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Influence of Technology Transfer on University Research Norms and Practices

INTRODUCTION

Two issues have dominated discussion of intellectual property (IP)-based university technology transfers since the current system was put in place at most universities. The first centers on whether efforts to commercialize technology have undermined traditional academic norms, and the second focuses on the effectiveness of universities in achieving the goals of the Bayh-Dole Act. This chapter addresses the first set of concerns, that is, whether the technology transfer system is having adverse effects on publicly funded science by inhibiting open communication of research results and sharing of research inputs and data, distorting research priorities, and detracting from faculty hiring and promotion based on scholarly excellence. Beyond concerns about the effect of commercial motives on the behavior of researchers and institutions, some observers have been apprehensive that patents on elements of research may block, limit, or delay follow-on investigation because of the difficulty and cost of securing rights to use those proprietary elements.

In addressing these hypotheses, the committee drew upon a variety of sources. The subject of university-owned IP has attracted a number of scholars in economics, sociology, and other disciplines who have produced a fairly extensive body of empirical research. Much of that research concerns the impact of IP on the university research enterprise.

The committee also probed the alleged adverse effects of promoting technology commercialization with presenters in pubic sessions, including the November 2008 workshop held in Washington. Further, the committee carefully considered the deliberations that led to the informal guidance issued in 2007 by members of the academic research community in response to concerns that overly aggressive proprietary behavior on the part of universities could be having adverse effects on the norms and missions of academic research (see Box 2A).



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2 Influence of Technology Transfer on University Research Norms and Practices INTRODUCTION Two issues have dominated discussion of intellectual property (IP)-based university technology transfers since the current system was put in place at most universities. The first centers on whether efforts to commercialize technology have undermined traditional academic norms, and the second focuses on the effectiveness of universities in achieving the goals of the Bayh-Dole Act. This chapter addresses the first set of concerns, that is, whether the technology transfer system is having adverse effects on publicly funded science by inhibiting open communication of research results and sharing of research inputs and data, distorting research priorities, and detracting from faculty hiring and promotion based on scholarly excellence. Beyond concerns about the effect of commercial motives on the behavior of researchers and institutions, some observers have been apprehensive that patents on elements of research may block, limit, or delay follow-on investigation because of the difficulty and cost of securing rights to use those proprietary elements. In addressing these hypotheses, the committee drew upon a variety of sources. The subject of university-owned IP has attracted a number of scholars in economics, sociology, and other disciplines who have produced a fairly extensive body of empirical research. Much of that research concerns the impact of IP on the university research enterprise. The committee also probed the alleged adverse effects of promoting technology commercialization with presenters in pubic sessions, including the November 2008 workshop held in Washington. Further, the committee carefully considered the deliberations that led to the informal guidance issued in 2007 by members of the academic research community in response to concerns that overly aggressive proprietary behavior on the part of universities could be having adverse effects on the norms and missions of academic research (see Box 2A). 29

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30 INFLUENCE OF TECHNOLOGY TRANSFER Box 2A Nine Points to Consider in Licensing University Technology 1. Universities should reserve the right to practice licensed inventions and to allow other nonprofit and governmental organizations to do so. 2. Exclusive licenses should be structured in a manner that encourages technology development and use. 3. Strive to minimize the licensing of “future improvements.” 4. Universities should anticipate and help to manage technology transfer-related conflicts of interest. 5. Ensure broad access to research tools. 6. Enforcement action should be carefully considered. 7. Be mindful of export regulations. 8. Be mindful of the implications of working with patent aggregators. 9. Consider including provisions that address unmet needs, such as those of neglected patient populations or geographic areas, giving particular attention to improved therapeutics, diagnostics and agricultural technologies for the developing world. Endorsing “consideration” of the Nine Points, AUTM urged its individual members to seek their institution’s endorsement of the document by whatever internal decision-making processes are used. AUTM continues to seek endorsements of the document. As of January 2010, only 74 of AUTM’s member institutions have signed on. CONCERNS ABOUT UNINTENDED EFFECTS ON ACADEMIC NORMS Regardless of whether the real contributions of patenting and licensing activity to commercialization of federally funded inventions can actually be isolated and measured, some observers have expressed concern about whether the drive to patent, license, and commercialize research discoveries is antithetical to the traditional norms and functions of the university, namely, to expose students to the latest advances in knowledge, to conduct systematic inquiries, and to widely communicate research findings.51 Is it possible that the 51 P. Dasgupta and P.A. David. 1994. Toward a new economics of science. Research Policy 23(5):487-521; see R.S. Eisenberg. 2003. Patent swords and shields. Science 299:1018-1019; D.

