reverse. It is a nonexclusive license. It provides no incentive, just a small tax in the form of royalties on the exploitation of the technology.''
The biotechnology boom that followed the widespread dissemination of recombinant DNA techniques transformed the way universities manage intellectual property. It also fundamentally changed the financial environment and culture of biological research.
Nelsen described two ways in which this patent was so successful in fostering the aims of the Bayh-Dole Act. First, it got the attention of biologists by showing the advantages of protecting intellectual property. Stanford earned respectability for the venture by involving NIH and discussing in a public forum how this technology could be disseminated in a way that would not impede research. Second, it got the attention of university chancellors. They began to see that licensing, patenting, and technology transfer might have some financial benefits for the university. Nelsen commented that "that went a little too far. Everybody was waiting for $100 million per year out of their technology transfer offices. Most of them did not get it, and most of them are never going to get it." In the meantime, technology transfer managers developed more experience and became professionalized. They began to learn how to decide what to patent, how to market technology, and how to close deals at reasonable prices and with reasonable expectations. And industry learned how to negotiate licenses with universities.
Nelsen concluded that the whole biotechnology industry came out of the Cohen-Boyer patent, not only because Cohen-Boyer developed gene splicing, but because universities learned how to do biotechnology and early technology licensing—even if the first example was paradoxical.
The decision to negotiate nonexclusive, rather than exclusive, licenses was critical to the industry. If the technology had been licensed exclusively to one company and the entire recombinant DNA industry had been controlled by one company, the industry might never have developed. Alternatively, major pharmaceutical firms might have been motivated to commit their resources to challenging the validity of the patent.
Nelsen noted that at most major universities, it has become standard in industry-sponsored research agreements that the university will retain ownership of any resulting patents but almost without exception will grant the sponsor a first option to an exclusive license. With the increase in university-industry partnerships this applies to more research than in past years. Moreover, the Bayh-Dole Act encourages universities to grant exclusive licenses to companies even if the research was publically sponsored. But as the next case study shows, even when a company holds exclusive rights to a fundamental technology, it might choose to disseminate the technology broadly.