March 2009 Archives

Our friends at SpicyIP Blog recently had a guest post from Harry Thangaraj, who does some very interesting work around intellectual property and developing economies and has been also associated with Centre for the Management of IP in Health R&D (MIHR) and the IP Handbook of Best Practices.

To read the post from SpicyIP Blog click here.

Listed below is his brief profile:

"Harry Thangaraj is an IP researcher based at St. George's University, London. He is also part of the EU-funded Pharma-Planta Consortium consisting of 39 academic and industrial partners deveoping processes to manufacture recombinant biopharmaceuticals in plants. Harry is responsible for their IP access strategies aimed at delivering specific biopharmaceuticals at affordable cost to resource-poor countries, and establishing freedom to operate in the field. He is a part qualified patent attorney, holds a PhD in the biosciences with several years of experience in tuberculosis research, and is also a graduate of Christian Medical College India where he completed his MBBS."

Public Sector IP and Socially Responsible Licensing
Harry Thangaraj
IP Research Manager
Pharma-Planta Consortium (www.pharma-planta.org)

The public sector including universities and research councils are crucial sources of innovation and national economic development. The Bayh Dole Act in the USA has undoubtedly facilitated and catalytically incentivized the translation of research into essential goods and services, and elsewhere similar legislative instruments and/or university policy and practice modeled along Bayh Dole is likely to have major transformative effects on local economies. While largely beneficial, in some cases this may come at a cost.

Over zealous enforcement of patent rights by commercial entities who are licensees of public sector IP (PSIP) may hamper the availability of essential technologies which have potential to address the health and nutritional needs of impoverished populations who are disproportionately affected by particular diseases and agricultural failures. This may be contrary to the mission of public sector institutions which is to harness the outcomes of research for the benefit of the public. Arguably, "benefit of the public" extends beyond own country borders. There is a perceived moral and humanitarian imperative to deliver technologies at affordable cost to least developed countries (LDC) which are both financially and technologically challenged, and poorer populations within innovative developing countries (IDC).

Putting this in a historical perspective, initiatives amongst universities to put into place policies and practices related to humanitarian access to their PSIP appeared to have begun with the Zerit® controversy [1]. This fuelled a drive for a number of universities, mainly US, to take up the issue of humanitarian access to PSIP and to be seen as pioneering stakeholders in this important matter of public policy. Zerit® a drug that eventually became a critical part of antiretroviral (HIV) combination therapy had its research origin in Yale University, and a US patent was issued in 1990. Bristol-Myers Squibb (BMS), under a sponsored research agreement, had received an exclusive option to a license towards patents that were likely to emerge from the work, and also included the right to file externally. BMS included some developing countries in their filings including South Africa. This led to a highly visible public controversy with the world's attention drawn to the potential enforcement of patent rights to block any future moves to import or manufacture locally, affordable generic substitutes. Even so, since this case, other pharmaceuticals essential for developing countries have been exclusively licensed out to industry by academic entities without any Socially Responsible Licensing (SRL) provisions in place [2].

It is tricky to balance the financial incentives provided by Bayh Dole type instruments that allow universities to gain from IP protection and licensing, with humanitarian objectives. SRL policy and practice is one way to achieve this. SRL should be distinguished from other initiatives practiced for many years even before the Zerit® case by large agricultural research institutions. Examples include open source innovation, defensive publishing, patent pooling and royalty free licensing, with the intention of making technologies easily accessible to farmers and the farming industry and establishing freedom to operate in the agricultural field. The major challenge for SRL on the other hand is balancing the positive impacts of exclusivity, chiefly the expensive rapid development and regulatory clearance of critical technologies against the negative impacts of IP barriers through such exclusivity.

I notice on this blog that there was concern amongst some about "exclusive" versus "non exclusive" licensing models in relation to India's future implementation of its own "Bayh Dole Act" namely The Protection and Utilization of Public Funded Intellectual Property Bill, 2008. I believe the issue is not that simple. Most licensing professionals I have spoken to believe that universities (I use the word "universities" interchangeably with all public sector research institutions) rarely have a great deal of negotiating power when it comes to commercializing technologies, with the rare exception of blockbuster products with significant value. Even so, potential value often cannot be predicted in advance because of numerous risk variables involved in bringing an invention to market. Besides there is a compelling case to reach agreement in a deal, rather than let PSIP sit on a shelf gathering dust and thus placed out of reach of consumers. Put simply the buyer is generally at an advantage over the PSIP seller. I am reliably informed that organizations such as MIT place more reliance upon numbers of deals made rather than quantity of revenue in their metrics of success.

