Strategic IP Considerations for the Medtech Market Rebound After Record Investment and M&A in 2025

In the medical device sector’s pursuit of market recovery following the post-pandemic correction, recent data indicates a significant resurgence in capital deployment and consolidation. With venture investment reaching a record $10.4 billion in 2025 and median M&A deal values increasing to $570 million (for private venture-backed medical device deals with at least $50 million paid upfront),[1] the landscape has shifted from preservation to aggressive growth.

However, this influx of capital and the return of “mega-rounds” signal a critical need for stakeholders to reassess intellectual property (IP) strategies. As acquirers deploy capital for high-value targets, the depth of IP due diligence is intensifying. Specifically, legal trends regarding enablement, subject matter eligibility, and regulatory exclusivity are likely to impact deal structures and valuations in the coming year.

VALUATION SURGES AND THE AMGEN ENABLEMENT STANDARD

The 2025 data reveals a bifurcation in the market: While deal volume has stabilized, valuations for top-tier assets have escalated, evidenced by a median upfront payment of $529 million. In this high-stakes environment, the legal scrutiny applied to patent portfolios has evolved.

Following the US Supreme Court’s decision in Amgen Inc. v. Sanofi, 598 U.S. 594 (2023), acquirers are increasingly wary of “functional genus” claims—claims that define an invention by what it does rather than what it is. This is particularly relevant for “platform” technologies where broad functional claims are often used to fence off future applications.

For companies positioning for exit, reliance on broad functional language without commensurate structural disclosure presents a substantial risk. Recent appellate decisions continue to reinforce this standard, cautioning against “overselling” the utility of a method without full scope enablement (see, e.g., In re Adhami, No. 2024-1218, 2025 WL 1949797 (Fed. Cir. July 16, 2025)). To support the high valuations seen in the current market, patent strategies must ensure that specifications satisfy this heightened enablement threshold.

NAVIGATING SECTION 101 IN AI-ENABLED DEVICES

The market data highlights that AI-driven advances—spanning imaging, surgical robotics, and neuromodulation—were primary drivers of the record investment levels. However, these “AI-enabled” technologies face unique challenges under 35 USC Section 101 regarding subject matter eligibility.

While the US Patent and Trademark Office and Federal Circuit have provided guidance, the line between an abstract idea and a patent-eligible improvement remains a focal point of litigation and diligence. Of particular note, the Federal Circuit’s reasoning in CardioNet, LLC v. InfoBionic, Inc., 955 F.3d 1358 (Fed. Cir. 2020), found claims eligible because they focused on a specific improvement to the functionality of the device itself, rather than merely collecting and analyzing data.

Furthermore, recent administrative guidance reinforces that claims must integrate the judicial exception into a practical application (see Ex parte Desjardins, Appeal 2024-001234 (PTAB Sept. 26, 2025) (precedential)). To maximize asset value, patent claims in this sector should be drafted to emphasize the technical integration of AI—specifically how the algorithm drives a tangible modification in device operation—rather than claiming the data processing in isolation.

KEY PRECEDENTS SHAPING THE 2026 LANDSCAPE

As the industry accelerates into Q2 2026, several judicial and administrative outcomes have crystallized, creating immediate diligence requirements for medical device portfolios.

(1) The “Commercial Prep” Safe Harbor

With the Supreme Court declining to review the Federal Circuit’s decision in Edwards Lifesciences v. Meril Life Sciences (Cert. Denied Jan. 2025), the broad interpretation of the 35 U.S.C. Section 271(e)(1) safe harbor is now settled law. The decision confirms that the safe harbor allows competitors to import infringing devices without triggering infringement, irrespective of intent or ancillary commercial uses, provided the activity is “reasonably related” to obtaining FDA approval.

(2) AI Eligibility in Practice

In early 2025, the Federal Circuit affirmed in Recentive Analytics v. Fox Corp., 134 F.4th 1205 (Fed. Cir. 2025), that applying generic machine learning to a new data set remains an abstract idea under Alice. As a result, generic machine learning techniques applied to new data environments are patent ineligible under Section 101. This underscores that validity for software-based medical devices depends on tying the AI to a specific, improved hardware output or clinical control mechanism.

(3) Protecting Patent Term

The decision in Allergan USA v. MSN Laboratories (Fed. Cir. 2024/2025) clarified the interaction between Patent Term Adjustment (PTA) and Obviousness-Type Double Patenting (ODP). The court held that a first-filed, first-issued patent with valid PTA cannot be invalidated by a later-filed child patent that expires earlier. This ruling provides a mechanism to protect the “tail” of the patent term—often the most lucrative years of a product’s commercial life—if claims are structured correctly across parent and child applications.

(4) Design Patents as Import Enforcement Tools: GoPro v. Insta360

In February 2026, the US International Trade Commission issued its final determination in Certain Cameras and Camera Systems (Inv. No. 337-TA-1400), confirming that Insta360’s action camera products infringed GoPro’s US Design Patent No. D789,435, which covers the ornamental design of GoPro’s HERO camera. The ITC issued a Limited Exclusion Order directing US Customs and Border Protection to block importation of the infringing products, along with a Cease and Desist Order prohibiting further importation, sale, and marketing of the covered devices. Notably, the ITC simultaneously ruled against GoPro on all five of its asserted utility patents—finding them either invalid, not infringed, or both—meaning the design patent alone secured the import ban.

The GoPro outcome illustrates a broader point that is increasingly relevant to medtech portfolio strategy: Design patents are an important asset in crafting a comprehensive IP portfolio, and can deliver enforcement outcomes that utility claims alone cannot. This is particularly true in Section 337 proceedings before the ITC, which offer rapid timelines and the potent remedy of import exclusion for products manufactured overseas.

A number of other recent Federal Circuit decisions continue to reshape the design patent landscape—including developments in design patent obviousness analysis, prosecution history disclaimer, and claim construction—that are further strengthening (and in some cases complicating) the role of design patents as enforceable assets. For companies building or acquiring medtech portfolios, these evolving standards make design patent diligence an essential component of any transaction.

THE INTERSECTION OF PATENT STRATEGY AND REGULATORY PATHWAYS

A notable trend in the 2025 exit data is the dominance of novel regulatory pathways among high-value pre-commercial exits, where Premarket Approval and De Novo pathways were significantly more prevalent than 510(k) clearances. This underscores a shift in how acquirers value “moats.” While a 510(k) strategy offers a faster route to market, it relies on substantial equivalence to a predicate device, which can inherently undermine arguments for broad patent novelty.

Legal counsel should coordinate closely with regulatory teams to ensure consistency between FDA representations and patent office arguments. Assertions made to the FDA regarding equivalence can be discoverable and potentially used to narrow patent scope or validity in future litigation.

CONCLUSION

The record-breaking capital influx of 2025 has signaled a market recovery, but the legal standards for valuation have fundamentally shifted. In 2026, a high-value exit requires more than just clinical efficacy; it demands a patent portfolio that can survive the heightened enablement standards of Amgen, navigate the AI eligibility restrictions of Recentive, and maximize exclusivity under the Allergan framework.

As the GoPro v. Insta360 ITC action demonstrates, design patents can serve as decisive enforcement tools in their own right—delivering import bans where even a portfolio of utility claims falls short. Market participants must weigh these evolving legal standards across both utility and design patent strategy to distinguish acquirable assets from potential liabilities in the year ahead.