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MANAGING UNIVERSITY INTELLECTUAL PROPERTY 31 time and resources expended on, or potential conflicts of interest created by, seeking commercial applications divert faculty from their core mission of conducting curiosity-driven “fundamental” research? Does the potential of financial sponsorship and compensation influence research results or decisions about which results are made public and in what time frame? Does overemphasis on exclusive licensing result in higher costs or diminished access to products for consumers (a concern that is especially pertinent to the fields of drug development and clinical diagnostics) or to research materials for other academic scientists? Are institutions misusing or misinterpreting the Bayh-Dole Act in an attempt to increase revenues and protect their own investments in infrastructure and personnel? Some critics have remarked on the privatization of the scientific commons associated with aggressive university commercialization efforts. These concerns center on whether the norm of open science that has traditionally dominated academic research would be threatened by restrictions on or delays of publication and limits on access to discoveries, data, instruments, tools, and other research inputs. Some assert “Bayh-Dole contributed to the creation of an ‘anti-commons’ by establishing incentives for universities to develop independent technology transfer programs and to manage IP in a highly individualized and even competitive framework.”52 Researchers have tended to examine each of these propositions independently. A few have acknowledged that one of the difficulties is disentangling the effects of the acquisition and exercise of IP rights from other trends that may be influencing faculty and institutional behavior in the same direction—in particular, the intensification of reputational competition among research scientists. Cohen and Walsh have written, for example, that even before Bayh-Dole, “there was an earlier concern over the extent to which the drive for recognition among scientists and competition for priority and associated rewards also limited contributions to the scientific commons.”53 In their survey of biomedical researchers, they found that “excludability” can be a real concern with regards to materials, but patent protection per se is rarely used as a means of exclusion. Indeed, patenting requires disclosures, even if delayed. Mowery, R.R. Nelson, B.N. Sampat, and A.A. Ziedonis. 2004. Ivory Tower and Industrial Innovation: University-Industry Technology Transfer Before and After the Bayh-Dole Act. Palo Alto, CA: Stanford University Press; R.R. Nelson. 2004. The market economy and the scientific commons. Research Policy 33:455-471; D. Bok. 2003. Universities in the Marketplace: The Commercialization of Higher Education. Princeton NJ: Princeton University Press; J. Washburn. 2005. University, Inc.: The Corporate Corruption of Higher Education. New York: Basic Books; E. Press and J. Washburn. 2000. The Kept University. The Atlantic Monthly 285(3):39-54. 52 S. Boettiger and A.B. Bennett. 2006. Bayh-Dole: If we knew then what we know now. Nature Biotechnology 24(3):320-323. 53 W.M. Cohen and J.P. Walsh. 2008. Real impediments to academic biomedical research. Innovation policy and the economy. National Bureau of Economic Research 8:1-30. P. 1.