Stevens and Effort [1] compellingly argue that, if universities adopt humanitarian-driven SRL into their policy, and therefore are able to demonstrate to commercial entities that there is a top-level requirement to do so, it would be far easier to persuade industry to conclude deals. More important, they argue that SRL provisions need not kill the potential to make a profit when balanced against the humanitarian objective. Let me illustrate this. With the benefit of hindsight, in the Zerit® deal, the issue would - for example - not revolve around "exclusive" versus "non-exclusive" licensing deals. Rather a provision in the license agreement and/or the preceding sponsored research agreement for not patenting in a developing country with a high HIV burden, or not asserting patent rights there might have been negotiated in advance. A number of similar or alternative provisions might involve concepts of market segmentation (geographically limited exclusivity), tiered pricing, mandatory sublicenses to developing countries to meet specific humanitarian objectives, milestone requirements for product availability (at affordable cost) in developing countries and march in rights if these are unmet, or retention of certain rights to make available the technology via additional sublicenses to other parties for humanitarian objectives.

Stevens and Effort [1] have developed and advocate a number of flexible licensing strategies including licensing language and clauses and how to approach definitions - example - how to define a "Developing Country". This is a crucial issue since countries such as India and China are not unequivocally developing.

There is now a growing list of universities that are adopting SRL policy and best practices. In some cases these are not explicitly labelled as SRL, but the general concepts and objectives are similar. A 2007 White paper [3] organized/facilitated by Stanford University was the first initiative by the US technology transfer community to draw up a list of principles of best practices in PSIP for the public good. 11 universities and the Association of American Medical Colleges were signatories to the paper. It is generally believed that U.C. Berkley was the first to develop policy and best practices in SRL in 2003 [4]. In many cases, universities that have not incorporated SRL considerations into their general policies are forced to do so in a project-specific manner. This is because of donor-driven (example Bill and Melinda Gates Foundation) requirements for access strategies to be developed while carrying out large collaborative research projects in health technologies important to the developing world. One of the many reasons that the research consortium I work for (Pharma-Planta) successfully attracted funding from the EU was the intent to develop and apply an access strategy for pharmaceuticals developed for HIV.

India is at a crucial point in its history with the forthcoming establishment of its own "Bayh Dole" Act. It is critical that the implementation should be in harmony with the social objectives of its own public funded research base. India's food and health security should be amongst prime considerations. The explanatory part of section 18 of the draft Act defines "interest of security of India" too narrowly. In my opinion there is also a moral imperative to consider the needs of LDCs. In the new and evolving global economic and IP ecosystems it is likely that LDCs will be increasingly looking at IDCs, rather than the developed world, as sources of technology to address food and health security.

The Centre for the Management of IP in Health R&D (MIHR) and the Public Intellectual Property Resource for Agriculture (PIPRA) through a joint initiative sponsored by the Rockefeller Foundation and the Ewing Marion Kauffman Foundation had made available, some time ago, a Handbook of IP Management in Health and Agriculture Innovation. Although available both in print form and online for a while, I am posting this with the intention of further raising awareness of the online version. The book's intent was to inform policymakers, technology managers, IP practitioners and scientists of comprehensive strategies to efficiently translate, transfer and disseminate technology related to innovative and essential health and agricultural products and processes. And in doing so, humanitarian access, availability and affordability to technologies that benefit poorer populations in developing countries forms the core of these strategies. IMHO it also serves as the most valuable resource on IP management for ANY IP practitioner or policymaker. I had the privilege of working for MIHR in the past, but I cannot better a review written by the Licensing Executive Society, and will simply point you to the web link [5].

The entire Handbook content, roughly 2000 pages, is available for free here. My personal experience suggests that the navigation will take some getting used to, but your patience will be amply rewarded.

References

[1] Using Academic License Agreements to Promote Global Social Responsibility. Stevens A.J and Effort A.E. Journal of the Licensing Executive Society International. June 2008. 85-101.

[2] Panjabi R., Rajkumar R., and Kim J.Y. (2008) Universities Have a Key Role in Global Access to Medicines. The Chronicle of Higher Education. Available online: www.chronicle.com

[3] In the Public Interest: Nine Points to Consider in Licensing University Technology.

[4] Socially Responsible Licensing at U.C. Berkley. An Intellectual Property Management Strategy to Stimulate Research Support & Maximize Societal Impact.

[5] Book Review: Intellectual Property Management In Health And Agriculture
Innovation: A Handbook Of Best Practices.

Our friends at the Afro- IP blog point out to the meeting in Accra to deliberate on providing regional and national data base systems.

Heads of tertiary institutions and academic researchers in Africa are meeting in Accra to deliberate on providing regional and national data base systems to improve the management and access of African scholarly works according to Ghana News Agency.

The three-day seminar organized by the Association of African Universities (AAU) to discuss policy guidelines for the operation of Institutional Repositories in Africa for the creation of a common platform to manage and disseminate theses and dissertations of African Universities electronically. Among other objectives the organisers seek to facilitate the development of copyright procedures and regulations to protect intellectual property rights of African university graduates and researchers.

