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Diluting Public Patrimony or Inventive Response to Increasing Knowledge Asymmetries: Watershed for Land Grant Universities? Reflections on the University of California, Berkeley-Novartis Agreement

Todd R. La Porte

University of California, Berkeley

Introduction

In the context of this workshop, my presentation takes a somewhat different approach. We all share a strong interest in helping universities to cooperate with government and industry. Such cooperation, when carried out under the right conditions, will provide substantial benefits to all concerned. I approach this problem from the other, nontechnical part of the university, and my comments are an attempt to show how the rest of us are affected by research partnerships in the area of science and technology. I am a political scientist, a real outsider here who comes from a long distance substantively to the issues that concern partnerships with industry and government. What follows is a cautionary tale that broaches some unsettling issues. I hope it might begin a path toward developing an institutional matrix within which to engage industries while minimizing the distortion to the values of public institutions and public universities in the United States.

Background

In 1996 and 1997, the College of Natural Resources (CNR) at Berkeley, and especially its scientific department, confronted the old problem of an eroding research infrastructure, accelerated in this case by a decline in state legislative support for the University of California (UC) system, down to about 30 percent of our total resources. There has been a relative surge of capital investments on the campus in the past couple of years, which has been mainly for seismic safety upgrades designed to improve safety for people escaping from buildings during an earthquake. But this does not protect the buildings themselves. If we have a significant event, we are likely to be able to get out, but not be able to return. So the upgrades that we had thought were two-way streets, if we have to use them, may cause a very interesting research continuity problem.

The new twist to the shortage of research funding, and the one that prompts this presentation, is very important, and in a sense is new and novel, at least on our campus. This is the growing recognition that in some areas, and particularly the agricultural genome area, four or five mega international corpora-



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--> 6— Diluting Public Patrimony or Inventive Response to Increasing Knowledge Asymmetries: Watershed for Land Grant Universities? Reflections on the University of California, Berkeley-Novartis Agreement Todd R. La Porte University of California, Berkeley Introduction In the context of this workshop, my presentation takes a somewhat different approach. We all share a strong interest in helping universities to cooperate with government and industry. Such cooperation, when carried out under the right conditions, will provide substantial benefits to all concerned. I approach this problem from the other, nontechnical part of the university, and my comments are an attempt to show how the rest of us are affected by research partnerships in the area of science and technology. I am a political scientist, a real outsider here who comes from a long distance substantively to the issues that concern partnerships with industry and government. What follows is a cautionary tale that broaches some unsettling issues. I hope it might begin a path toward developing an institutional matrix within which to engage industries while minimizing the distortion to the values of public institutions and public universities in the United States. Background In 1996 and 1997, the College of Natural Resources (CNR) at Berkeley, and especially its scientific department, confronted the old problem of an eroding research infrastructure, accelerated in this case by a decline in state legislative support for the University of California (UC) system, down to about 30 percent of our total resources. There has been a relative surge of capital investments on the campus in the past couple of years, which has been mainly for seismic safety upgrades designed to improve safety for people escaping from buildings during an earthquake. But this does not protect the buildings themselves. If we have a significant event, we are likely to be able to get out, but not be able to return. So the upgrades that we had thought were two-way streets, if we have to use them, may cause a very interesting research continuity problem. The new twist to the shortage of research funding, and the one that prompts this presentation, is very important, and in a sense is new and novel, at least on our campus. This is the growing recognition that in some areas, and particularly the agricultural genome area, four or five mega international corpora-

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--> tions—the so-called "life sciences corporations"—appear to hold as proprietary information a key fraction of the field's salient intellectual capital. They maintain this information so closely that our Department of Plant and Microbial Biology (PMB) could no longer assure the university that it could provide a top-flight education for the graduate students. There is a sufficient monopoly over this kind of intellectual capital, and the department encountered a series of surprising outcomes over the past four or five years. This is a very interesting and troubling consequence. One might suggest, to be optimistic about this, that we in the higher education world have been very successful in producing our own competitors in the private sector. The consequences for the free flow of information are very troubling, and they comprise one of the drivers to the events that have unfolded at Berkeley. The combined concerns of a funding shortage and nonavailability of proprietary data were serious concerns to the people involved. First, there was inadequate laboratory space for continuing the department's outstanding research program and the fear that the department's standing as a major research and teaching resource in the discipline would be significantly diminished. Second and more novel was a fear that the equally important public function of assuring broadly available basic knowledge might be truncated in favor of the self-interests of multinational corporations. It could be argued that the interests of these groups might not be consistent with the economic and agricultural interests of the American West. The agricultural subplot involves the deep division among students of agricultural resources about the respective roles of aggressive manipulation of genetic materials in the interest of sustainable food supplies on one hand, and other less intrusive methods of sustaining agricultural production on the other. This division could provide a very important disagreement with regard to the colleagues who might be joining this enterprise. Partnering The challenge at Berkeley was to increase resources both for expensive genetic research and research infrastructure and, at the same time, crack the hold on proprietary genomic information held by the several multinational corporations in the United States and Switzerland. Gordon Rausser, the dean of the CNR, gave considerable thought to this problem of how to work with the corporate world. He is an economist, and this is partially reflected in the kind of design criteria he used to frame an invitation to the five corporations to bid for the services of the PMB. (See Box 6.1.) One should realize that "in the public interest" (see premise 3 in Box 6.1) does not mean research on issues that the public thinks are important. It is research—often basic research—for which the outcome is expected both to benefit the public and be accessible to it. Rausser uses the language of "public-good research" as something that comes out of a special subdialect of economics. So the CNR had this interesting idea of attempting to deal with a number of issues discussed at this workshop. In the spring and summer of 1998, the CNR worked through these very interesting principles quite rigorously in the way the college presented them to the potential bidders, and then waited for returns. The four U.S. corporations responded to the competitive bidding with bids that were considered predatory and not at all in the spirit of the design; these bids were rejected, almost out of hand. Novartis, then a new corporation, formed by the merger of two other companies, responded in the spirit of the offer, and the resulting contract worked its way through the legal and administrative offices of the UC Berkeley campus during the summer. In early fall, the dean invited the views of the academic senate, which has a very strong role in shared governance. My abrupt acquaintance with this story began then, as chair of the senate's committee on research. This committee' s main role is to dispense small enabling