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32 INFLUENCE OF TECHNOLOGY TRANSFER CONCERNS ABOUT CONFLICTS OF INTEREST Bayh-Dole’s encouragement of university-industry partnerships and the significant increase in federal funding for academic research have left many concerned about the potential for conflicts of interest. Although the federal government has regulated financial conflicts of interest in federally sponsored research since 1995, reports in the press of high-profile incidents of researchers tied to corporate entities following improper procedures with human research subjects or reporting inaccurate results have caused major university groups to reevaluate academic conflict of interest policies and practices.54 In addition, numerous journals have agreed to adopt a new standard conflict of interest disclosure form drafted by the International Committee of Medical Journal Editors that probes deeper into the financial and nonfinancial interests of published authors.55 Furthermore, NIH has been amending its regulations on the “Responsibility of Applicants for Promoting Objectivity in Research.” Noting that since the promulgation of regulations in 1995, biomedical and behavioral research and the resulting interactions among government, universities, and industry have become increasingly complex, the proposed amendments seek to “expand and add transparency to investigator disclosure of significant financial interests, [and] enhance regulatory compliance and effective institutional oversight and management of investigators’ financial conflicts of interests.”56 There is an inherent tension in the post Bayh-Dole environment, but by no means solely attributable to it, where universities are encouraged to efficiently transfer their knowledge to the private sector for the development of products that will benefit the public. Interactions between researchers and industry are critically important as the give and take of ideas and know-how creates a more fruitful and promising environment for translating the results of research into innovative products. Yet, this closeness also brings with it the risk that research, and the integrity of individual researchers and their institutions, may be compromised. Conflicts of interest tend to arise under two broad categories: (1) those applicable to individual investigators who enter into agreements in which 54 See Association of American Universities (AAU). 2001. Report on Individual and Institutional Financial Conflict of Interest; Association of American Medical Colleges (AAMC). 2001. Protecting Subjects, Preserving Trust, Promoting Progress: Policy and Guidelines for the Oversight of Individual Financial Interests in Human Subjects Research. Available at: https://www.aamc.org/download/75302/data/firstreport.pdf; AAMC. 2002. Protecting Subjects, Preserving Trust, Promoting Progress II: Principles and Recommendations for Oversight of an Institution’s Financial Interests in Human Subjects Research. Available at: https://www.aamc.org/download/75300/data/2002coireport.pdf; AAMC. 2008. Protecting Patients, Preserving Integrity, Advancing Health: Accelerating the Implementation of COI Policies in Human Subjects Research. Available at: https://www.aamc.org/download/157386/data/aamc- aau_coi_report.pdf; and IOM. 2009. Conflict of Interest in Medical Research, Education, and Practice. Washington, D.C.: National Academies Press. 55 Some of the journals adopting the new disclosure form include The Lancet, JAMA, New England Journal of Medicine, and The British Medical Journal. 56 “Responsibility of Applicants for Promoting Objectivity in Research for Which Public Health Service Funding Is Sought and Responsible Prospective Contractors: Proposed Rules,” 75 Federal Register 98 (21 May 2010), pp.28697-28712.

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MANAGING UNIVERSITY INTELLECTUAL PROPERTY 33 financial considerations may compromise or give the appearance of compromising the researcher’s judgment and (2) those applicable to institutions, when any of an institution’s senior officials, trustees, or units has an external relationship or financial interest in a company that itself has a financial interest in an investigator’s project.57 In most cases, there is a recognition and appreciation of the benefits that come from university-industry collaboration and a call for better management, disclosure, and transparency and, in some rare cases, the prohibition of activities that might undermine the integrity of an institution. The management of these relationships must be in line with the goals and values of the institution. CONCERN ABOUT PUBLICATION DELAYS AND INCREASED SECRECY A series of studies in the 1990s by Blumenthal and colleagues at Harvard Medical School called attention to an apparently rising incidence of delays in the publication of some biomedical research results.58 The authors suggested that the delays were associated with commercial motives—to begin to capitalize on research discoveries or at least initiate the process of obtaining IP protection before disclosing the results to potential competitors. Likewise, an industry survey published in 2007 by Thursby and Thursby found that half of the firms sponsoring research at universities sought to include publication delay clauses in 90 percent of their contracts.59 The average delay was four months, but some firms required as much as a year’s delay. In 2008, Huang and Murray examined 4,270 human gene patents and found that patent strategies in the area of human genetics resulted in modest but measurable decreases in the amount of public (published) genetic knowledge.60 Limitations on publication of knowledge increased with broader patent scope, private-sector ownership, complexity of the patent landscape, and the gene’s commercial potential. In more recent years, concern about publication delays appears to have receded, in part because universities have standardized some of the terms under which they receive private research funding, accepting modest but not inordinate delays. The imperative for research scientists to publish their results serves as a strong counterweight to delays in publication; and certain features of the U.S. patent system—in particular, the ability to submit provisional (streamlined) patent applications to establish priority of invention in advance of 57 AAU, op. cit. 58 D. Blumenthal, E.G. Campbell, M.S. Anderson, N. Causino, and K.S. Louis. 1997. Withholding of research results in academic life science: evidence from a national survey of faculty. JAMA 277:1224-1228; see also E.G. Campbell, B.R. Clarridge, M. Gokhale, et al. 2002. Data- withholding in academic genetics: Evidence from a national survey. JAMA. 287:473–481. 59 J. Thursby and M. Thursby. 2007. University licensing. Oxford Review of Economic Policy 23(4):620-639. 60 K.G. Huang and F.E. Murray. 2009. Does patent strategy shape the long-run supply of public knowledge? Evidence from human genetics. Academy of Management Journal 52(6): 1193- 1221.

