6
Perspectives From Different Sectors

INTRODUCTION

The protection of intellectual property has been one of the most challenging issues in the recent proliferation of university-industry-government partnerships—largely because costs and benefits associated with protection of intellectual property are distributed unevenly among different sectors. Even though different sectors might share the general goal of providing useful innovations to society, there are vast differences in how people can contribute to this goal. Optimal strategies clearly depend on immediate goals, needs, and opportunities. Within the university, research scientists and technology-transfer managers have different missions. A university research scientist might have goals and needs different from those of a scientist working in industry. Within industry, the best strategies for protecting intellectual property are different for small biotechnology companies and major pharmaceutical companies.

This chapter summarizes a session in which representatives of the three sectors (university, industry, and government) were asked to discuss their concerns about intellectual property rights and research tools from their own perspectives. The session provided a forum to address the issues more thematically than was possible during the case study discussions. Gerald Rubin and Lita Nelsen spoke from their experiences in the university as a research scientist and technology transfer manager, respectively; Leon Rosenberg and Thomas D'Alonzo spoke from their experiences with a major pharmaceutical company and small biotechnology company, respectively; and Harold Varmus discussed



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Intellectual Property Rights and Research Tools in Molecular Biology: Summary of a Workshop Held at the National Academy of Sciences, February 15–16, 1996 6 Perspectives From Different Sectors INTRODUCTION The protection of intellectual property has been one of the most challenging issues in the recent proliferation of university-industry-government partnerships—largely because costs and benefits associated with protection of intellectual property are distributed unevenly among different sectors. Even though different sectors might share the general goal of providing useful innovations to society, there are vast differences in how people can contribute to this goal. Optimal strategies clearly depend on immediate goals, needs, and opportunities. Within the university, research scientists and technology-transfer managers have different missions. A university research scientist might have goals and needs different from those of a scientist working in industry. Within industry, the best strategies for protecting intellectual property are different for small biotechnology companies and major pharmaceutical companies. This chapter summarizes a session in which representatives of the three sectors (university, industry, and government) were asked to discuss their concerns about intellectual property rights and research tools from their own perspectives. The session provided a forum to address the issues more thematically than was possible during the case study discussions. Gerald Rubin and Lita Nelsen spoke from their experiences in the university as a research scientist and technology transfer manager, respectively; Leon Rosenberg and Thomas D'Alonzo spoke from their experiences with a major pharmaceutical company and small biotechnology company, respectively; and Harold Varmus discussed

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Intellectual Property Rights and Research Tools in Molecular Biology: Summary of a Workshop Held at the National Academy of Sciences, February 15–16, 1996 his concerns about the protection of intellectual property in government-sponsored research. UNIVERSITY RESEARCH Gerald Rubin, University of California, Berkeley Intellectual property rights and research tools present two main concerns for academic researchers. First is the exchange of materials and ideas in a timely and unencumbered way. Second is the allocation of credit and reward for discoveries. Although intellectual property rights have been a source of great concern, intellectual property law as practiced has generally not encumbered the timely exchange of materials and ideas among university researchers. In 1917, Thomas Morgan, the progenitor of Drosophila genetics research, wrote in strong terms that scientific material and knowledge should be freely and widely circulated. Even into the 1990s, the Drosophila genetics research community has continued to support the free exchange of materials. I offer my own experience as an example of contrasts. My collaborators and I recently published a gene that we had isolated using genetic screening in Drosophila. We also cloned the mouse and human genes, and these were described in the same article. I received six requests from Drosophila workers for these strains, each of which said something like, "I enjoyed your paper. Please send me . . ."—followed by a long list of reagents and then, "Thank you," and that was it. The dozen requests for the mammalian reagents went something like, "We will, of course, consider this a collaboration. Here is exactly what I am going to do with it. . .'' followed by all sorts of stipulations. [This exemplifies Stephen Hilgartner's observations in chapter 4 that practices of sharing material information can differ widely—even between closely related subfields. Hilgartner also notes that access practices are probably most intensively shaped not at the level of a discipline, but at the level of relatively narrow subjects of research, where the force of individual personalities has substantial influence on how research is practiced. This may also illustrate another one of Hilgartner's points which is that narrowly focused competition tends to influence practices of sharing. Human and mouse genes are more likely to have commercial value (whether as strategic intellectual property or for their value as products on the market) and might thus increase the level of competition for sharing.] Some of the problems in the scientific community with the exchange of material are due more to commercialization than to intellectual property laws. There are problems when academic researchers get money from industry and when the industrial collaborators impose constraints on when and where people can distribute materials, but these problems are not with patent law. Most academic scientists would agree the patent laws can cause problems with respect to the fair allocation of credit and reward. Academic researchers are