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--> BOX 6.1 Design Premises for CNR-Corporate Relationships 1. Select a single industrial partner for a strategic alliance that will maximize the financial, technological, and intellectual benefits for the department, the university, and California agriculture. 2. Use traditional business models to encourage competitive bidding among the candidates for partnership. 3. Insist that the strategic alliance generate large unrestricted funds for the department to use for research in the public interest, without oversight by the industrial partner. 4. Require that the industrial partner make significant intellectual contributions to the university in the form of access to technology and data useful for departmental research that would otherwise be prohibitive because of cost or proprietary reasons. grants to faculty, but is the only locus where research policy matters can be considered by the faculty. The senate was surprised, indeed, taken aback as the details of the draft contract were outlined. The Novartis-Berkeley Contract Some of the key provisions of the Novartis-Berkeley contract are outlined in Box 6.2. The PMB in the CNR was to receive $25 million over five years for unrestricted, largely faculty-allocated research support. The spending was to be overseen by a steering committee that has some Novartis representation. About 33 percent of these funds would be reserved for overhead, including renovations of space negotiated with the deans and the administration, support for graduate programs, and overhead for the university. Notably, this is an unusual distribution of overhead in the UC Berkeley context. According to the contract, Novartis would provide access to its agricultural genomic database on a confidential basis. A $3 million Novartis facility nearby would have workstations to distribute the proprietary data and house several Novartis staff members who would provide technical support for using the data. An original proposal for three adjunct faculty positions for Novartis scientists was subsequently withdrawn, although the university makes this arrangement frequently and it was not a particularly controversial matter. Adjunct appointments go through the regular quality control processes to which all faculty appointments are subject. Finally, the contract would provide faculty and graduate students with access to Novartis personnel on an informal basis. There are some 33 members of the department, and 30 of them signed up for this arrangement. So there is a very interesting concentration of attention that has resulted. What value does Novartis receive from the arrangement? The contract gives Novartis the first right of negotiations to acquire a percentage (now set at about 30 percent) of the intellectual property from discoveries that may result from the research funded under the contract. The right of first negotiations allows the university to say no—at least in principle—if it is not offered fair market value, so it is not as limiting as many of these relationships. Novartis would also be able to license commercially viable discoveries at their own expense, and Novartis scientists and staff would have informal access to faculty and graduate students.

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--> BOX 6.2 Outline of the Current Contract: Respective Expectations University (CNR) Expectations 1. $25 million—$5 million for each of five years—for unrestricted, largely faculty-allocated research (steering committees with some Novartis representatives). 2. 33 percent of annual funds to overhead distributed to renovation, graduate program support, and general campus overhead support. 3. Access to Novartis' agricultural genomic database (on a confidential basis). 4. $3 million for a nearby Novartis facility with workstations to distribute proprietary agriculture genomic data and several Novartis staff members to provide technical guidance. 5. Access for faculty and graduate students to Novartis personnel on informal basis. Novartis Expectations 1. Right of first negotiation to acquire a percentage (now approximately 30 percent) of discoveries that may result from research it helps to fund. 2. Authorization to license commercial-viable discoveries (at their expense). 3. Access informally for Novartis scientists to faculty and students. There is, as well, an array of patent and legal safeguards. Among the most important is a provision in the contract that termination can be initiated by either party with a year's grace. Governance and Oversight The faculty had also become interested in the governing structure, which is detailed in Box 6.3. A six-member advisory committee oversees relationships between Novartis and the university generally. The university representatives are the vice chancellor for research, who engineered much of this; the dean of the CNR, who was the primary engine behind this; and a member of the faculty, unaffiliated with anyone involved with this work. The unaffiliated role was added at the insistence of the faculty senate. It was originally to have been a faculty member from the CNR, but the agreement was amended because the senate believed that such a faculty member would not be sufficiently uninvolved. Novartis has three people on the advisory committee, too: the president and CEO of the Novartis Agricultural Discovery Institute (NADI) and two co-presidents of the Novartis Agribusiness or Biotech Research Corporation. There are also two nonvoting ex officio members, the contract principal investigator (PI), who is the chair of the research committee, and the chair of the PMB. This makes sense in terms of providing data and information about how things are going. Managing the day-to-day affairs is a five-member research committee that allocates funds among the PMB faculty. This committee has the responsibility of distributing the $5 million every year—actually $3.3 million without overhead.