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34 INFLUENCE OF TECHNOLOGY TRANSFER filing formal patent applications and to make inventions public within a year prior to filing a formal application without endangering patentability (known as the “grace period”)—reduce the incentive to postpone disclosure. However, these same features also contain potential pitfalls for universities. The lack of a one-year grace period in most other countries’ patent systems virtually eliminates the benefit of the U.S. grace period for inventors whose discoveries will require patent protection abroad to fulfill their commercial potential.61 Moreover, university technology transfer offices rely heavily on provisional applications for U.S. filings. In 2004, AUTM reported that 75 percent of the patent applications filed by universities and other nonprofit institutions were provisional applications,62 but they accounted for only 30 percent of all patent applications received by the U.S. Patent and Trademark Office (USPTO) that year.63 However, the protection provided by provisional applications can be illusory. Claims filed in regular non-provisional applications that rely on priority from provisional applications to overcome prior art can be rejected during prosecution or invalidated in later patent litigation if the provisional application is not drafted with sufficiently specific information to support those later claims.64 Drafting a more detailed disclosure in a provisional application increases time and expense and may not be the norm for technology transfer offices with numerous early-stage invention disclosures and a limited prosecution budget. Of course, there may be more subtle “secrecy” effects of the IP system and commercial motives, as is sometimes alleged. Some studies suggest that IP considerations have a far smaller effect on behavior than commercial motives more generally or scientific competition.65 And such behavior could include withholding enabling information from published research papers or from students and even colleagues in routine communication. These effects, however, have not been studied systematically and would be exceedingly hard to investigate. No doubt they occur, but on what scale and with what motives is unknown. Again, peer reputational competition may induce such behavior as much as or more than IP considerations. CONCERNS ABOUT DIVERSION AND DISTORTION OF RESEARCH EFFORT Two hypotheses have been advanced to suggest that faculty involvement in patenting, technology transfer, and commercial exploitation of research results has adverse effects on academic research and teaching. The first is simply that 61 M.A. Bagley. 2006. Academic discourse and proprietary rights: Putting patents in their proper place. 47 B.C.L. REV. 217, 245. 62 AUTM U.S. Licensing Activity Survey, FY2007 Survey Summary. op. cit. 63 U.S. Patent and Trademark Office. 2004. Performance and Accountability Report for Fiscal Year 2004, at 116 tbl.1 (2004). Available at: http://www.uspto.gov/about/stratplan/ar/2004/ 2004annualreport.pdf. 64 M. Bagley, op. cit. pp. 248-250. 65 J. Walsh, W. Cohen, and C. Cho. 2007. Where excludability matters: Material versus intellectual property in academic biomedical research. Research Policy 36:1184‐1203.