To read the post from the Afro- IP blog click here.

The Author Feroz Ali Khader is an advocate and the author of the book 'The Touchstone Effect: The Impact of Pre-grant Opposition on Patents.' In this piece in The Hindu he looks into the new IP bill in India in the lines of the US Bayh-Dole Act. As per Khader the Bill titled 'The Protection and Utilisation of Public Funded Intellectual Property Bill, 2008' has already seen its share of brickbats for blindly emulating the Bayh-Dole Act when the conditions of basic research in India do not warrant such imitation and that too without some of the measures for protecting public interest contained in the US Act.

Does patenting research change the culture of science?

The Bayh-Dole Act does not encourage sharing of results

The 'experimental use' of patented invention is solely for amusement

"Dr. Georges Kohler, Nobel laureate and co-inventor of the hybridoma technique, did not care much about patents. As a result, the hybridoma technique -- a technique for developing monoclonal antibodies of exceptional purity and specificity that are able to recognise and bind a specific antigen -- remained in the public domain. This paved the road for using it in numerous diagnostic tools to test for cancer and AIDS.

Unlike the hybridoma technique, the native and recombinant forms of Taq DNA polymerase (Taq), an important tool used commonly in DNA sequencing, is protected by patents held by Hoffman-La Roche. In 1995, the Taq patents became the cause for a legal action against more than 40 U.S. universities and research institutes and hundreds of individual scientists. Roche's cause of grievance pertained to the purchase of Taq by scientists for use from an unauthorised source.

Biomedical research in the U.S. underwent a major change in 1980. The U.S. Congress passed the Bayh-Dole Act which encouraged universities and other institutions to patent discoveries arising from federally supported research and permitted the transfer of these technologies to the private sector. Patent filings increased manifold. But the new law also changed the culture of science.

Before the Act was passed, much of biomedical research followed a shared approach. Researchers were free to use research results as they were all in the public domain. Federal funded research discoveries remained unpatented and formed the foundation for many applied (downstream) research. Drug companies used them for developing cures. The Act, however, changed it. Results were kept secretive.

The Bayh-Dole Act encouraged private participation in basic research, allowed the patenting of basic research, and permitted licensing of the research to private hands for exclusive commercialisation. Even after nearly three decades of its existence, the effect of the Bayh-Dole Act remains controversial.

The Indian Government is presently deliberating on a new IP bill in the lines of the US Bayh-Dole Act. The Bill titled 'The Protection and Utilisation of Public Funded Intellectual Property Bill, 2008' has already seen its share of brickbats for blindly emulating the Bayh-Dole Act when the conditions of basic research in India do not warrant such imitation and that too without some of the measures for protecting public interest contained in the US Act.

The Bill would certainly qualify for an untimely piece of legislation though proposed with the laudable objective of allowing universities to patent and commercialise public funded research. One significant impact of the Bill is strangely not be seen or noticed within the provisions of the Bill. If the Bill is enacted it would severely undermine the 'experimental use' exception which grants immunity to universities and research institutions which are involved in research from patent infringement actions.

Section 47(3) of the Patents Act, 1970 provides exemption from infringement liability when the use of a patented invention is for research or experimental use which includes imparting instructions to pupils.

The US patent law also acknowledges the 'experimental use' exception but the new role of universities as profit-making organisation introduced by the Bayh-Dole Act has significantly weakened the immunity enjoyed by universities.

Since the Bayh-Dole Act came into force the number of US universities involved in patent infringement suits rose drastically. Many universities, such as University of California, University of Minnesota, Emory University, Columbia University, Harvard University, Cornell University, and MIT have been parties to infringement suits.

In Madey v Duke University (2002), the Court of Appeals for the Federal Circuit rejected the 'experimental use' defence taken by Duke University.

It narrowed the research defence to exclude any unauthorised use of intellectual property in the course of university research, particularly when university research and development efforts were targeted at the commercialisation of new biomedical research tools.

The Court held that experimental use defence will apply only if the use of the patented invention is solely for amusement, to satisfy idle curiosity, or for strictly philosophical inquiry. The Court refused to entertain the defence if the use was in furtherance of the alleged infringer's legitimate business.

Deterring discovery

Many legal experts are of the view that narrowing down the experimental use exception to mean research for 'amusement' and 'philosophical inquiry' will deter scientific discovery.

Scientists and researchers who use patented research tools without authorisation will now do so at the risk of being made parties to future litigation.

And clearing the way will involve licensing patented research tools which will further add to the transaction cost of conducting research.