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--> BOX 6.3 Current Contract: Governance Structure Advisory committee overseeing relationship between Novartis and the university—six members, plus ex officio • Three university-related members: Vice chancellor for research, dean of CNR, and unaffiliated faculty member • Three Novartis-related members: President and CEO, Novartis Agricultural Discovery Institute (NADI); two co-presidents, Novartis Agribusiness or Biotech Research Corporation • Chair of research committee (contract principal investigator) and chair of Department of Plant and Microbial Biology (PMB) as nonvoting, ex officio members Research committee managing day-to-day matters and allocating funds among PMB faculty—five members. • Three PMB faculty: Contract principal investigator, as chair, and two PMB faculty selected by department faculty • Two Novartis representatives: President and CEO, NADI, one co-president, Novartis Agribusiness or Biotech Research Corporation The Faculty Response Once the contract was settled, but before it was signed—scheduled for that fall—the dean talked candidly with senate representatives. Considerable distress and concern arose, within the CNR itself and among members of the senate. There was considerable concern on the campus—a remarkable situation that almost never happens in connection with research relationships. How did the PMB respond to this? They took umbrage to the reaction of the faculty senate. They wanted to know what was new about this style of collaboration. It involves a PI. It has sponsored research. It is similar to an arrangement. So what is the big deal? Why should the faculty senate have anything to say about the free conduct of research? This sentiment was shared by many of us on the faculty, and the senate had a sense of their insult. Indeed, such an official or informal faculty question is rare to nonexistent on the Berkeley campus. The primary issue under debate—an issue of great importance at UC Berkeley—is maximum freedom for individual investigators. Everything on campus—however irrational it may seem—is rational when observed under that criterion. And from the department's view, freedom for investigators was essentially what the contract delivered. The contract provided more freedom in allocation of research support than almost any type of contract or grant, and the funds were to be disbursed by their own department. But the sentiment of the department faculty was not shared by its own colleagues. There are five departments in the CNR. When the faculty returned in the fall and learned what was going on, many of the CNR faculty were distressed for a variety of reasons. One was process: A dramatic change seemed to have been implemented very abruptly, and they did not know what the details were. Although a

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--> college faculty meeting had been held on this topic and a web page had been posted, the faculty believed that they had not been informed. And there was another anxiety—anxiety about institutional integrity. The faculty committee on academic freedom began to wonder about what was involved here. Public universities in California—and particularly for land grant institutions—have a constituency that pays strict attention to what the universities do. This results in intense scrutiny and frequently unequivocal judgments. In other words, one can expect such scrutiny to be applied to the proposals for university-industry interactions that we are discussing here. There was a worry about the relationship with industry versus the growers and people of rural California. People realized that this would be a contract with a Swiss firm, and Switzerland is a long way from the Central Valley of California. Novartis has a very strong presence in California, south in San Diego, and north in the Bay Area. The company has been very clever and strategic in how it has invested in California, and I do not mean that in an ungenerous way. But UC also has had a long history of involvement with California agribusiness that has been quite checkered. Almost always, until very recently, it has benefited the large economic interests in the Central Valley, and this has led to a small political movement on sustainable agriculture within the university and the legislature. Finally, there is the antipathy to aggressive manipulation of genetic materials. That was not why the academic senate was concerned, although we understood that others on the faculty might be. And there were novel properties in the proposed arrangement with Novartis, including its magnitude and its long institutional timeframe. It also differs clearly from the more common arrangement involving a consortium of 6 or 12 companies, each providing some money and dealing with a small number of researchers (much like the situation at the Center for Interfacial Engineering at the University of Minnesota—see Chapter 4). UC Berkeley and the UC system have experience at the other end of the continuum, with large national laboratories such as Sandia, Lawrence Berkeley, and Los Alamos. One of the things we learned to deal with is how to manage secure and proprietary information—to be sure it is in the interest of national security. But we do not know how to deal with an intermediate situation of the presence of a large multinational corporation in our midst that holds proprietary data with interests beyond those of the university. Interestingly, the academic senate' s response was much more reserved than that of the faculty in the CNR. The more the senate leadership thought about this—and we had long conversations with a number of the senior committees and the academic senate council—it deepened our concern about what the university was getting into. This is the origin of the title of this chapter—because we began to ask, How far are we down the path of privatization, of essentially diluting the public patrimony of an intense institutional investment for the public in the interest of some part of that public? Is this tension that we all feel warranted, or is this situation really innovative? Did Gordon Rausser produce a design matrix that addresses only the first example of university-industry cooperation at that proposed scale? What happened at Berkeley certainly will not be the last of these temptations of higher education. Faculty Concerns A range of concerns bubbled up spontaneously from the faculty across the university as news spread about the Novartis contract. Much of the concern—expressed by e-mails, phone calls, conversations with colleagues, and other approaches—was directed to the faculty senate Committee on Research. This explosion of faculty concern was an amazing outpouring on the part of a faculty that usually focuses on its individual research and teaching activities.