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MANAGING UNIVERSITY INTELLECTUAL PROPERTY 35 the former set of activities takes time and effort away from the latter activities. The second hypothesis is that preoccupation with commercial development shifts research effort away from fundamental, understanding-driven scientific inquiry toward work on applied research problems with practical applications. Some critics have charged that patenting and licensing activity has put “the profit motive directly into the heart of academic life,” driving faculty away from traditional, socially more beneficial pursuits.66 Empirical research on this issue has measured the relationship of commercial activity to publication counts, citation counts as well as citation patterns, industry- and federally-sponsored research, and citation-based measures of the fraction of faculty research effort that can be classified as basic research. The majority of the studies have not found evidence of negative effects of commercially related faculty activity. There are several noteworthy results. First, only a minority of faculty are engaged in even the earliest stage of commercial activity, as indicated by disclosing inventions to their universities.67 Second, several studies have found a strong positive relationship between various measures of research output and engagement in invention disclosure activity and patenting.68 The only studies to find negative effects on faculty output suggest that this occurs for the few faculty members who repeatedly engage in commercial activity.69 In a theoretical study that examined the question of whether commercial activity diverts faculty from their traditional focus on basic research, Thursby, Thursby, and Gupta-Mukherjee70 suggested a likely outcome is that faculty increase both basic and applied efforts, though the latter effort may increase relative to the former. These authors also provided empirical evidence in support of their theoretical model.71 In short, studies using different methodologies have not found an appreciable change in the orientation of research, even on the part of faculty 66 J. Washburn. 2008. University Inc.: The Corporate Corruption of Higher Education. New York: Basic Books. 67 J. Thursby and M. Thursby. 2010. University licensing: Harnessing or tarnishing faculty research? Innovation Policy and the Economy 10(1):159-189. 68 P. Azoulay, W. Ding, and T. Stuart. 2009. The impact of academic patenting on the rate, quality, and direction of (public) research output. Journal of Industrial Economics (57)4: 637-676; P. Azoulay, W. Ding, and T. Stuart. 2007. The determinants of faculty patenting behavior: Demographics or opportunities? Journal of Economic Behavior & Organization 63(4):599-623; Thursby and Thursby, 2009, op. cit.; J. Thursby and M. Thursby. 2010. Faculty participation in licensing: Implications for research. Res. Policy. doi:10.101b/;respol.2010.09.014; F. Murray. 2002. Innovation as overlapping scientific and technological trajectories: Exploring tissue engineering. Research Policy 31:1389-1403; K. Fabrizio and A. DiMinin. 2008. Commercializing the laboratory: The relationship between faculty patenting and the open science environment. Research Policy 37:914-931; P. Stephan, S. Gurmu, A. Sumell, and G. Black. 2007. Who’s patenting in universities? The Economics of Innovation and New Technology 16:71-99; A. Agrawal and R. Henderson. 2002. Putting patents in context: Exploring knowledge transfer from MIT. Management Science 48(1):44- 60. 69 Thursby and Thursby, 2008, op.cit.; Fabrizio and DiMinin, op. cit. 70 M. Thursby, J. Thursby, and S. Gupta-Mukherjee. 2007. Are there real effects of licensing on academic research? A life cycle view. International Journal of Industrial Organization 63(4):577-598. 71 Thursby, Thursby, and Gupta-Mukherjee. 2008, op. cit.

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36 INFLUENCE OF TECHNOLOGY TRANSFER members already active in commercialization efforts. But even if they had found such a change, a negative inference would presume that the preexisting balance between curiosity-driven research and research with potential commercial applications was optimal—an arguable premise. CONCERNS ABOUT CHANGE IN FACULTY HIRING AND ADVANCEMENT CRITERIA A third concern is that faculty involvement in commercial activity, including invention disclosures and patent filings, has crept into hiring, promotion, and tenure decisions. The evidence remains anecdotal, as no systematic surveys have been conducted. However, one group of researchers has searched the promotion and tenure guidelines of universities with highly ranked science and engineering departments for evidence of the role of patents and commercial activities in tenure and promotion decisions. They found approximately 15 institutions that include such criteria, albeit usually secondary to publications, and concluded it is likely that many other institutions also consider such activities on an informal basis.72 No doubt this has occurred in some fields and at some institutions, and has even been formalized in science and engineering departments at a few institutions; but nowhere has it been suggested that such considerations have supplanted rather than supplemented the long-standing criteria of the productivity and excellence of scholarly output. The empirical evidence cited earlier of a close association between research output and commercial involvement suggests that this would be an appropriate concern only if the traditional criteria for academic career advancement were being displaced. CONCERNS ABOUT INTERFERENCE WITH FOLLOW-ON RESEARCH AND APPLICATIONS The “anti-commons” hypothesis first articulated by Heller and Eisenberg73 suggests that the proliferation of patents held by diverse stakeholders on upstream elements of biomedical research in particular could handicap or prevent follow-on research and applications because of the difficulty or cost of obtaining rights to use those patented inputs. On the one hand, academic researchers lack the experience and resources to conduct patent searches and negotiate licenses. On the other hand, previous studies have shown that most scientists do not check for IP when pursuing research leads, and they are not likely to be sued for infringement, although they may be warned to cease using 72 H Sauermann, W Cohen, and P Stephan. February 2010. Complementing merton: The motives, incentives, and commercial activities of academic scientists and engineers. Unpublished Manuscript. 73 M. Heller and R. Eisenberg. 1998. Can patents deter innovation? The anticommons in biomedical research. Science 280(5364):698-701.