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Intellectual Property Rights and Research Tools in Molecular Biology: Summary of a Workshop Held at the National Academy of Sciences, February 15–16, 1996 taught that giving credit where credit is due is a basic tenet of science. Scientists understand that their discoveries are based on the work of many other people and that it is very important to give proper credit in publications and spoken presentations for the work that went beforehand. That is how intellectual royalties are paid. However, in patent law, all the rewards go to the person who gets to the step of establishing utility first; the basic work that led to that point is not compensated. That is just a fact of life. It makes researchers uncomfortable, and it could get worse. For example, if someone actually got to patent ESTs, and I took a gene with a patented EST and discovered its function, I might not get any financial reward for my effort; the person who patented the ESTs would get the reward. That would clearly be a disincentive for most scientists, and we need to worry about it. Short of changing or rewriting the whole patent law, I am not sure what can be done. That seems to me a much more serious concern than problems with the exchange of material. UNIVERSITY ADMINISTRATION Lita Nelsen, Massachusetts Institute of Technology From the perspective of university administrators, the primary reason to license and protect intellectual property is to induce development and thereby make the products of university research available to taxpayers. Nowadays, expectations of economic development resulting from taxpayers' fundamental research spending are much greater. The university also wants to induce development because the business community wants it. When MIT helps to establish small incubator companies, the city of Cambridge gets more jobs and local real-estate values go up. If the university wants to attract industrial sponsorship of research, it must have an intellectual property program. The faculty also appreciate the benefits of an intellectual property program. They earn royalties. Some of them get a great deal of psychic reward out of seeing their research actually cure disease or become commercially available products. More mundanely, if we have patents that we license to companies that will hire consultants, our faculty have more consulting opportunities. We think it is good for our teaching mission to have our laboratories engaged in real world problems and bringing industry in. Many of our graduates go to work for our licensees. Many people believe that the role of technology transfer offices is to make money. University-based technology transfer is not a good way to make money. The MIT technology transfer office is seen as one of the more successful and lucrative university licensing offices. But its revenues are relatively modest. MIT's budget is close to $1 billion a year, which includes $350 million in research at MIT and $350 million in research at Lincoln Laboratories. The gross income of the technology transfer office is $8 million, including all patent ex-

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Intellectual Property Rights and Research Tools in Molecular Biology: Summary of a Workshop Held at the National Academy of Sciences, February 15–16, 1996 penses and royalties. The net income, which is distributed to inventors and departments and to the institute's general fund, is only about $3 million a year. Maximizing revenues is not our primary goal, although we have to make enough money to survive. Finally, if we are going to be involved in patenting and licensing, we have to make enough money to provide incentives to the faculty to write patent applications. No university president is going to let people do it at a loss when he or she is looking for functions in the university that can be eliminated to save operating costs. In theory, there are two kinds of research tools, and they are often confused. One is the kind that becomes useful only if it is commercialized and is otherwise only marginally useful—chromatography or PCR, for example. You can make the invention, publish it and let no one have patent rights in it, and people will still be working with little pieces of paper, test tubes, and candles. Or you can give a license, or rights to the intellectual property to a Hewlett-Packard or a Perkin Elmer, for example, which will take the hand-crafted piece of equipment and turn it into a machine that allows people to do something a thousand times faster than they would otherwise have done. The other kind is what I call a discovery tool. Rather than a tool for doing research, it is something to work on—for example, a gene or a receptor. A discovery tool does not usually need development before researchers can use it as a research tool. A priori, I would argue against patenting them; if they are not to be patented, they should be licensed nonexclusively because the more people using a discovery tool, the better. Ligand Pharmaceuticals provides a counter-example even to that assumption. Although a few people might have worked on receptor assays, haphazardly, Ligand was able to make a major investment in their receptor research with the commitment of hundreds of millions of dollars because of patenting and exclusive licensing. There are no easy answers to the question of what should and should not be patented. Tradeoffs are always made. If an exclusive license to a research tool is given to an unsuccessful company that is unable to raise money and then stagnates, but does not quite go out of business, the patent rights will block access to the research tool, and that would be a scandal. If an exclusive license for an important pharmaceutical receptor is given exclusively to a large pharmaceutical company that proclaims that it wants to disseminate knowledge widely, but whose licensing practices are so difficult that it takes three years to get a sublicense, it is a less-visible scandal, but it is still a scandal. The right way is not clear. As a university administrator, I proclaim that universities are trying to figure out what the right thing to do is and trying to evolve norms based on the balancing of equities. But we do not know how to do it yet.