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--> The Committee on Research forwarded these questions to the vice chancellor for academic affairs, the vice chancellor for research, and the dean of the CNR. We hoped that getting these questions and concerns in the open would allow the administration to explain the benefits of the collaboration and why it is not diluting public patrimony. But the responses from the chancellors' offices were defensive and evasive and were not appropriate for public dissemination. Questions Raised An important group of the questions raised by the faculty at UC are general to university-industry collaboration1 and are included in the attachment to this chapter. As universities heavily embark in partnering with industry, these questions are the kind of issues that will be of concern to those faculty who are not immediately involved in the collaboration. Hopefully university administrations will become apt at answering the questions. I will highlight several of the questions, many of which are really quite straightforward and contain no surprises. But there is a pattern that gives a sense of the symbolic frame of reference and the enormous ambivalence that is felt on campus. To what degree was the agreement signed with a full understanding of the implications for the public image of both the college and the university? The university has made several attempts at trying to deal with bioengineering firms. They have all failed rather badly. There is a kind of residuum that I do not know well, but it has not been a positive history. This leads one to wonder: What will happen if we become associated with this kind of research? The context at the time was interesting. Monsanto and the U.S. Department of Agriculture had recently announced that they were about to license a kind of seed that would not reproduce itself—the so-called ''terminator gene." It was a great idea for marketing, but the farmers were a little unsettled because it seemed that one company might control the entire market. People on the campus were saying, "Is that what it means to be involved with California agriculture? You and the people like you are doing the terminator genes?" That did not sound like it was in the public's interest. Unfortunately for the internal dialogue that ensued, this story came out about the same time that we received the UC-Novartis contact proposal. And it sent some of the younger faculty and some of the students of the college into a tight political orbit of remarkable intensity. I have been asked, "To what degree are public UC Berkeley funds being used either to support or provide infrastructure for research funded by industry?" Others have suggested that the patrimony is being put out for advantage to specific groups on the outside world. But what will be the consequences? What are our requirements? And what is our duty—as a public university—to evenhandedly develop information about the world, the national and social world, for all the citizens of California? Another area of potential concern is the stipulation of the right to license 30 percent of any discoveries. The contribution from Novartis will increase to the point that this contract will constitute 30 percent of the department' s total budget. The department has many other resources, as well, from both the private and the government sectors, so this is a cautionary concern. Novartis is not the whole thing, but it is the biggest thing. Novartis also funds some directed research and is certainly free to increase 1   The attachment includes approximately 50 questions that were received from many comers of the campus. The list has numbered questions that came from the academic senate. The starred questions came from the executive committee of the CNR. The original questions were stated more in terms of the rhetorical "won't this or that happen." They are now framed closer to data-gathering devices.

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--> support for that kind of activity within the same department. The question has become: What will one entity, in terms of its attention-getting capabilities, gain from providing 30 percent of the total budget, and probably half of the rest of the budget in terms of technical intelligence? Consider what the Novartis people will be able to learn and exchange information about when they are on site. It is very strategic in terms of exchange of information about important things. Returning to the list of concerns, there is a predictable set of questions on institutional development; that is, what is the effect of such a large-scale activity on graduate and undergraduate education. To what degree have there been resources set aside to support unrestricted graduate fellowships—to be allocated by the faculty who are not in the Novartis agreement? The question has come up in a number of different places on campus. If you are going to sell yourself to a strong market sector, how do the rest of us benefit? The argument takes the following form: When you are considered to be one of the top departments in the country, it is not just the one department that is being evaluated. Everyone around you—your university neighbors—is implicated in that judgment. Departments do not exist in isolation. If the rest of the university were of lower standing, you would not have that top position. It is a judgment on the institutional collective that people are making about your capacity as an analytical resource. So we need to think about not just the immediate self-interest of the department and graduate students, but of others as well who are a part of the institution's world. When these matters involve making liaisons with private interests, the question arises as to how much of your attention is turned to those private interests before you are no longer squarely operating in the public's interest as in public university. This is a really interesting problem. It has never come up before on the UC Berkeley campus. It is part of the larger frame of reference in that more and more often we are being asked as faculty to partner with people outside our normal environment. One must—or at least should—ask how many of these interests we are being promised to. How many can we join before our capacity to be loyal to our institution and our public mission is seriously compromised? I am astonished at the strength of consensus among my colleagues on these issues, although we rarely spoke about them previously. It turns out that we never realized how much we cared until the Novartis matter arose. It has been an extraordinary catalyst to discovering that we had a community of interest about unspoken subjects. The next question is a related concern expressed by the college faculty, To what degree has there been a perceived increase in the cultures of "haves" versus "have-nots"? Holders of research grants and contracts are the ''haves." I happen to be a "little have," but many of my colleagues are "have-nots." Nevertheless, they are a part of our collective success. The concern here is not just the Novartis episode, but also the other issues that increase the sense of distance among our colleagues. The different approaches and attitudes of various disciplines may create friction at times, but all the disciplines are important. Another concern is: To what degree has the freedom of association or research, teaching, and publications been restricted formally or informally with regard to this arrangement? This problem is not specific to the Novartis relationship, but it is one in which the faculty has a great interest. When our committee on academic freedom encountered this question, they asked, What are the conditions that would assure these freedoms, not in the first two or three years—that is not a problem—but in the fourth year, the fifth year, and through a second Novartis contract? It is the long-term erosion of these freedoms that concerns us. There is the possibility that the questions one asks will change—with the consequence that we will only ask about what is interesting to industry. While I understand this—it happens to me sometimes too—think about how that sounds to outsiders observing us. What is the level of independence here? Do we have to be concerned? I do not know whether we have to be concerned