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MANAGING UNIVERSITY INTELLECTUAL PROPERTY 37 unlicensed inventions.74 Thus, the effects of the anti-commons might be somewhat attenuated in the university (i.e., more basic science) environment.75 Researchers have approached this topic using survey methods and bibliometric data. A 2004-2005 survey of approximately 2,000 randomly selected scientists in leading-edge biomedical research fields was conducted by Walsh, Cho, and Cohen and supported by funding from a previous National Research Council study committee. Their sample of investigators, analytical methods, and findings are reported in detail elsewhere,76 and only the key points are summarized here. Walsh and colleagues found a high level of commercial involvement on the part of biomedical researchers in their sample, a low level of awareness whether any of their research inputs were patented by others (and even less inclination to inquire), and thus an extremely low incidence of cases in which a lack of access to relevant technology protected by IP caused a line of research to be delayed significantly or redirected. No one reported an instance in which she or he had abandoned a line of work for that reason. Similar findings have been reported for biomedical scientists in Germany,77 Australia,78 and Japan.79 The only evidence for a “modest” anti-commons effect, also in the biomedical research field, is in work by Murray and Stern,80 who took a different research approach. They examined what happens to the citations to a scientific article before and after a patent issues on its subject matter and found that articles associated with patents are more highly cited than articles not associated with patents but that the citations are about 10 to 20 percent fewer than expected after the patent is awarded. This suggests that there may be some post-patent avoidance of certain 74 National Research Council. 2006. Reaping the Benefits of Genomic and Proteomic Research: Intellectual Property Rights, Innovation, and Public Health. Washington, D.C.: National Academies Press. 75 R.S. Eisenberg. 2008. Noncompliance, nonenforcement, nonproblem? Rethinking the anticommons in biomedical research. Houston Law Review 45(4):1059-1099. 76 J. Walsh, C. Cho, and W. Cohen. 2005. Patents, Material Transfers, and Access to Research Inputs in Biomedical Research. Available at http://www2.druid.dk/conferences/viewpaper.php?id=776&cf=8. Also J. Walsh et al. 2005. View from the bench: Patents, research, and material transfers. Science. 309(5743) and J. Walsh et al. 2007. Where excludability matters: Material versus intellectual property in academic biomedical research. Research Policy. 36:1184-1203. The initial results are summarized in National Research Council. 2006. Reaping the Benefits of Genomic and Proteomic Research: Intellectual Property Rights, Innovation, and Public Health. Washington, D.C.: National Academies Press, pp. 100-132. 77 J. Strauss. 2002. Genetic Inventions and Patents – A German Empirical Study. Presentation to the BMBF & OECD Workshop entitled “Genetic Inventions, Intellectual Property Rights and Licensing Practices.” Berlin, January 24-25, 2002. Available at: http://www.oecd.org/dataoecd/36/22/1817995.pdf. 78 D. Nicol and J. Nielsen. 2003. Patents and medical biotechnology: An empirical analysis of issues facing the Australian industry. Centre for Law and Genetics Occasional Paper No. 6. 79 S. Nagaoka. 2006. An empirical analysis of patenting and licensing practices of research tools from three perspectives. Paper presented May 18, 2006 to the OECD Conference on Research Use of Patented Inventions, Madrid. 80 F. Murray and S. Stern. 2007. Do formal intellectual property rights hinder the free flow of scientific knowledge? An empirical test of the anti-commons hypothesis. Journal of Economic Behavior & Organization 63(4):648-687.

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38 INFLUENCE OF TECHNOLOGY TRANSFER research directions and possibly a small decline in “knowledge accumulation,” although the authors refrain from drawing causal inferences. In any case, Murray and Stein conceded “though a key tenet of the anti-commons theory is that the effects are particularly salient for research tool patents, there is no evidence that the impact of patent grant is significant for theses types of inventions.”81 There is, however, reason to be cautious in predicting the future. Not only is the patent landscape becoming more complex in many domains of research, but also the absence of evidence for a substantial patent thicket or a patent blocking problem is clearly linked to the general lack of awareness and concern among investigators about existing IP. That could change if patent holders, aware that universities are not shielded from liability by a research exception, take more active steps to assert their patents against them. More vigorous assertion of patents is not likely to result in more patent suits against universities—indeed, established companies may be reluctant to pursue litigation against research universities—but it could involve more demands by non-practicing patent holders for licensing fees, grant-back rights, and other terms burdensome to research. More assertions would, of course, prompt more defensive behavior on the part of institutions that are traditionally risk averse. University efforts to raise researchers’ awareness or even to try to regulate their behavior could be both burdensome on research and largely ineffective because of researchers’ autonomy and their ignorance or at best uncertainty about what IP applies in what circumstances. It is much easier for corporations to exercise due diligence in the context of research that is centrally directed than it is for universities, where research is highly decentralized and decision making is fragmented. CONCERNS ABOUT ACCESS TO AND SHARING OF RESEARCH INPUTS In contrast to the lack of strong evidence that university management of IP rights interferes with academic research, the Walsh et al. survey did turn up evidence of a more immediate and potentially remediable burden on research, private as well as public. This burden stems from difficulties in accessing proprietary research materials, whether patented or unpatented, difficulties that seem likely to be related to scientific as well as commercial competition. Concern over the flow of research materials—which may be critical inputs for the success of a research project—is not new, nor has it gone unaddressed. The research tool guidelines developed and published by the National Institutes of Health (NIH)82 address the process of materials exchanges, and NIH also has developed model Material Transfer Agreements (MTAs).83 81 Ibid., p. 680. 82 NIH. December 1999. NIH Principles and Guidelines for Sharing of Biomedical Resources—Final. Available at: http://www.ott.nih.gov/policy/rt_guide_final.html. 83 See http://tto.ninds.nih.gov/Mta.asp