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Intellectual Property Rights and Research Tools in Molecular Biology: Summary of a Workshop Held at the National Academy of Sciences, February 15–16, 1996 MAJOR PHARMACEUTICAL COMPANY Leon Rosenberg, Bristol-Myers Squibb Attitudes Have Greatly Changed As late as the early 1980s, there remained a deep suspicion of intellectual property among investigators in academe, other research institutions, and government. Even though they understood that patents rewarded inventors for disclosing the nature of inventions to the public, patent law was not considered a mechanism for promoting dissemination of knowledge. Consequently, many scientists strongly opposed any role that their colleagues might have as founders of or collaborators in commercial enterprises. Some even objected to researchers having the status of inventors on university-owned or government-owned patents. In the opinion of many scientists, such relationships fostered unavoidable and unmanageable conflicts of interest. Today, there is greater appreciation and acceptance of the delicate balance that has now been struck in the laws governing intellectual property protection. Commerce and Science: Legitimate, Yet Competing, Interests We have witnessed the development of an ever-closer alliance between universities, research institutions, government agencies, and private industry in the field of medical research. These increasingly productive, yet always complex, relationships are an accepted reality in today's medical-research enterprise. Their frequency and complexity, however, continue to highlight the inherent tension between two legitimate, yet competing, interests—the commercial incentive to protect intellectual property and the tradition of open communication and free flow of information within the scientific community. Undoubtedly, the many collaborative efforts that exist today will not subside, and there will be more tomorrow. Funding pressures on all parties will drive them closer together as scientists seek scarce research funds from all potential sources and companies seek to maximize their use of all sources of innovation. Thus, it is incumbent on the academic and government research communities and on private industry to communicate and understand each other's positions better. The necessarily different interests and different cultures on both sides of the equation will continue to present us with complex questions that defy simple answers. Dissemination of research results is one of the most visible ways in which the competing interests intersect. Once new knowledge is created, researchers want to exchange it freely in the scientific community for replication, evaluation, and use. Publication, whether immediate or delayed, is not always welcomed by parties holding a commercial interest in the research. Nevertheless, most corporate entities recognize that it is critical to attract and retain the cooperation of top scientists. As indicated by Blumenthal and others (1996), it is common for

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Intellectual Property Rights and Research Tools in Molecular Biology: Summary of a Workshop Held at the National Academy of Sciences, February 15–16, 1996 companies to "require academic researchers to keep information confidential to allow a filing of a patent application. Such a requirement is standard practice at most academic institutions." Most companies currently request no more than the 90-day waiting period to make the necessary patent filings. As Blumenthal and others also note, "the current policy of the National Institutes of Health provides that 30 to 60 days is a reasonable period to delay the release of information while such an application is being filed. Such delays are a natural consequence of patent law, which requires that confidentiality be maintained until a patent application is filed." In individual cases, companies may request an extension of time to address unique issues. In my experience, such requests generally are few and are made only after a careful weighing of the scientific benefits and the competitive risks associated with disclosure. In general, the individual researcher or the academic institution with which a company is collaborating can deny the request and thus decline to collaborate if granting the extension of time would adversely affect important research objectives. Certainly, there have been instances of abuse of this general idea. But my experience does not suggest that the abuses are pervasive or even widespread. My own company, Bristol-Myers Squibb, has a variety of such collaborative research agreements and has seldom required more than 60 days of advance notice. As many companies do, Bristol-Myers Squibb takes reasonable steps to limit the number of requests for extension of the 60-day advance notice. Of course, if we cannot convince investigators in their own institutions of the need for the longer duration of confidentiality, they do not need to concede it. A pivotal issue on the horizon will be the distribution—under a material-transfer agreement,1 license, or otherwise—of basic research tools that are not otherwise available to other investigators. Numerous companies, large and small, and universities are struggling with this issue. Among the important considerations is that one person's tool can be another person's product. For example, a gene can be a product in the hands of the gene therapy company or a manufacturing system for a company that sells the gene product. The same gene could be a research target for yet another company seeking a small-molecule drug. If the gene was secured only after years of investigation, a commercial enterprise generally would be unwilling to distribute it simply for the asking. Directors of corporate research charged with the responsibility for the investment of their company's shareholder dollars would have to think very hard before recommending a course of action that could result in widespread availability of that target in the community at large. 1   Material-transfer agreements (MTAs) are used to define the terms under which proprietary material and/or information is exchanged. Neither rights in intellectual property nor rights for commercial purposes are granted under this type of agreement. MTAs typically State that the recipient may use the materials for their own research purposes only and not for any commercial purposes.