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--> or not, but one can imagine the possibilities and manage the situation to avoid compromising this essential academic value. The last set of questions has to do with governance of the institutional evolution, "provisions for exiting/terminating the relationship." In a relationship this exclusive, we do not feel assured by the stipulation allowing formal termination at any time. Although the desire to have this provision is understandable, to think that it provides a formidable protection against institutional erosion is naive. When you have an association with a partner of that scale, with that many people, and for that long a time, it is not reasonable to just terminate the arrangement. There is a high degree of skepticism among faculty on campus who have been in this situation before. When resources for the university from the state legislature dropped from 60 percent to 30, our research capacity provided the flexibility needed to compensate for the loss. We have a number of faculty who have been in positions of heavy dependence on external funding. They understand what can go wrong and what can go right in relationships with outside funders, and they are the people who are saying that terminating the contract as a significant protection is not credible. Another issue is prompted by the present governance structure. To what degree is this structure seen as being composed of people who themselves will benefit? It could be imagined that everyone in the department benefits except the few, unaffiliated faculty members. This is a potential source of trouble if you want your governing arrangement to be a good source of early warning. The structure we have is not a very good one. But it is the structure we have and it is the structure we are going to be watching. One question is associated with an interesting set of issues not previously mentioned at this workshop. "How have plans worked out for developing a research capacity, not only to develop new agricultural products and methods, but to provide insights into the consequences of their widespread deployment?" A relevant example is an experience at the UC Davis campus, where they developed a machine for harvesting tomatoes in great numbers. Traditional tomatoes were too fragile, so the tomatoes were changed. Great fields of these tomatoes can be seen in the Central Valley. These plants are wonderful for ketchup, but not much else. These machines were built in a way that required large plots of ground to make them economically efficient. Can you imagine what happened to the Central Valley after that machine was invented? The land pattern was transformed from many small farmers, with small land holdings, to a few very large tomato growers using those machines. Who could have known? Perhaps anyone who thought about it could have known. And the university was taken to court about seven or eight years ago for not letting anyone know about the potential consequences of this invention for the society in which we live. The university prevailed in court on a technicality, but think of the residuum of suspicion that people hold about this. Much of the research discussed in this workshop is intended explicitly to learn how the world works more effectively—to change the conditions that people who live in our society will experience. But suppose we are wrong about the underlying benefits of the technical processes that we provide for others. Are we at the university responsible if something goes wrong out there in the farms? What if we have a runaway terminator gene—however improbable—or something like it? Would we be held accountable? I think we would be if something harmed the wine industry. We must think about the long-term consequences and follow through on our obligations to report those consequences. My last point concerns the processes that are put in place to involve stakeholders in receiving information about Novartis-based development and seeking advice for research directions themselves. "Stakeholders" in this context are the general public—people without direct financial investment in the program. I contrast this with "special interests" who do have a financial investment. In this situation, a public university can be perceived, if it is not careful, as working for the benefit of special interests rather than the public. I believe the political environment of UC and of higher education in general is

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--> more intense in California than in other states. Here we have an interesting dialogue, and it is in that context that we must view the Novartis contract. Outcome After all the deliberation, the faculty decided to suspend judgment, recognizing the case as an experiment in progress. This redefined the challenge and allowed us to say "Let's do the experiment right. If anybody in the university or higher education communities should be able to do it right, we're the ones!" What this meant was that the senate would not say yes or no for five years—until the experiment is completed. This means that the administration, Novartis, the academic senate, and the CNR will conduct a study. Some argued that we could not call it an "experiment" because we had no control group. And it could not be an "evaluation" because evaluations lead to finger pointing and blame. So we are going to call it an ''observational following." This "following" is intended to discover and understand the consequences for the institution while attempting to manage the overall arrangement. The questions in the attachment are all hypotheses, framed as questions for which data might be gathered. But we are not just studying ourselves; we are surrogates for every land grant institution that has the same problem. The political and institutional challenges are the same across the country. The tensions are already present. A survey was done in the CNR in parallel to the senate's effort, and it turns out that two-thirds of the CNR, and many others in the university are focused in hostile fashion against that department. This is not a healthy situation. Somehow, in a collective way, we have overridden the norms of individual freedom of research on our campus. It is astonishing that this kind of sentiment has begun to crystallize on campus. I do not know what the outcome will be, but my committee is attempting to put together a request for proposals to get someone—an external group—to follow the evolution of this institutional development at Berkeley. Although I have had a number of invitations to comment on this situation, this workshop is the first one I have accepted because of the workshop topic and the venue. The problem emerging here is the type of challenge often undertaken by the National Academies of Science and Engineering. I think that we are at a watershed in public higher education, certainly in California. We are as vulnerable as any institution to temptations, and although I do not see Novartis as predatory, other organizations are. The analytical capacities of our society are being nibbled away—from the destruction of the Office of Technology Assessment, to the decline of consultants in the legislatures, and the assault on the national laboratories. Many of the institutions of analytical credibility are gone, and others have declined in capacity. And the Novartis situation, unless it is managed well, is not going to help. In our society, there appears to be an increasing hostility—now I speak as a political scientist—to analytical work in general. I spend a good deal of time at Los Alamos, in part working on matters related to radioactive waste. What I see in important sectors of our society are smart people who discount scientific input out of hand. This is a very difficult situation, and there is a lot to lose, and I do not see the Novartis paradigm or much else presented at this workshop fostering a movement away from this skepticism. Without more thoughtfulness about how to increase public confidence in us—as a chemical association, as a nuclear community, as a community of thoughtful academics, or as people who labor in the analytical vineyards—we will lose a great deal. I hope that discussions about partnering with industry will have room for such matters because industry has a very important role in countering this loss of confidence. This is a very serious concern. It would be a shame for us to enter the 21st century on the edge of losing public trust and confidence in the enterprise we have given our lives to. I think this is what is at risk.