Commercial exploitation and 'experimental use' immunity do not go together. Universities and research institutes will have to choose between the two. By allowing universities to patent and commercialise their research, the proposed Bill will expose the universities to the rigmarole of patent litigation, either to enforce their patents or to defend themselves against charges of infringement.

Universities will pay a heavy price the day they are prevented from pursuing a line of research for the fear of infringing patents. Developing economies cannot afford to give up or even dilute the 'experimental use' exception enjoyed by its universities.

Ideally, the move to commercialise university research must have come after removing all the barriers that hinder research and restrict its produce. Till such time, the temptation of putting the horse before the cart must be resisted."

This post comes from Prof Karen Hersey in the series of the blog's previous post on the issues of royalty payment under Bayh Dole type legislations in South Africa and India.

Prof Karen Hersey is Professor of Law at Pierce Law and a past President of the Association of University Technology Managers (AUTM). She is a former Senior Counsel for intellectual property at Massachusetts Institute of Technology. In 1992, she served as the academic community's representative to a congressionally mandated Department of Defense Government-Industry Advisory Committee on Rights in Technical Data and Computer Software to study and recommend changes in the Department of Defense Procurement Regulations in the areas of technical data and computer software.

She publishes widely in the area of intellectual property law as it impacts institutions of higher education. In addition to offering courses dealing with technology transfer for nonprofit organizations and intellectual property management in universities, she is also the co founder of the International Technology Transfer Institute at Pierce Law.

Royalty Sharing: A Matter of Law or a Matter of Policy

Recently, with at least two countries, India and South Africa, legislating in the area of commercialization of academic research funded by their respective governments, the question how to provide for the sharing of royalties with university inventors of commercialized patents (or other intellectual property) has been raised.  To some extent patterned after the 1980 Bayh-Dole Act in the U.S., (35 USC 200-212), in both countries the framers of the bills have opted to include, as Bayh-Dole does, a provision for sharing royalties with creators and inventors.  The difference between the two new initiatives, and the question framed for this discussion, is one of how the requirement for royalty sharing is mandated.  In the case of the India Bill (Public Funded Intellectual Property Bill, 2008), the requirement to share at least 30% of royalty income (after some deductions) is directly introduced as part of the law.  In other words, sharing a minimum of 30% is legally required.  The South African version (Intellectual Property Rights from Publicly Financed Research and Development Act), mirroring Bayh-Dole, requires royalty sharing but declines to mandate a specific percentage or floor.  

Perhaps some reflection from the U.S. experience is instructive.  The sharing of royalties with inventors, when introduced as a statutory requirement by Bayh-Dole, was controversial because it was a significant departure from industry practice.  The obvious intent of the U.S. Congress in mandating royalty sharing was as an inducement for faculty to participate in the innovation and commercialization process.  Since then, it has also become important as an element of consideration for requiring faculty and students to give up their initial rights of ownership as inventors, since they are rarely hired to invent and universities do not automatically have ownership rights over their inventions.  This, by the way, has led to not inconsequential litigation as universities through their policies changed their royalty-sharing percentages over the years, sometimes to the detriment of the inventors.  Not only have questions of adequacy of consideration for these changes been tested in the courts, but issues of how and when to apply changes in royalty-sharing formulas have also been litigated.

Without further guidance, in the early days of Bayh-Dole university policy makers in determining the appropriate share of royalties were free to make arbitrary decisions.  They could either reward inventors by granting them a high share of royalties or minimize the importance of inventive efforts by a low share.  In other words, universities were able to send a message to the university community, either encouraging or discouraging innovation and commercialization, through the share of royalties they agreed to grant.  That some universities also sent messages related to value - low royalty share, low inventor value vs. high royalty share, high inventor value goes without saying. And, of course, there was no consistency between U.S. institutions in the early days.  Royalty sharing percentages went from lows of 15% to highs of 40%.  This situation created some competition between universities in their recruitment of entrepreneurially-minded faculty and is likely one factor that led to the commonly accepted , but not universal, ⅓ - ⅓ - ⅓ (inventor-department/lab-university) formula that presently exists today in the U.S.  

While this author is not 100% supportive of many of the provisions of the India Bill that plough too deeply into process at the expense of principle, setting a floor of 30% arguably accomplishes two things.  First, it sends a message from government to research institutions receiving grants that the efforts of faculty and students who contribute to the process of innovation and commercialization is valued.  Second, it prevents grant recipients from, quite frankly, playing politics with rewards that their innovators justly earn.  As we have learned in the U.S., getting buy-in from our talented, but time-challenged faculty to participate in the commercialization process requires daily effort.  Guaranteeing academic inventors a fair share of the proceeds earned from their labors sends an important signal that they and the university are partners in helping to build 21^st century knowledge economies.  Leaving royalty-sharing formulas to the arbitrary demands and pressures of university policy-makers does not.