retain, transfer, and license their rights. CIRM also follows the Bayh-Dole approach in obligating grantees to make reasonable efforts to achieve practical application of their inventions through either commercialization or licensing, and in fortifying this obligation by retaining march-in rights that allow CIRM to grant licenses if necessary. However, CIRM’s intellectual property policies also depart from the familiar Bayh-Dole framework in certain notable respects. These departures are sanctioned and required by the text of Proposition 71 and subsequent legislation3 and set forth in regulations that have the force of law.

First, California law calls for CIRM to use intellectual property not only to motivate firms to pursue commercial development of CIRM-funded technology but also to generate revenue to the state of California’s budget. This goal is stated in Section 3 of Proposition 71, which announces an intent to: “Protect and benefit the California budget … by funding scientific and medical research that will significantly reduce state health care costs in the future; and by providing an opportunity for the state to benefit from royalties, patents, and licensing fees that result from the research.”

Federal law has no comparable provision for revenue sharing or recoupment of federal grant funding; such proposals have repeatedly been rejected as conflicting with the primary goal of promoting further investment in commercial development by licensees. Although federal agencies collect royalties on patents they own on the inventions of their employees, they generally do not attempt to share in the revenues earned by grantees on their patents.4

Second, CIRM’s approach to intellectual property departs from the federal model in its requirements for (1) access plans to make drugs emerging from CIRM funding affordable for Californians who would not otherwise have access to these products, and (2) the provision of such drugs to eligible Californians and to those purchasing the drugs in California with public funds at prices established in the California Discount Prescription Drug Program.5 These requirements originated in CIRM regulations rather than in the text of Proposition 71 as approved by the voters, but a requirement

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3California Legislature (Sen. Bill No. 1064), approved by Governor September 30, 2010. Filed with Secretary of State on September 30, 2010.

4The committee is aware of at least one exception to this generalization. The National Medical Test Bed at Loma Linda University Medical Center (NMTB), funded by congressional appropriation pursuant to a cooperative agreement with the Department of Defense, funded a series of research projects between 1992 and 2006 to develop new medical technologies. The cooperative agreement required NMTB to capture royalties from the commercialization of any and all research sponsored under the cooperative agreement, and to use such proceeds to endow a revolving fund to be administered by NMTB in conducting further research (LLUMC, 2012).

5CIRM’s intellectual property policy makes no mention of stem cell–based therapies.



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