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--> Attachment: Responses to the CNR-Novartis Arrangement: An Explosion of Faculty Concern Introduction The CNR-Novartis arrangement has a number of features that are novel both for the UC Berkeley and for public universities generally in the United States. Some features could result in a substantially increased flow of intellectual capital from the corporation to the research programs of a department's faculty and potentially enrich the economic returns to the campus for research done there. Other features—the relative scale and the relative exclusivity and duration—together seem worrisome to the academic community of UC Berkeley. These concerns are summarized below. They arose from extensive faculty discussions. Categories of Concern2—Planning Process *In CNR's review of the experiences of other institutions' attempts to establish a relationship between a public land grant university and a major international corporation, what were the lessons learned? What would be the sources of learning for an institutional experimental and observational aspect of a CNR-Novartis evolution? *To what degree was the agreement signed with the full understanding of the public image aspect for both the college and for the UC Berkeley of the arrangement with Novartis? What are the mechanisms for monitoring and enhancing those images? I. Optimize Learning from Novartis and Benefit from Innovation Sponsored in Part by Novartis Objective: Assure equalized benefits: to California public, faculty and students, and corporation while maintaining the quality of research (and scholars); assure a breadth of research warranted by a public university. How have funds been allocated in terms of the "public good" research conducted? How is the character and public value of CNR-Novartis-supported research to be judged? On what basis? (For questions concerning public interests, see Section V.) **How have boundaries been drawn between proprietary and public information/technology work? Have they been maintained? **To what degree are public UC Berkeley funds being used either to support or to provide infrastructure for research favored by industry? (Are the opportunity costs shouldered by the public sector more than the proposed $25 million of unrestricted funds?) These funds have not materialized. **To what degree are private funds supporting "public research"? Has this been used to argue for increased public funding? 2   Starred questions are from the CNR executive committee; numbered questions are from the academic senate.

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--> **To what degree has the college (as well as Novartis researchers and employed graduate students) gained access to funds, technology, and patented and proprietary technology and information? On what basis has this been assured? To what degree has there been restriction on publication of Novartis-sponsored research (e.g., delay until it is clear that no confidential information is disclosed or delay until one is assured that patents are being secured)? Has the provision for a delay of publication for up to 120 days inhibited the reporting process or seen as a disadvantage in scholarly competition? What have been the advantages for the Novartis arrangement as perceived by researchers, especially graduate students? For the quality of CNR's programs as perceived by CNR faculty? Given the provision on "first right to negotiate ... for license of discoveries coming from the departmental lab," to what degree has Novartis initiated claims on intellectual property arising from work of colleagues in the department that is NOT supported by Novartis (as well as the work that is supported)? How will patents based on Novartis-supported research be handled? What are the general arrangements for filing patents and copyright agreements? How has the stipulation of the "right to license 30 percent" been worked out? On what basis have calculations associated with the "30 percent of all patents" provision been made? Novartis has the right to license some 30 percent of new findings; how has this worked out in practice? Does this include PMB inventions that are not done with Novartis funding? How has the disposition of overhead been worked out and for what functions? II. Institutional Development Vis-à-vis Ongoing CNR and Campus Processes and Climate Objective: Avoid or minimize institutional distortion regarding undergraduate teaching, graduate education, and faculty governance. How has the agreement affected the general atmosphere of the open academic environment in graduate education? Do students perceive the same type of environment as before the arrangement? To what degree has there been a perceived distortion of the undergraduate teaching program? Has the time devoted to undergraduate teaching changed since the arrangement was put in place? How have the Novartis developments affected the education of graduate students? What advantages are perceived? Have choices for graduate students increased or decreased? Have discussions among graduate students involved in confidential research affected interactions within the graduate student body as a whole? Are graduate students publishing their research within the usual timeframe? To what degree has the PMB maintained its control over the direction, scale, and progress of graduate students (i.e., to monitor and certify the types of thesis research work done by graduate student

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--> research assistants on projects sponsored by Novartis scientists to assure that it would be at least equal in quality to that done with UC faculty; to attract able students to the program; and to assure a "normative pace" and attention toward graduate students as the proportion of students engaged in Novartis "targeted research" grows)? To what degree has this (type of) arrangement (shifting research from a corporate to a university environment) resulted in fewer jobs being available in the marketplace for Ph.D. recipients? To what degree has there been a "set-aside of resources" for unrestricted graduate fellowships, to be allocated by faculty within PMB or CNR who are not in the Novartis agreement? To what degree have Novartis resources affected faculty pay (e.g., sustained summer pay) in introducing inequality of reward? **To what degree has it been difficult to distinguish clearly between "restricted" and "unrestricted" moneys? Have nonparticipating faculty had access to either? **To what degree has there been a perceived increase in a culture of "haves" and "have-nots"? To what degree is it perceived that "Novartis scholars and professionals," both departmental and adjunct, have had an affect on faculty governance processes? Adjunct faculty option dropped. **To what degree has freedom of association (e.g., individual faculty working with other companies or no company at all) and/or freedom of research, teaching, and publication been affected by the Novartis arrangement? **To what degree is it perceived that the arrangement has affected the Division of Agriculture and Natural Resources (DANR) agenda for the CNR; on the impact on CNR's outreach mission? What processes does CNR have to gauge the effects of the Novartis relationship on the college's internal development? What indicators of change are being used? **To what degree has the ease or difficulty of recruiting faculty and student changed since establishing a relationship with Novartis? **To what degree has the pattern of teaching, curricular stability, and service performed by faculty work changed since establishing a relationship with Novartis? Has this varied for those faculty supported by Novartis resources? How have the appointments of Novartis scientists as adjunct professors been handled? How many such appointments have there been? Adjunct faculty option dropped. To what degree has Novartis-supported work affected the size and number of existing faculty and the potential for faculty salaries paid from non-1990 sources?