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Intellectual Property Rights and Research Tools in Molecular Biology: Summary of a Workshop Held at the National Academy of Sciences, February 15–16, 1996 Research-Use Exemption Is Practiced as Rational Forbearance Bristol-Myers Squibb often licenses to the research community basic research tools that we develop that would not otherwise be available to investigators at academic or other research institutions. I am sure that our practice and that of others in the pharmaceutical industry is similar to that of many academic and other research institutions conducting federally funded research. In that context, the National Institutes of Health (NIH) maintains a policy of facilitating the availability of unique or novel biologic materials and resources developed with NIH funds. In all those circumstances, the competing interests must be balanced. To some extent, intellectual property law helps to provide some rationality for the use of patented research tools. Damages generally cannot be collected from an infringer who is merely engaging in research. Typically, in fact, an inhouse research program is not sufficiently far along to know whether a lawsuit would actually protect valuable property or technology or even whether that property will ultimately prove to be of no value. Frankly, we all know that it is not good form to sue researchers in academic institutions and stifle their progress. Consequently, much potential litigation has been held in check, and we have not often had to confront the vexing issues that would arise in the litigation context. I hope that this rational forbearance will continue. Why Intellectual Property Is Important in Molecular Biology Clearly, there are likely to be a variety of important issues on the horizon. In fact, in the slightly more than 30 years that I have been a member of the human genetics community, our field has been responsible for a successive list of the issues that seem to vex the public in ethical, legal, and commercial ways. Early on, it was a prenatal diagnosis, then it was gene therapy, then it was genetic counseling, then it became DNA sequencing, and today it is genomics. Tomorrow, it will surely be something else. That is part of why it has been so exciting to be a member of this community for all these years. Those issues and others are indicative of the fact that intellectual property rights will be an increasingly important component of future research developments. However, they also demonstrate that neither intellectual property rights nor science can or should try to trump the other. We must continue to engage in reasonable discourse, acknowledge and deal with our differences constructively, and strive to find the compromises that provide maximal support for a biomedical research enterprise that has enormous potential for the alleviation of human suffering. This remains, despite all the problems, a remarkably exciting time for the conduct of biomedical science. Judging by what we heard in this workshop, I have no doubt that it will remain as exciting a time for the commercialization of science as well.

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Intellectual Property Rights and Research Tools in Molecular Biology: Summary of a Workshop Held at the National Academy of Sciences, February 15–16, 1996 SMALL BIOTECHNOLOGY COMPANY Tom D'Alonzo, Genvec, Inc. Genvec's Intellectual Property What we do at Genvec is start with a virus and declaw it. We do that by pulling out part of its genome and putting human DNA in its place. Then we grow it in commercial quantities that represent possible products. In developing the intellectual property of our business, we concentrate on what to take out of the virus and what to put back into the virus, and perhaps most important—having removed part of its genome—we need to figure out what is required in cell lines to replicate the modified virus, that is, how to grow it. Our objective is to produce a clinical preparation that will meet Food and Drug Administration specifications for use in humans. It is a fairly daunting exercise. The progress that has been made on this in just the last couple of years is striking. I think it is naive to consider gene therapy in any context other than traditional drug development. We should expect a series of generational improvements, in terms of filing patents, in the products that are developed. Ultimately, we are looking at the clinical application of our virus technology. For us, it has initially been in cystic fibrosis. Within the next few weeks, we hope to start a clinical trial with colon cancer metastatic to the liver through which we expect to improve the performance characteristics of the vectors being used for gene therapy and to add to our understanding of how these vectors work. Role of Venture Capital Venture capital is a greater asset in the United States than anywhere else in the world. It provides the engine for the biotechnology companies that are reviving up across the United States. In the biotechnology industry, venture capitalists perform the service of identifying potential technologies that might be too underdeveloped, too underadvertised to attract the interest of the larger companies, or too far outside their technology area to induce them to displace ongoing research programs and businesses. A venture capitalist sees that as an opportunity that begins with assessment of the technology. Are there other technologies with which it might compete? How does it relate to the overall market? What about the proprietary estate that surrounds it? Is it something that can be developed, progressed, and finally made into a business? More than any other country in the world, the United States has the ability to pull in venture capital from various sources, tie it up for 10 years with the understanding that there are going to be occasional conspicuous failures, and return enough of a gain to a pension fund or investor to attract more money to invest in the cycle. Venture capitalists take on the risk and invest in a small company. They enlist people to envision how the business is going to be formed and developed. They might spend a bit

