MANAGING UNIVERSITY INTELLECTUAL PROPERTY IN THE PUBLIC INTEREST

Committee on Management of University Intellectual Property: Lessons from a Generation of Experience, Research, and Dialogue

Board on Science, Technology, and Economic Policy

Committee on Science, Technology, and Law

Policy and Global Affairs

Stephen A. Merrill and Anne-Marie Mazza, Editors

NATIONAL RESEARCH COUNCIL
OF THE NATIONAL ACADEMIES

THE NATIONAL ACADEMY PRESS

Washington, D.C.
www.nap.edu



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Managing University Intellectual Property in the Public Interest Committee on Management of University Intellectual Property: Lessons from a Generation of Experience, Research, and Dialogue Board on Science, Technology, and Economic Policy Committee on Science, Technology, and Law Policy and Global Affairs Stephen A. Merrill and Anne-Marie Mazza, Editors THE NATIONAL ACADEMY PRESS Washington, D.C. www.nap.edu

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THE NATIONAL ACADEMIES PRESS 500 Fifth Street, N.W. Washington, DC 20001 NOTICE: The project that is the subject of this report was approved by the Governing Board of the National Research Council, whose members are drawn from the councils of the National Academy of Sciences, the National Academy of Engineering, and the Institute of Medicine. The members of the committee responsible for the report were chosen for their special compe- tences and with regard for appropriate balance. This study was supported by Contract/Grant No. 30700699 between the National Academy of Sciences and the Andrew W. Mellon Foundation; Contract/Grant No. 9903375 between the National Academy of Sciences and The Robertson Foundation; Contract/Grant No. 07-90086- 000-GEN between the National Academy of Sciences and the John T. and Catherine D. Mac- Arthur Foundation; Contract/Grant No. 20080270 between the National Academy of Sciences and the Ewing Marion Kauffman Foundation; Contract/Grant No. 1007160 between the Na- tional Academy of Sciences and the Burroughs Wellcome Fund; Contract/Grant No. 2007129 between the National Academy of Sciences and the Doris Duke Charitable Fund; The High Q Foundation, Myelin Repair Foundation, the FasterCures Center of the Milken Institute, and an anonymous foundation. Any opinions, findings, conclusions, or recommendations expressed in this publication are those of the author(s) and do not necessarily reflect the views of the or- ganizations or agencies that provided support for the project. International Standard Book Number-13: 978-0-309-16111-4 International Standard Book Number-10: 0-309-16111-8 Limited copies are available from: Board on Science, Technology, and Economic Policy National Research Council 500 Fifth Street, N.W., Keck Center 574, Washington, D.C. 20001 Phone: (202) 334-2200 Fax: (202) 334-1505 E-mail: step@nas.edu Committee on Science, Technology, and Law National Research Council 500 Fifth Street, N.W., Keck Center 510, Washington, D.C. 20001 Phone: (202) 334-1713 Fax: (202) 334-2530 E-mail: cstl@nas.edu Additional copies of this report are available from the National Academies Press, 500 Fifthe Street, N.W., Lockbox 285, Washington, DC 20055; (800) 624-6242 or (202) 334-3313 (in the Washington metropolitan area); Internet, http://www/nap.edu. COVER DESIGN: Athena, goddess of wisdom (symbolized by her owl), supporting Heracles (Hercules) in the course of his twelve labors, which earned him immorality. Medallion from a drinking cup, 480-470 BC, in the collection of the Staatliche Antikens ammlungen, Munich, Germany. Copyright 2011 by the National Academy of Sciences. All rights reserved. Printed in the United States of America

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The National Academy of Sciences is a private, nonprofit, self-perpetuating society of distinguished scholars engaged in scientific and engineering research, dedicated to the furtherance of science and technology and to their use for the general welfare. Upon the authority of the charter granted to it by the Congress in 1863, the Academy has a mandate that requires it to advise the federal government on scientific and technical matters. Dr. Ralph J. Cicerone is president of the National Academy of Sciences. The National Academy of Engineering was established in 1964, under the charter of the National Academy of Sciences, as a parallel organization of outstanding engineers. It is autonomous in its administration and in the selection of its members, sharing with the National Academy of Sciences the responsibility for advising the federal government. The National Academy of Engineering also sponsors engineering programs aimed at meeting national needs, encourages education and research, and recognizes the superior achievements of engineers. Dr. Charles M. Vest is president of the National Academy of Engineering. The Institute of Medicine was established in 1970 by the National Academy of Sciences to secure the services of eminent members of appropriate professions in the examination of policy matters pertaining to the health of the public. The Institute acts under the re- sponsibility given to the National Academy of Sciences by its congressional charter to be an adviser to the federal government and, upon its own initiative, to identify issues of medical care, research, and education. Dr. Harvey V. Fineberg is president of the Institute of Medicine. The National Research Council was organized by the National Academy of Sciences in 1916 to associate the broad community of science and technology with the Academy’s purposes of furthering knowledge and advising the federal government. Functioning in accordance with general policies determined by the Academy, the Council has become the principal operating agency of both the National Academy of Sciences and the Na- tional Academy of Engineering in providing services to the government, the public, and the scientific and engineering communities. The Council is administered jointly by both Academies and the Institute of Medicine. Dr. Ralph J. Cicerone and Dr. Charles M. Vest are chair and vice chair, respectively, of the National Research Council. www.national-academies.org

