February 2009 Archives

The Government of South Africa recently enacted the Intellectual Property Rights from Publicly Financed Research and Development Act. The Act intends to enable and encourage recipients of government-funding to protect as Intellectual Property and license the results of their research in order to provide incentives for those recipients to work with industry players to commercialize research.

Section 10 of the legislation provides that the creators and the inventors get a portion of the royalty stream generated from the licensing of the invention.

There is a similar provision in the Indian Bayh Dole Bill which is before the Indian Parliament, as per which that inventors receive 30 percent of any royalties stemming from licensing.

The issue of royalty payment has been discussed in an article "Public-funded R&D Bill -- Creating the ecosystem for innovation" in The Business Line in India by Jyothi Datta. The article is available here. Relevant issue of royalty payment under Bayh Dole type legislation as per the article:

"The draft Bill seeks to give back to the scientist or inventor, 30 per cent of the revenue from commercialisation of his or her research. About 10 per cent is marked to the public-funded institute's IP Management Cell and the rest of the revenue is ploughed back into the institute. The IPM Cell will help the researcher patent innovative work, besides negotiating with commercial institutions when it is ready to strike.

As in the past, the rights on the research will be with the institute, though the rights to assign will be jointly held by researcher, institute and Government, which largely plays the role of an observer, explains an architect of the Bill.

All research funded by Government comes under the ambit of this Bill that would also cover the several institutes under the Council of Scientific and Industrial Research (CSIR), the Indian Council of Medical Research (ICMR), the Defence Research and Development Organisation (DRDO), the Department of Science and Technology, the Department of Biotechnology, National Institute of Pharmaceutical Education and Research (NIPER), Central and State Universities, Deemed Universities, etc. Significantly, it would cover research in science, drugs, biotechnology, engineering, culture and so on.

Parameters have also been outlined on the royalty that would be paid to the scientist/institute when the patented research gets commercialised, says the Bill's architect. But IP expert Dr Prabuddha Ganguli, who was recently on an international expert team to help draft a similar legislation for South Africa, is uncomfortable with attempts to outline parameters on issues such as royalty payment. The legislation should be a broad guiding framework and specifics should be left to the rules that are made later taking into account in the changing environment. Though he has not seen the draft of the proposed Indian legislation, he points out that there are several texts and sub-texts to the issue -- like whether the research has been fully or partially funded by the government; definition of national interest and if the government exercises its "march-in" rights on a critical product, does it pay for it, and so on.

The draft Bill in South Africa has seen four amendments in five days and it has been circulated among stake-holders, universities, research institutions and industry. The S.A Bill will be drafted in legal parlance and opened to public debate, Mr Ganguli explains. This is in striking contrast to the non-transparent manner of the Indian draft Bill."

WIPO commissioned reports on Tech. Transfer of various Asian Countries in 2003 and they had a set of guidelines for developing models which were divided into 3 levels:

1.       National Policy on Intellectual Property and University-Industry Technology Transfer

2.       University Policy on Intellectual Property and Technology Transfer

3.       Institutional Set-up and Practical Aspects for Technology Transfer from Universities to Industry

They include Income distribution (or royalty sharing) as a part of "University Policy on Intellectual Property and Technology Transfer" and not a part of the National Policy/ Law, that is also Dr. Gangully's  view on this issue as was published in an Indian Daily some time back.

Extract from WIPO Guidelines:

"Income distribution (or royalty sharing).  Provisions on income distribution (or royalty sharing) are a key element of most IP policies.  Income distribution provides an important incentive for researchers to ensure that they disclose their inventions to the relevant body and seek to find the best avenue for commercialization.  Provisions on income distribution generally define clearly what type of income is to be distributed and generally applies not just to royalties but to any other lump-sum or milestone payment made to the institution for the commercialization of the technology.  Common practice in this regard is that income generated must first cover any expenses related to the protection and exploitation of the IP and the net income is subsequently distributed between the researcher(s), the department, the university, the technology transfer office and/or other stakeholders in percentages that are established in the policy.  IP policies often establish revenue thresholds, and the percentage received by the researcher(s) decreases as total net revenues increase.  University IP policies may also define how decisions are to be taken on how to split the income when more than one researcher is involved."

Although in an article published on SciDev.net, Shamnad Basheer (Ministry of HRD IP Chair Professor at WBNUJS, Kolkata) said that Indian IP Act would ensure that inventors receive at least 30 percent of any royalties stemming from licensing and the same is a laudable aspect of bill unlike the US Bayh-Dole Act, which leaves royalty-sharing policies to the academic institutions. Their remains to be dispute about the fact that having a mandatory provision for royalty sharing might not be the best of ideas and such specifics should be left to the rules that are made later taking into account in the changing environment or to the judgment of the University bodies, looking to their profits and the best way they can incentivize scientists and researchers to maximize the interest of the institutions.

Matt Jones on GenomeWeb News points out to the Bill against NIH Open-Access Policy has been introduced again. The bill is based on the belief that "the policy is a breach of standing copyright laws that protect scientific publishers".