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MANAGING UNIVERSITY INTELLECTUAL PROPERTY 39 The Walsh et al. survey found that impediments to the exchange of biomedical research materials remain prevalent and may be increasing. For the period 1997-1999, Campbell and colleagues84 reported on the basis of a previous survey that academic genomics researchers denied 10 percent of material transfer requests. In the Walsh et al. study, the comparable number for 2003-2004 was 18 percent. About half of academic respondents had had at least one request denied over a two-year period. Rates of refusal are higher for university-to-industry, industry-to-university, and industry-to-industry requests than for university-to-university requests. For academics, the most common reason given for denying or ignoring a request was simply the effort involved or the need to protect publications. For industry respondents the key reported reasons were the need to protect commercial value and the recipient’s unwillingness to accept restrictive terms. Whatever the reluctant supplier’s motive, the consequences of being denied a tangible research input can be more severe than the inability to license another’s IP, since in the latter case work may proceed, albeit at some risk. Walsh et al. found that fewer than one-half of material requests entailed an MTA between supplying and receiving institutions, and the process of negotiating an MTA did not often lead to a breakdown. However, MTAs often occasion delays, with 11 percent of the negotiated cases taking over one month to conclude. A more recent survey of agricultural biologists suggested that the problem is more severe in at least some subfields. According to Lei, Juneja, and Wright, their sample of agricultural scientists at four land-grant institutions “believe that institutionally mandated MTAs put sand in the wheels of a lively system of intra-disciplinary exchanges of research tools.”85 According to Feldman and Bercovitz, MTAs are no more popular with technology transfer personnel, who reported spending about 10 percent of their time negotiating them. “They are considered time consuming while offering little upside revenue potential.”86 Several leading research universities have recently made an effort to minimize the use of MTAs and, where deemed necessary, use only Simple Letter Agreements (SLAs).87 An area where patents seem to be having an inhibitory effect on research and related clinical practice involves gene-based diagnostic tests. The first concern is that a patent owner’s refusal to make a patented gene available for licensing on reasonable terms will inhibit follow-on research on the incidence of mutations in the gene as well as limit patient access to testing at a reasonable cost and the possibility of obtaining a second opinion on the result. Exclusive licenses also limit the opportunity for the development of improvements in the test and verification of the result. An anti-commons effect can also be anticipated in the future as clinicians increasingly develop tests for multigenic traits. This set of issues is the focus of a March 2010 report by the Advisory 84 E.G. Campbell et al. 2002. Data withholding in academic genetics. JAMA 287(4):473-480. 85 Z..Lei, R. Juneja, and B.D. Wright. 2009. Patents versus patenting: implications of intellectual property protection for biological research. Nature Biotechnology 17:(1)36-40. 86 Feldman and Bercovitz, op. cit., p. 5. 87 http://www.stanford.edu/group/ICO/researcher/documents/MTA9-18-09_000.pdf.

