SpicyIP: Public Sector IP and Socially Responsible Licensing

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.