"A bill aimed at limiting the open-access publishing policy adopted by the National Institutes of Health has been re-introduced in the US House of Representatives by Rep. John Conyers (D - Mich.), after the same legislation expired at the end of the 110th Congress.

The law would effectively overturn the policy NIH put into effect last year mandating that all NIH-funded investigators must submit electronic versions of their final, peer-reviewed manuscripts to PubMed Central within a year after they are officially published.

The Conyers bill claims that the policy is a breach of standing copyright laws that protect scientific publishers. It would amend US Code to keep the federal government from imposing terms or conditions regarding licenses or rights based on certain federal funding conditions.

The Fair Copyright in Research Works Act, as it was called in last year's Congress, has supporters in the publishing industry who opposed the open-access policy. But it also has fired up the advocates of open-access for scientific reasons and those who favor taxpayer access to government-funded research -- both groups that pressed NIH to adopt the policy."

To read the entire report from GenomeWeb click here.

ITTI recently released the U.S. Patents 101 - A Guidebook on Patents and Patenting for University Researchers by Carolyn A Alenci. Alenci is a third year JD candidate at Franklin Pierce Law Center and specializes is Patents and Technology Transfer. As per Alenci "Although the patenting process can be complex and lengthy, this guidebook seeks to make the process a little more clear. Patenting inventions can be very rewarding, and understanding the process can only make it easier."

To access the 'U.S. Patents 101 - A Guidebook on Patents and Patenting for University Researchers' from Pierce Law's IP Mall site click here.

Ali Imam a primary patent examiner at the United States Patent and Trademark Office ("PTO") points out the role of Technology Transfer in economic development in his article "How Patent Protection Helps Developing Countries" (AIPLA Quarterly, Fall 2005).

In the global economy, it has become increasingly common to license patents. An inventor may not have enough capital to build a manufacturing plant for a patented product. In this situation, the inventor can grant to a party an exclusive or non-exclusive, royalty-based license to use, make, sell, offer for sale, or import a given patented product. The inventor is enriched economically and can use the profit from the licensing agreement either for the R&D of new products or to improve existing products. On the other side, a licensee may not have enough technical background but may be able to market that product. A licensing agreement with an inventor is an opportunity for a licensee to profit from those business skills.

Licensing agreements may also stimulate the economies of developing countries by creating new employment. Developing countries should pursue licensing agreements with inventors in other countries. Providing strong patent protection will encourage patent holders in developed countries to enter into licensing agreements because production costs in most developing countries are lower than in developed countries.

It may be difficult initially to earn considerable profits from these licensing agreements because of royalty obligations to patent owners. However, in the long term, developing countries could reap generous economic benefits. Providing stronger patent protection could increase economic growth by stimulating trade, FDI, and licensing revenue.

Technology does not solely produce economic benefits. It is an important tool for closing the gap of technological information, which is crucial to the socio-economic development of developing countries.

J. Sai Deepak from SpicyIP pointing to the MoU between Microsoft and IIT Law School reports on the recent University-Industry Partnership seminar at IIT Kharagpur:

"The one-day University-Industry Partnership seminar at Rajiv Gandhi School of Intellectual Property Law, IIT Kharagpur held on 3rd February witnessed the culmination of months of efforts between the IIT Law School and Microsoft India. The objective of the collaboration, as professed by both the parties, is towards enabling capacity building in IP law and policy.

Prof.Partha P. Chakraborty, Dean of the Sponsored Research and Consultancy (SRIC) Cell of IIT Kharagpur and the Head of the IIT Law School, Prof.S.Tripathy represented IIT Kharagpur, Amarchand Mangaldas which handles Microsoft's IP portfolio was represented by Mr.Ranjan Negi, a partner at the firm and a well-respected Copyright lawyer, while Microsoft India was represented by its Associate General Counsel Mr.Rakesh Bakshi, National Technology Officer Mr.Vijay Kapur and Ms.Ankhi Das.

Chief among the dignitaries were Dr.N.L.Mitra, Advisor to the IIT Law School and Dr.Prabuddha Ganguli, a renowned IP expert and the chief advisor to the Government of India on IP affairs. The other dignitaries to grace the occasion were Ms.Sunita Sreedharan, CEO of SKS Law Associates, Prof.Madhukar Sinha of IIFT, Delhi, Mr.Vinnie Mehta of MAIT, Mr.Chandramouli of Zinnov Management Consultants and Mr.Anjan Das, Senior Director of CII.

The possibility of an MIPL (Master of Intellectual Property Law) degree jointly offered by IIT Law School and the WIPO academy was broached with the latter being represented by Ms.Gao Hang and Ms.Martha Chikowore. Panel discussions were held all day long on the following topics with Mr.Peter Ollier, the Asia Editor of Managing Intellectual Property, as the moderator(On a different note, Mr.Ollier had warm words for the SpicyIP team.):

1.Role of R&D in a knowledge-based economy
2.From R&D to commercialisation: Universities & IPR
3.Challenges and Legal issues before Online Service Providers"

To read the blog post from SpicyIP click here.