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COMMITTEE ON MANAGEMENT OF UNIVERSITY INTELLECTUAL PROPERTY: LESSONS FROM A GENERATION OF EXPERIENCE, RESEARCH, AND DIALOGUE Mark S. Wrighton, Chair Chancellor and Professor of Chemistry Washington University in St. Louis Mark C. Fishman, Vice Chair President and Chief Executive Officer Novartis Institutes for BioMedical Research Craig A. Alexander Wesley M. Cohen Vice President and General Frederick C. Joerg Professor Counsel of Business Administration Howard Hughes Medical Institute and Professor of Economics, Management, and Law Faculty Director, Center for Margo A. Bagley Professor of Law Entrepreneurship and Innovation University of Virginia The Fuqua School of Business, Duke University Wendy H. Baldwin Director Robert Cook-Deegan Program on Poverty, Gender, and Director Youth Center for Genome Ethics, Law, and The Population Council Policy Institute for Genome Sciences and Policy Alan B. Bennett Executive Director, Public Duke University Intellectual Property Resource Associate Dean for Agriculture Mark S. Kamlet University of California, Davis Provost and Professor of Economics and Public Policy Carnegie Mellon University Greg Kisor Vice President and Portfolio Architect Intellectual Ventures v

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David Korn Dorothy K. Robinson Vice Provost for Research Vice President and General Counsel Harvard University Yale University Katharine Ku N. Darius Sankey Director, Office of Technology Managing Director Licensing Zone Ventures Stanford University Jerry G. Thursby Professor of Strategic Management Edward D. Lazowska Bill and Melinda Gates Chair & Ernest Scheller, Jr. Chair in Computer Science and College of Management Engineering Georgia Institute of Technology University of Washington Jennifer L. West Isabel C. Cameron Professor of Marshall C. Phelps, Jr. Corporate Vice President, Bioengineering and Director, Intellectual Property Policy Institute of Bioscience and and Strategy (retired) Bioengineering Microsoft Corporation Rice University STAFF Stephen A. Merrill Merlina Manocaran Study Director Christine Mirzayan Science and Technology Policy Graduate Fellow Anne-Marie Mazza Study Director Leah Nichols Christine Mirzayan Science and Steven Kendall Senior Program Associate Technology Policy Graduate Fellow Daniel Mullins Program Associate Shaun McGirr Research Fellow Cynthia Getner Financial Officer Eric S. Douglas Research Fellow Guru Madhavan Christine Mirzayan Science and Technology Policy Graduate Fellow vi

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BOARD ON SCIENCE, TECHNOLOGY, AND ECONOMIC POLICY (STEP) For the National Research Council (NRC), this project was overseen by the Board on Science, Technology, and Economic Policy (STEP), a standing board of the National Research Council established by The National Academies of Sciences and Engineering and the Institute of Medicine in 1991. The mandate of the STEP Board is to integrate understanding of scientific, technological, and economic elements in the formulation of national policies to promote the economic well-being of the United States. STEP bridges the disciplines of business management, engineering, economics, and the natural social sciences to bring diverse expertise to bear on issues of innovation, productivity, and national competitiveness. The members of the STEP Board and associated NRC staff are listed below. Paul L. Joskow, Chair President Alfred P. Sloan Foundation Lewis Coleman Amory Houghton President & CFO, Former Member of Congress DreamWorks Animation William Meehan Lecturer in Strategic Management and Alan Garber Henry J. Kaiser, Jr. Professor Raccoon Partners Lecturer in Stanford University School of Management Medicine Stanford Graduate School of Business Ralph Gomory David Morgenthaler Research Professor Founding Partner Stern School of Business Morgenthaler Ventures New York University Joseph Newhouse John D. MacArthur Professor of Mary Good Donaghey University Professor and Health Policy and Management Dean Harvard University College of Information Science and Systems Edward Penhoet University of Arkansas at Little Rock Director Alta Partners vii

