SmileDirectClub didn’t invent the market for clear teeth aligners, they just rose to the top almost overnight.
When the company got into the teledentistry market in 2014, Invisalign was already becoming increasingly popular, with millions of people saying goodbye to traditional metal braces and opting for a quicker, more subtle approach to straightening their teeth. Although the innovative technology was a recent advancement, it was a crowded IP category, with Invisalign’s parent company alone holding more than 2,500 pending and issued patent applications.
SmileDirectClub’s goal was to disrupt the orthodontic industry by cutting out the middleman and offering a “do-it-yourself” approach to teledentistry. Instead of having to visit a dentist or orthodontist like with Invisalign, customers could simply create their 3D-printed aligners based on teeth impressions they make in SmileShops or at home with a kit.
Neat trick, and it was pretty perfectly timed.
After the initial pandemic wave in 2020, SmileDirectClub’s stock soared 26% as the company’s retail SmileShops began to reopen. With more than a million people already using the product and COVID-19 driving e-commerce sales like never before, the direct-to-consumer process seemed foolproof. The company claimed to be on track to grow to 100 million customers.
Building an IP moat
SmileDirectClub’s IP applications began with more than 60 patents to protect technology like merging 3D dental impressions to create an accurate model of a person’s teeth.
But as they continued to expand and started to pursue patent filings for medical procedures without oversight from a dental professional, they began to run into trouble. Unlike their aligners, their business model wasn’t as clear-cut.
In 2019, the American Dental Association (ADA) submitted a citizen petition to the U.S. Food and Drug Administration stating that SmileDirectClub is placing the public at risk by skirting the FDA’s “by prescription only” restriction on plastic aligners and providing the class II medical devices over the counter. Other major medical organizations like the American Association of Orthodontists followed suit, claiming that the company puts patients in danger by illegally practicing medicine. And within the first five years in business, the Better Business Bureau received more than 1,200 complaints from customers.
“Instead of fixing its practices, the company has gone on a litigation spree to silence critics,” stated a reporter for Hindenburg Research. Just one day after the U.S. Patent and Trademark Office awarded SmileDirectClub a patent on its retail concept, the company sued competitor Candid Care for patent infringement, stating “a copycat model.”
In the complaint, SmileDirectClub accuses Candid’s retail component of taking advantage of the extensive analysis, financial investment, experience, and effort in developing the groundbreaking teledentistry platform. More than just damages and injunctive relief, SmileDirectClub was seeking that the court prohibit the copycat model from continuing.
The company’s attempt to eliminate their competition didn’t go as planned. According to Bloomberg, the business model patent was quickly invalidated by U.S. District Judge Colm Connolly in Wilmington, Delaware. When the business-model patent that once sent the company’s stocks soaring was shut down, the market responded quickly, with shares plunging more than 7%.
Why did the court rule in their competitor’s favor? Business model patents are notoriously difficult to obtain and easy to challenge.
“The concept lacks the inventive steps that would make it eligible for legal protection,” Judge Connolly said. “Numerous cases have established that patents that simply take a standard business practice and describe how to conduct it over the internet or with modern information technology are directed to abstract ideas,” he ruled. “Having the patient never physically see their dentist or orthodontist is simply part of the abstract idea.”
SmileDirectClub spokeswoman Kim Atkinson defended the strength of the company’s IP, disagreeing with the court’s decision. “The USPTO has validated SmileDirectClub’s SmileShop and telehealth customer journey, and we stand behind the strength of our intellectual property.”
The clear difference between the two companies? Candid Care employs orthodontists over underqualified ‘Smile Guides’ and offers advanced remote monitoring. Instead of being evaluated by a licensed professional, customers were taking a complex process into their own hands … resulting in countless complaints and issues.
The key IP takeaways here…
I could speculate all day on what went wrong for SmileDirect — especially since they are in trouble with the ADA and have been the subject of several expose articles — but that’s not our focus here. Let’s talk about their IP position.
- Stick with what you know: SmileDirectClub actually has a decently sized patent portfolio with ~60 patent applications pending and issued. Their earliest patent applications covered technologies like merging 3D dental impressions to create an accurate model of a person’s teeth. But when they started getting into more filings related to the business models for getting teeth aligned or whitened without visiting a dentist that’s when they started getting into trouble.
- Prepare when you’re in a crowded IP field: Align Technology, the parent company of Invisalign, has 2500+ pending and issued patent applications. They were the incumbent, and muscling into that strong of a market was never going to be easy.
- Understand your own IP position: Business method patents are notoriously difficult to obtain and easy to challenge. Besides, suing your competitors is an expensive business model even in the best of situations.
The good news? You don’t need to fight your way through the process on your own. At Patents Integrated, we help guide hardware founders through every stage of the patent application process. Ready to take a smarter approach to IP? Click here to get started.