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40 INFLUENCE OF TECHNOLOGY TRANSFER Committee to the Secretary of Health and Human Services on Genetics, Health, and Society.88 Mildred Cho and colleagues89 conducted telephone surveys of U.S. clinical laboratory directors who were members of the Association for Molecular Pathology (corporate, university, private hospital, federal government, and other nonprofit laboratories). They analyzed the responses of 122 individuals, a large majority of whom had licenses to perform genetic tests for a wide variety of conditions, including hereditary breast and ovarian cancer (BRCA1/2), Canavan disease, hereditary hemochromatosis, and Fragile X syndrome, among others. The results suggest that holders of gene-based diagnostic patents (many of them are companies) are active in asserting their IP rights. Sixty-five percent of respondents reported having been contacted by a patent or license holder regarding their potential infringement in performing a test. Twenty laboratories had received notification for one test, 51 had received notifications for up to three tests, and 26 for four or more tests. These enforcement efforts focused on 12 tests that, as a result, one or more laboratories had ceased to perform. In all, 30 laboratories responded that they had ceased administering at least one test. This number included almost all of the corporate laboratories and about one- quarter of university laboratories. Asked to evaluate their experience, respondents believed that patents had had a negative effect on all aspects of clinical testing and reported a decline in information sharing among laboratories. Inclination to undertake test development, too, was adversely affected, according to respondents. The viability of gene patents has been called into question as a result of a Federal District Court’s decision in Association for Molecular Pathology, et al., v. United States Patent and Trademark Office, et al., invalidating gene claims as outside the scope of patentable subject matter.90 It is not known whether the decision will be upheld on appeal. In the meantime, the concerns described remain. CONCLUSIONS This chapter summarized a substantial body of research suggesting that the expansion of faculty entrepreneurial activity and institutional technology transfer activity at U.S. research universities has not seriously undermined the core missions of knowledge generation and dissemination. Despite repeated continuing expressions of concern, research has found little evidence that 88 United States Dept. of Health and Human Services. Secretary’s Advisory Committee on Genetics, Health, and Society. Gene Patents and Licensing Practices and Their Impact on Patient Access to Genetic Tests. April 2010. Available at: http://oba.od.nih.gov/oba/SACGHS/SACGHS%20 Patents%20Report%20Approved%202-5- 20010.pdf. 89 M.K. Cho et al. 2003. Effects of patents and licenses on the provision of clinical genetic testing services. Journal of Molecular Diagnostics 5(1):3-8. 90 Association for Molecular Pathology, et al., v. United States Patent and Trademark Office, et al. 1:09-cv-04515-RWS. United States District Court, Southern District of New York. March 29, 2010.

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MANAGING UNIVERSITY INTELLECTUAL PROPERTY 41 • commercially oriented faculty are less likely to publish in the open literature (on the contrary, they are more prolific producers of scientific articles); • commercial motives have shifted effort away from fundamental research questions and toward more applied research questions; • institutional or sponsor concerns to protect IP rights have resulted in more than modest delays in publication of research results; and • commercial involvement and IP activity have replaced scholarly output and its quality as the principal criteria for academic employment and advancement. Several studies address whether university IP has limited the incentive or ability of investigators to build on prior research because of delayed or denied access or excessive fees or coordination costs. A few studies found a statistically significant decline in citations to published knowledge after the grant of patents on that knowledge. But surveys of investigators have found the potential of an “anti-commons” effect to be mitigated by a variety of factors, primarily a lack of awareness of or concern about patents on inputs to academic research, but also other influences such as NIH guidance and occasional intervention to lower barriers to research tool access.91 The sole documented exception where IP rights may have been problematic (i.e., gene-based diagnostic testing) is technology-specific. Moreover, because there are charges for diagnostic tests in most cases as well as research uses of such tests, this activity often lies on the border between research and commercial activity. Other, subtler negative effects of faculty entrepreneurial activity and university patenting and licensing are difficult to investigate and quantify but may be occurring. If so, they should be considered along with other, positive effects associated with the activity. For example, participation in external networking and consulting—means of communicating the results of research— has probably increased along with formal technology transfer activity involving IP transactions. And although its distribution is highly skewed across institutions and research fields, income from IP-based transactions has increased the pool of research funds available to departments, research centers, and investigators. Although these relationships bear close watching for changes, at this time the research evidence points to only one issue that needs to be addressed—the difficulty that researchers experience in accessing biological research materials, both patented and unpatented, may have increased over time. University-to- university requests are denied or ignored with some frequency, affecting whether the research can be undertaken at all or at least whether it can proceed expeditiously. When an exchange involves a formal agreement or an MTA, the process of negotiating an agreement frequently involves costs in terms of delays in proceeding with research, restricted freedom of action, and financial costs to institutions. 91 Thursby and Thursby, 2008, op. cit.; Walsh et al. 2005 and 2007, op. cit.

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