company to be based on this new technology and the first of the wave of biotechnology companies, which in fifteen years has grown from one to over 2000.
The first patent application was filed by Stanford University in November 1974 in the midst of much soul-searching on the part of the scientific community. Stanley Cohen and Herbert Boyer, who developed the technique together at Stanford and the University of California, San Francisco (UCSF), respectively, were initially hesitant to file the patent (Beardsley 1994). Several years of discussion involving the National Institutes of Health (NIH) and Congress followed. By 1978, NIH decided to support the patenting of recombinant DNA inventions by universities; in December 1980, the process patent for making molecular chimeras was issued. The product patent for prokaryotic DNA was issued in 1984. The patents were jointly awarded to Stanford and UCSF and shared with Herbert Boyer and Stanley Cohen. The first licensee signed agreements with Stanford on December 15, 1981. As of February 13, 1995, licensing agreements had generated $139 million in royalties, which have shown an exponential increase in value since their beginning. In 1990–1995 alone, the licensing fees earned $102 million.
This case has three key elements. First, the technology was inexpensive and easy to use; from a purely technical standpoint, there were only minimal impediments to widespread dissemination. Second, there were no alternative technologies. Third, the technology was critical and of broad importance to research in molecular biology.
The technology was developed in universities through publicly funded research. The strategy used to protect the value of the intellectual property was to make licenses inexpensive and attach minimal riders. The tremendous volume of sales made the patent very lucrative. Every molecular biologist uses this technology. However, not all inventions are as universally critical. Only a few university patents in the life sciences, such as warfarin and Vitamin D, have been even nearly as profitable as the Cohen-Boyer patent. Clearly, had this technology not been so pivotal for molecular biology or had an equally useful technology been available, the licenses would not have been sold so widely and the decision to license the technology might have met with more resistance.
The Cohen-Boyer patent is considered by many to be the classic model of technology transfer envisaged by supporters of the Bayh-Dole Act, which was intended to stimulate transfer of university-developed technology into the commercial sector. Ironically, it presents a different model of technology than that presumed by advocates of the Bayh-Dole act (for discussion, see chapter 3). Lita Nelsen, director of the Technology Licensing Office at the Massachusetts Institute of Technology (MIT), noted that the premise of the Bayh-Dole Act is that exclusivity is used to induce development and that universities should protect their intellectual property because without that protection, if everybody owns it, nobody invests in it. ''The most-successful patent in university licensing, in the entire history of university licensing, is the Cohen-Boyer pattern which is just the