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--> To what degree have Novartis funds been used (or allowed other funds to be used) to add faculty to the department or college? What are the provisions for exiting or terminating the relationship if it proves unworkable? 21.1. Specifically, do the rights of either party to negotiate an exit with a single year' s notice assume any protections for graduate students with implicit four-year commitments and for staff research associates? III. Infrastructure Concerns Generic concern: There is likely to be an expansion by 100 people associated with the Novartis contract. This is likely to affect the demand for other resources, including possibly foregoing other future growth elsewhere. Where are Novartis personnel housed on campus space? How have company-confidential, restricted-to-Novartis personnel spaces on campus been managed? To what degree have UC faculty, students, and staff signed nondisclosure agreements? To what degree has there been a change in staff (over that already associated with CNR) on campus? How has the provision of space for PMB been managed? Who funded this? Did it come at the expense of others on campus? To what degree has the availability of Novartis funds affected interactions with federal agencies on capital expenditure matters? IV. Governance of Institutional Evolution Generic concern 1: The degree of exclusivity is novel and a matter of continuing concern. This calls for a structure to assure sustained thoughtful attention. Generic concern 2: It is naive to assume that PMB can walk away from such a contract with Novartis should the research agenda be somehow "bent" away from the research of the university and toward more applied activities. One cannot easily shut down a relationship of this nature, and thus successful governance is critical. Given the present governance structure, to what degree is this structure seen as being composed of people who will benefit? Have Novartis representatives played a major role in departmental governance or resource allocations? To what effect? How has the distinction between "unrestricted" research funds, paid out of the annual Novartis grants, and specifically targeted research projects been implemented by the research review committee? To what degree have Novartis representatives on the two boards been influential in decisions about nonrestricted, non-Novartis-related research?

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--> What provisions have been made by the college (department) to prepare for the analysis of feedback from such study and to effect remediation if necessary? Has there been a vehicle to provide a voice for the CNR faculty and academic senate in matters of reviewing the institutional outcomes of the CNR-Novartis evolution? To what degree have the interests of the senate been represented via the current arrangement to university representatives (UC Berkeley, vice chancellor for research, and the University Office of the President and Division of Agriculture Natural Resources vice president)? V. Optimize Relationships with a Wide Variety of California Stakeholders Generic concern: Expand range of public-good research to include awareness of public and social impact and potential mitigation as well as benefits. How have plans worked out for developing a research capacity, not only to develop new agriculture products and methods, but to provide insights into the consequences of their widespread deployment? How has the Novartis arrangement informed research relationships with the California commodity groups? The principles outlined include a provision of no oversight by the industrial partner. But both the proposed research allocation committee and the policy board include such individuals. How has this worked in practice? What processes have been put in place to involve stakeholders in receiving information about Novartis-based developments and seeking advice for research directions? How has this been received? VI. Experimental Nature of This Development Objective: To provide the basis in advance for a rigorous experimental design and resources for its timely execution. What processes have been put in place to assure that all parties understand the experimental nature of this agreement and the importance of acute feedback and analysis of "lessons learned"? How has timely feedback been provided to oversight group(s) for midcourse corrections if appropriate? (Who has been involved and on what grounds?) Discussion Hank Whalen, PQ Corporation: How did you get Novartis to sit still while these negotiations went on? And how long has this been going on? Todd La Porte: I don't know the history of this in a careful way. It didn't take very long, possibly because there were several people at Novartis who realized, through whatever series of experiences they