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Arati Prabhakar Laura Tyson General Partner S.K. and Angela Chan Professor of U.S. Venture Partners Global Management Haas School of Business University of California at Berkeley William Raduchel Independent Director and Investor Alan Wolff Partner Dewey & LeBoeuf LLP EX-OFFICIO MEMBERS Ralph J. Cicerone President National Academy of Sciences Charles M. Vest President National Academy of Engineering Harvey V. Fineberg President Institute of Medicine STAFF Stephen A. Merrill Charles Wessner Executive Director Program Director Sujai J. Shivakumar David E. Dierksheide Senior Program Officer Program Officer McAlister Clabaugh Cynthia Getner Program Officer Financial Officer Daniel Mullins David Dawson Program Associate Senior Program Assistant viii

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COMMITTEE ON SCIENCE, TECHNOLOGY, AND LAW (CSTL) David Korn, Co-Chair Vice Provost for Research Harvard University Richard A. Meserve, Co-Chair President, Carnegie Institution for Science, and Senior Of Counsel, Covington & Burling LLP Frederick R. Anderson, Jr. Partner Arturo Casadevall McKenna, Long & Aldridge LLP Leo and Julia Forchheimer Professor of Microbiology and Immunology Chair, Department of Biology and Arthur I. Bienenstock Special Assistant to the President Immunology and for Federal Research Policy and Professor of Medicine Director, Wallenberg Research Link Albert Einstein College of Medicine Stanford University Joe S. Cecil Project Director, Program on Scientific Barbara E. Bierer Professor of Medicine and Technical Evidence Harvard Medical School and Division of Research, Federal Judicial Senior Vice President, Research Center Brigham and Women’s Hospital Rochelle Cooper Dreyfuss Pauline Newman Professor of Law and Elizabeth H. Blackburn Morris Herzstein Professor of Biology Director, Engelberg Center on and Physiology Innovation Law and Policy University of California, San Francisco New York University School of Law John Burris Drew Endy President Assistant Professor, Bioengineering Burroughs Wellcome Fund Stanford University and President, The BioBricks Foundation Paul G. Falkowski Board of Governors Professor in Geological and Marine Science Department of Earth and Planetary Science Rutgers, The State University of New Jersey ix

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Marcus Feldman Prabhu Pingali Burnet C. and Mildred Wohlford Deputy Director of Agricultural Professor of Biological Sciences Development, Global Stanford University Development Program Bill & Melinda Gates Foundation Alice P. Gast President Harriet Rabb Lehigh University Vice President and General Counsel Rockefeller University Jason Grumet President Barbara Rothstein Bipartisan Policy Center Director The Federal Judicial Center Gary W. Hart Wirth Chair in Environmental and Jonathan M. Samet Community Development Policy Professor and Flora L. Thornton Chair University of Colorado, Denver Department of Preventative Medicine, Keck School of Medicine and Director, Institute for Global Health Benjamin W. Heineman, Jr. Senior Fellow University of Southern California Harvard Law School and Harvard Kennedy School of Government David S.Tatel Judge U.S. Court of Appeals for the District D. Brock Hornby Judge of Columbia Circuit U.S. District Court District of Maine Sophie Vandebroek Chief Technology Officer and President, Xerox Innovation Group Alan B. Morrison Lerner Family Associate Dean for Xerox Corporation Public Interest and Public Service George Washington University Law School STAFF Anne-Marie Mazza Director Steven Kendall Senior Program Associate Guruprasad Madhavan Program Officer x

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Preface This study of the organization, functioning, and effects of university technology transfer activities involving formal intellectual property rights resulted from the deliberations of two standing National Research Council (NRC) committees: the Board on Science, Technology, and Economic Policy (STEP) and the Committee on Science, Technology, and Law (CSTL). Aware of both claims for the success and criticisms of the system that has evolved since passage of P.L. 96-517, the Patent and Trademark Act Amendments of 1980 (the Bayh-Dole Act), members of the two committees concluded that an Academy review was appropriate and that the eve of the Act’s 30th anniversary made it timely. The Academies sought private funding for the project and ten philanthropic institutions responded: the Andrew W. Mellon Foundation, Robertson Foundation, John T. and Catherine D. MacArthur Foundation, Ewing Marion Kauffman Foundation, Burroughs Wellcome Fund, Doris Duke Charitable Fund, High Q Foundation, Myelin Repair Foundation, FasterCures Center of the Milken Institute, and one foundation whose grant-making is anonymous. The Academies and the committee assembled to conduct the study are grateful for their support. The NRC Governing Board Executive Committee presented the committee with the charge to conduct a consensus study distilling lessons from research and experience since the Bayh-Dole Act of 1980 for the acquisition, licensing, defense, and sale of intellectual property arising from publicly and privately sponsored research at U.S. academic institutions. The project will involve synthesizing existing research, commissioning a survey of university officials and consulting with private and public research sponsors, holding a national conference, evaluating the various objectives of technology transfer, and xi

