities, such as:
- Data ingestion and normalization
- Training models in regulated environments
- Validating outputs in clinical settings
- Operationalizing decisions
Why AI Raises the Stakes
The advent of AI has amplified both the value of innovation and the risk of competitive exposure. While AI allows for rapid iteration, it also accelerates the replication of features. A function that once took years to develop can now be approximated within months by competitors using similar models.
Patents act as a counterbalance, establishing enforceable boundaries around what competitors can and cannot do, even if they independently develop similar systems. This is particularly crucial in healthcare AI, where multiple companies may tackle the same problems with overlapping technologies.
Additionally, patents provide critical evidence of technical novelty, which is increasingly scrutinized by regulators and payors in healthcare. They signal that a company has created something substantively different, rather than merely assembling pre-existing components.
Patents and Data Strategy Go Hand in Hand
Many mistakenly believe that proprietary data alone offers a competitive edge. However, data rights can be precarious—access can be revoked, licenses can expire, and regulatory interpretations can shift. Patents provide a durable solution where data access may be uncertain.
In AI-driven digital health platforms, patents can protect the methods of using data, not just the data itself. This includes:
- Training models on sensitive data while maintaining privacy
- Techniques for mitigating bias or ensuring explainability
- Architectures that comply with healthcare regulations
For companies navigating complex regulatory landscapes, a patent portfolio aligned with their data strategy can enhance compliance and reduce reliance on any single data source.
Defensive Value and Litigation Reality
The digital health sector is experiencing a surge in patent litigation as it matures. Companies without patents find themselves vulnerable, facing limited leverage against assertive claims and often forced to settle or litigate from a weak position. Establishing a thoughtful patent portfolio can transform this dynamic.
Even a modest collection of high-quality patents can deter opportunistic claims and provide substantial leverage in disputes. This is not about fostering a litigious environment; it’s about effective risk management.
For general counsels, patents facilitate smoother transactions and due diligence. Acquirers and investors increasingly expect to see patent coverage around core functionalities, particularly when AI is central to value propositions. The absence of patents may raise questions about a company’s defensibility, impacting its valuation.
Timing Matters More Than Ever
Creating a patent strategy cannot be an afterthought. Delaying patent filings can lead to the loss of rights altogether, as public disclosures, customer demonstrations, and regulatory submissions can create prior art, limiting what can be protected.
The most effective patent programs often begin earlier than anticipated. This doesn’t mean filing countless applications prematurely; rather, it involves identifying core technical concepts early and securing them before they enter the public domain.
For CTOs, this necessitates collaboration between engineering and legal teams. Engineers must recognize that patents aren’t intended to hinder innovation but to capture it. For CEOs, treating patents as a strategic business decision is crucial.
Patents as a Strategic Signal
Beyond mere protection, patents signal to the market a company’s long-term vision, technical sophistication, and commitment to defensibility. In competitive enterprise sales, especially with health systems and payors, this messaging can significantly influence customer decisions.
In the context of growing concerns about commoditization in AI, patents help differentiate truly innovative platforms from those that are not. They tell a compelling story about how the technology operates and why it is challenging to replicate.
A Practical Path Forward
While not every digital health company requires an extensive patent portfolio, each should make deliberate choices about patent strategy. Digital health companies ought to:
- Identify what differentiates their platform commercially.
- Focus on system-level functions rather than surface features.
- Align patent strategy with data strategy, regulatory posture, and product roadmap.
- File patents early enough to preserve options without creating unnecessary noise.
- Integrate patent considerations into broader AI and technology governance frameworks.
In a landscape where AI is integral to healthcare innovation, patents are no longer optional; they form a vital component of a resilient digital health business. If the technology is worth developing, it is worth protecting.