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Intellectual Property Rights and Research Tools in Molecular Biology: Summary of a Workshop Held at the National Academy of Sciences, February 15–16, 1996 more money, perhaps raise another round or two of financing, and begin to investigate the commercial application. How is the product going to be made? How is it going to be put into a clinical development program, and what toxicology will support it? Finally, and fairly important for the ability to partner up this technology, can the product be efficiently manufactured in commercial quantities? Then the discussion with the larger corporate partners begins. For businesses like ours in the biotechnology industry, without the opportunity to establish partnerships with larger companies, we could not raise the money required to bring the technology to the point of availability to a patient as an approved product. The biotechnology companies are conspicuously and unquestionably dependent on larger corporate partners to take products forward through the clinic and into a commercial setting. The 1995 rate of partnering between pharmaceutical companies and biotechnology companies was double the rate in the year before. At the end of the day, venture capitalists' goal is to realize a profit. Typically, it is through an initial public offering (IPO), which is a marker of the success of a business. The venture capital system is both self-pruning and self-regenerating. It is estimated that there are upwards of 2,000 biotechnology companies in the United States; they represent a market capitalization of more than $60 billion, of which $6–7 billion a year is spent on research. Thus, it is an essential and very successful national experiment that has so far yielded about 30 biotechnology products that have reached the market. To be sure, there are failures along the way. But if we were the kind of nation or if venture capitalists were the kind of people that would not take on a risk for fear of failure, we would not have any of those products. It is more risk and reward that drive this system, rather than a frank fear of failure. The system has provided an incredible benefit to the medical community in the United States. Issues in Partnering Biotechnology and Pharmaceutical Firms There are only so many ways that a company at an early stage of development like ours can fund itself. We either raise more money privately, develop our business to the point of the IPO, or find a corporate partner to fund development of the technology. Mergers and acquisitions are another source of funds. Two companies might come together and form a stronger business than either one was before. Alternatively, one company might be acquired by another, in what could be a camouflage for a partial failure (there is no way of knowing without knowledge of specific details about the companies). Mergers or acquisitions themselves can be a source of funding. From our discussions with several companies, some things have become apparent and predictable about corporate partnering. First is the demand for high-quality science that is going to form the basis for the business. A second is

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Intellectual Property Rights and Research Tools in Molecular Biology: Summary of a Workshop Held at the National Academy of Sciences, February 15–16, 1996 the challenges that still remain with the technology. What is the quality of the people who are behind the challenges? What are the strategies that are being put in place to address them? What is the probability of success? Finally, a very important consideration is, What do you own, what will we have a right to, and will we have the freedom to operate? If we can look at what you have and envision a product possibility and a pathway to get there, will we have the freedom to commercialize the product under the proprietary estate that surrounds it? From the industry point of view, some of the trends I see in patents are helpful and some are disturbing. We see broad, sweeping patents at the front end of new technology that begin to narrow in scope as later patent applications are filed. The broad earlier filing can be troublesome, and the later filings become more narrow and specific as the technology matures. Broad earlier filing, if granted, will complicate the commercialization of new technology. Summary I take great pride in the fact that industry has delivered a considerable benefit to the health care community. The early venture capitalists who are taking the high risks with the newest, least-developed technology need to be able to see that risk rewarded if they are to sustain the challenge of developing that technology and putting their capital at risk. During its initial phase, a biotechnology company must develop both its business and its technology. When a company finally offers its technology to a corporate partner, the proprietary estate is a prominent piece of what is being offered to the larger corporate partner, and it has an appropriate and a correct expectation in that regard. If there is uncertainty or lack of predictability and confidence in the partnering system, it will complicate the discussions and make forming partnerships much more difficult. We have enough uncertainty on the science side without introducing uncertainty on the patenting side. For the patent system to work well, predictability and consistency must be a part of it. GOVERNMENT Harold Varmus, National Institutes of Health Decisions that the National Institutes of Health (NIH) makes about intellectual property—be it research tools or anything else—are influenced by at least three goals: Fostering scientific discovery. This includes providing various kinds of incentives to our investigators but making sure that we maintain the health