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xii PREFACE recommending good practices for research institutions and research sponsors. Those practices will take into account significant differences in the role of intellectual property in different fields of technology, differences in the constraints on and resources of universities, objectives of different research sponsors, and differences among potential commercial licensees of university-owned intellectual property. The incentives that influence the behavior of researchers, administrators, and public policy makers will be examined and related to public goods. In the course of preparing this report, the committee met five times. At four of the meetings, oral presentations were made by individuals from government, universities, and industry listed in Appendix B. Committee members presided over sessions of a two-day national conference held in Washington on November 20-21, 2008. Invited presenters are listed in Appendix A. The conference also provided an opportunity for interested members of the public to articulate their views. In addition, the committee commissioned an original background paper, Legal Context of University Intellectual Property and Technology Transfer, by Sean O’Connor, University of Washington, Gregory Graff, Colorado State University, and David Winickoff, University of California at Berkeley, that is available on the Academy website at http://sites.nationalacademies.org/PGA/step/ PGA_058712. The committee also provided partial support for a previously planned survey of university technology transfer personnel, conducted by Professor Maryann Feldman, University of North Carolina at Chapel Hill, and Janet Bercovitz, University of Illinois at Urbana-Champaign. The results made available to the committee can be found under the title “Commissioned Papers” at http://www.nationalacademies.org/step. Other results will be reported in due course. The papers by O’Connor et al. and Feldman and Bercovitz were subject to external review. Finally, the committee received very preliminary results of an examination of invention disclosures filed with technology transfer offices of the University of California system over a five-year period, 1992 to 1997, by Kyriakos Drivas, Zhen Lei, and Brian Wright. See http://www.national academies.org/step. The committee is grateful to all of these important contributors to its understanding of the system and its consequences. The report has been reviewed in draft form by individuals chosen for their diverse perspectives and technical expertise, in accordance with procedures approved by the National Academies’ Report Review Committee. The purpose of this independent review is to provide candid and critical comments that will assist the institution in making its published report as sound as possible and to ensure that the report meets institutional standards for objectivity, evidence, and responsiveness to the study charge. The review comments and draft manuscript remain confidential to protect the integrity of the process.

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PREFACE xiii We wish to thank the following individuals for their review of this report: Robert Blackburn, DNAlex.com; Michael G. Borrus, X/Seed Capital Management; Wylie Burke, University of Washington; Joseph DeSimone, University of North Carolina at Chapel Hill; Maria Freire, The Albert and Mary Lasker Foundation; Rebecca Henderson, Harvard University; Krisztina Holly, University of Southern California; Trevor Jones, ElectroSonics Medical; Richard Nelson, Columbia University; Marvin Parnes, University of Michigan; Lori Pressman, Harris & Harris Group; Luis Proenza, University of Akron; Tim Quigg, University of North Carolina at Chapel Hill; John Raubitschek, U.S. Department of Commerce (retired); and Catherine Woteki, Mars, Inc. Although the reviewers listed above have provided many constructive comments and suggestions, they were not asked to endorse the conclusions or recommendations, nor did they see the final draft of the report before its release. The review of this report was overseen by Johanna Dwyer, Tufts University, and Joseph Cecil, The Federal Judicial Center. Appointed by the National Academies, they were responsible for making certain that an independent examination of this report was carried out in accordance with institutional procedures and that all review comments were carefully considered. Responsibility for the final content of this report rests entirely with the authoring committee and the institution. The committee’s work was ably assisted by staff of both the STEP Board and the CSTL. We wish to thank Stephen Merrill, Executive Director, STEP, and Anne-Marie Mazza, Director, CSTL, who served as study directors, and their colleagues Steven Kendall, Daniel Mullins, and several Academy science and technology policy fellows. Mark S. Wrighton, Chair Committee on Management of University Intellectual Property: Lessons from a Generation of Experience, Research, and Dialogue

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Contents SUMMARY 1 1 THE GROWTH OF UNIVERSITY TECHNOLOGY 13 TRANSFER 2 INFLUENCE OF TECHNOLOGY TRANSFER ON UNIVERSITY RESEARCH NORMS AND PRACTICES 27 3 EFFECTIVENESS AND ACCOUNTABILITY OF UNIVERSITY TECHNOLOGY TRANSFER ACTIVITIES 41 4 FINDINGS AND RECCOMENDATIONS 55 APPENDIXES A. Conference Agenda 83 B. Conference Presenters 91 C. Biographical Information of Committee and Staff 93 xv

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