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Intellectual Property Rights and Research Tools in Molecular Biology: Summary of a Workshop Held at the National Academy of Sciences, February 15–16, 1996 and the integrity of the entire research community that we support with our nearly $12 billion budget. Making sure that the discoveries made by NIH investigators are sufficiently used to foster human health. This includes our grantees at universities and research institutions, and investigators at the NIH campus. Research information must be transferred to industry so that the public derives the benefit from the tax dollars used to support research to improve strategies for preventing and curing diseases. Protecting the rights of NIH employees when they make discoveries. Although this goal is sometimes in conflict with the first two goals, as an employer of several thousand scientists at NIH, we must take their rights into consideration when we make decisions about how we protect intellectual property. Claims have been made in some quarters that, under my direction, NIH is somehow opposed to patenting and licensing. That is clearly untrue. We acknowledge the many benefits of patents and of licenses, such as mandating disclosure, speeding the application of research results to human health, and providing incentives to scientists and discoverers. Since the inception of our Office of Technology Transfer, we have had a very high patenting rate. Nearly 90% of NIH invention disclosures were submitted for patent protection. We are now trying to reduce that rate, both to restrict our costs of patent-claim development and to restrict our applications to inventions that we expect to be most useful. We currently file patent claims on about 60% of our invention reports. That number will probably come down further in the future. I have been involved in a number of conflicts over intellectual property and research tools. Before I came to NIH, I was deeply involved in the conflict over the sharing of genetically manipulated mice [For further discussion, see National Research Council 1994]. That episode shows how influences of the marketplace and open discussion of issues can lead to solutions that work. The issue was joined initially because one company had attempted to extract fairly large amounts of money from academic investigators for access to mice for which there were patent claims; but most academic investigators felt that they should have access to these mice because their development was sponsored with public funds. In the course of trying to deal with this somewhat abstract argument, it became apparent that no single company could take in and do the husbandry on a large enough number of strains of genetically altered mice to satisfy the community and that the companies that were trying to do so were not making a profit. Moreover, the scientific community was determined to get an efficient process for distribution of mice. The Jackson Laboratory was sufficiently interested in being the vehicle for distribution, and it handles the mice efficiently. Virtually all genetically altered mice are now available, and most of us do not feel that there is

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Intellectual Property Rights and Research Tools in Molecular Biology: Summary of a Workshop Held at the National Academy of Sciences, February 15–16, 1996 a major problem any longer. There are sometimes some licensing restrictions; but in general, the problem is not acute. The second episode that has concerned me involved the patent applications that NIH had made before my arrival at NIH on so-called expressed-sequence tags (ESTs). We decided not to appeal the rejection of NIH's application by the Patent and Trademark Office for several reasons: my concern about the lack of demonstrated utility of these sequences; the possible complications of having what is referred to as ''patent clutter,'' that is, multiple patents that would ultimately prove to be held on the same gene; and the problem of speculative claims, or so-called "gotcha" patents, in which someone would do a lot of work on a gene and find that a patent had already been established on the gene. All in all, such patent activity might well restrict progress. Although NIH withdrew from this argument under those circumstances, the issue is not completely resolved. As Bill Haseltine, from Human Genome Sciences, suggested during the workshop, some companies have in fact made patent applications on ESTs. My view is that widespread patenting of ESTs will pose some fairly serious problems because of some of the reasons mentioned above. A third concern is the agreement that Human Genome Sciences (HGS) was requiring for use of its EST database.2 The HGS agreement was to allow reasonably free access to what they call level I sequences (sequences that already had appeared in the Genbank database). There was a different kind of requirement for access to so-called level II sequences (those not in Genbank). That requirement was developed after a series of discussions among HGS, NIH, and the Howard Hughes Medical Institute. Scientists using information in the level II database would be required to report discoveries to HGS, maintain strict confidentiality about the sequences, and give HGS options to intellectual property rights considerably downstream of discoveries made by using the database. Although the HGS agreement is certainly legal, I was not enthusiastic about having either investigators on the NIH campus or academic scientists who are supported by NIH grants become involved in it. I saw the restraints on the abilities of those scientists to communicate freely with their colleagues as unreasonable. I was also concerned about what seemed to be excessive, long-term reach-through provisions. For example, someone who had gotten a sequence from HGS would have to honor the agreement, even if the same sequence had appeared in Genbank two weeks later from an academic source. We did not prohibit our investigators from entering into agreements with HGS, but we did caution them about the restraints that the agreements would impose on them. Our 2   Discussants at the workshop referred to this as the "HGS agreement." In discussions with NRC staff after the workshop, William Haseltine described this as a "TIGR agreement." The written agreement included two appendixes. One was signed by TIGR (The Institute for Genome Research) and the other by HGS. Because both appendixes extensively reference each, both TIGR and HGS were considered to be signatories to the full agreement.

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Intellectual Property Rights and Research Tools in Molecular Biology: Summary of a Workshop Held at the National Academy of Sciences, February 15–16, 1996 intramural scientists discussed these issues, and they felt fairly strongly that the secrecy issues and the reach-through provisions were sufficiently troubling for the intramural program to choose not to make use of any agreements with HGS. We acknowledge that a company like HGS needs to make some profit on its investment in ESTs. Here is one place where self-interest obviously creates a difference of opinion about what should be done. It is interesting to contrast how ESTs are offered to individual investigators with how restriction enzymes are offered. Both are products of companies. If we buy a restriction enzyme for $50 or $250, there might or might not be a patent on it. We are pleased to pay the asking price because it is an efficient way for us to get a useful research tool. No one attempts to seize downstream rights on anything that we do with that restriction enzyme. In contrast, the reach-through provision attached to the use of ESTs creates a very serious problem for us, and that (tied in with the secrecy arrangements) has discouraged us from pursuing the EST databank that is made available through level II agreements. What should be patented, and what should be placed in the public domain? I see this as the central question. Approaches to such questions are influenced by three major factors: self-interest, the investment of the public in government-supported research, and the law. How do we determine whether our answers to the questions are correct? With respect to what is legal, one must simply wait for decisions from either the judiciary or the Patent and Trademark Office. The more interesting issue is how we judge which decisions to make with respect to the goals of NIH and the interests of the public. It is sometimes easier for a company to judge whether it has made the right decision. Did it make a profit? Did it get more investment capital? A university, in some cases, might try to weigh the effectiveness of what it does on the basis of whether there are royalty returns. But, as Lita Nelsen pointed out, there are many other reasons why a university would want to get involved in technology transfer and intellectual property protection—reasons that are much harder to measure. From NIH's perspective, how do we measure whether the scientific community is more productive as a result of decisions that we have made? How do we measure whether applications of knowledge occur more efficiently? These are difficult questions that we would like to know the answers to, but we do not. One way to look at this is to follow the outcome of the use of sequences that are in the HGS-TIGR database (TIGR, The Institute for Genome Research is a nonprofit partner of HGS), as opposed to sequences that have been put into the public database as a result of the activities of Merck. Will sequences that investigators obtain only by going through level II agreements with HGS produce more benefits than those studied by academic investigators and obtained free of any attachments from Genbank after being sequenced by Washington University and paid for by Merck? This would be a useful experiment. One of the things that we learn from these discussions is that every example of a research tool that breeds contention has its own characteristics and its own

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Intellectual Property Rights and Research Tools in Molecular Biology: Summary of a Workshop Held at the National Academy of Sciences, February 15–16, 1996 solutions. Nevertheless, in looking at the history of how our science is developed and how we use the available instruments of intellectual property protection, it would be of interest for many of us to know, even in retrospect, whether placing restraints on information and attempting to exploit our ability to restrict information for the benefit of one party or another actually has any public benefit. REFERENCES Blumenthal D. Causino N, Campbell E, and Louis KS. 1996. Relationships between academic institutions and industry in the life sciences—an industry survey . New England J Med. 334(6): 368–373. National Research Council. 1994. Sharing Laboratory Resources: Genetically Altered Mice. Washington. National Academy Press. 41p.