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--> had had in the past, that they would to be locked out altogether if they didn't pay attention. If I recall correctly, Novartis and UC Berkeley were in conversation for about 18 months. David Schetter, University of California, Irvine: Does the agreement provide for the university to have a role in the selection of the projects that are being carried out? Todd La Porte: Yes. That is the role of the research committee. The disbursements on the list of projects range from $200,000 to $75,000 per faculty member based on the selection committee's sense of quality. David Schetter: I would say that there is more to this that is positive. First of all, there is the flexibility of the research mission, which is not uncommon for Novartis. Also, there was a $25 million building for UC Berkeley. Todd La Porte: Not exactly; it became a $3 million facility. The $25 million somehow disappeared. I am familiar with the facts. David Schetter: I thought it was a higher price. Todd La Porte: I agree. For 30 faculty and $3,300, its not that much per person. In fact, one of my colleagues in the Division Council, which is the body that worries about these things, said it should have been three times per person. David Schetter: It puts enormous pressure on the other universities that are not doing these "creative deals." The other part is that, whereas they can access only 30 percent of the licenses, they want to look at everything. And if there is any joint invention, what good is it? Essentially they are going to capture over 60 or 70 percent of actual licensed information. Todd La Porte: This wouldn't surprise me. We already came up with that hypothesis, and it is one of the questions in the attachment. But don't misunderstand the tone of this conversation. I sounded like I was being negative, but I'm not. As a faculty member, I'm equivocal because we don't know what the requirements are for engaging with industry this way and doing it gracefully. If we can learn whether it can be done gracefully or not, then many of the things that we here are supposing can be seen as hypotheses rather than conclusions or predictions. As a biologist, for example, or in my case as an organization studies person, we don't know enough about the details of these agreements. We are told what the organizational outcome will be. But my response is, "Wait a minute. You can't tell me that your confidence in the goodness of your heart and your colleagues will result in that kind of outcome with a high degree of certainty." It might and it might not. It's indeterminate. And that's why the "organizational following" is necessary. Joseph Gordon, IBM: This is a single, relatively large grant or contract. Is that the same as a number of small ones that add up to the same amount of money? Are there the same concerns? Todd La Porte: I made the allusion that we know how to handle a number or consortia of sponsors and a group of faculty. We do this a lot, and many of you do too. Why do we say that? Because sponsors check each other. Essentially none of them are large enough to have the potential for untoward

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--> influence if that were to happen. The fewer contracts you have, the more money involved and the longer the relationship is, then the more you have to wonder about it in terms of institutional care. And that is why we are in the middle between the arrangements we do quite often and the national laboratories. The Novartis deal is in the middle, and we do not know yet how to do this type of agreement gracefully. The question is whether we can figure out a way of doing this gracefully and not distorting the meaning of public higher education in the 21st century. That is the basis for the concern because higher education is what is at stake here. As long as our public and our public legislative bodies are either distracted or maliciously disinvesting in analytical capacity, we somehow, as a university and as an analytical community, have to figure out ways of maintaining our analytical capability, and particularly the capacity for freely posing questions. It's the question-posing part that is as important as anything else, and that is hard enough in any environment to maintain. Claude Meares, University of California, Davis: As I'm sure you remember, something related to this happened at Scripps about five years ago. How do you see that as relating to this? Todd La Porte: Do you know enough about it to tell our colleagues here what the Scripps situation was? Claude Meares: It was with Sandoz, another large Swiss corporation. This was one of the director's entrepreneurial activities, which at that time attracted the attention of Congress because it involved a share of the inventions, similar to the UC Berkeley and Novartis agreement, that might have been supported by federal funds and that was renegotiated after considerable rancor. It seems to me that something must have been learned that impacts the UC Berkeley and Novartis case. Todd La Porte: One of the questions listed in the attachment was to what degree the planners at Berkeley have taken into account the history of the UC and these types of agreements in the past. You can conclude that the UC Berkeley people were aware of some past events and were hoping it wouldn't happen to them. But it was certainly within the consciousness of most of the people who were close enough to that research community to know the full story. And there's more. At Irvine there has been an unfortunate relationship with a Japanese firm and also at UC San Francisco. So there's a lot of concern here that has surfaced. I have no reason to believe that other universities are not having the same experiences. Francis Via, General Electric: I have a couple of concerns with the basic premise before you began the discussion of the Novartis agreement. I'm relating myself more with the discussion that occurred on campus between the "haves" and the "have-nots." Being a chemist and being on the Chemical Sciences Roundtable, I'm starting to feel like the "have-nots" associated with the type of agreement you are able to work out at the university. And in trying to picture what would happen if such a proposal were made to a general chemical company on general chemical technology, the consternation is with the initial one, that unless the university, a world-class leading university, teams up with a corporation at this stage to gain knowledge from the company, the university would be ineffective in educating its students. We have seen the content of teaching students to solve problems, and basic science seemed to work for a 100 years or so. I'm wondering if that premise is fractious? Todd La Porte: No. I'm glad you raised the question because that is one other aspect of this "observational following." We are going to be asking two questions. First, do the design principles return an

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--> outcome that was expected? We're going to try to test the principles. Second, if the outcome is as expected, is this the only way to provide access to the proprietary data that in this particular case you can't get anywhere else? I don't understand the specifics of the agricultural genomic database. What my understanding of it is, in talking to the faculty about why this is a problem, is that because it's so fundamental, that if certain companies or certain bodies hold pieces of information exclusively, the department cannot use it with regard to the education of their students. It's not the process part of education that you were referring to. It's the substance aspect of it. Let me tell you a story. UC Berkeley had several instances in which students had gone through a dissertation project, finished the dissertation, and taken it out to the world. But the corporation said, "Oh, we already knew that, and we knew it two years ago, but we weren't telling anybody we knew that." Now, if you are a graduate professor with students working as hard as they do, to program that kind of outcome, it's just plain irresponsible. Those lives are too precious and those skills are too rare to treat them as temps or to treat them as dispensable. If you can avoid that, you should. That is part of what' s driving the character of the Novartis agreement, and that is what's novel from what is happening on our campus. This is happening, it turns out, in the computer sciences too. We are beginning to ask the question: Where else is this happening? Andrew Kaldor, Exxon: It's happening all over. Todd La Porte: If it is happening all over, then it is our responsibility as academics to ask how we can prevent damage from this in terms of the graduate students and as a public institution. If you are a private institution, it's not a problem. But if you want to align yourself with a special interest, do that. There's no public prohibition from this in their case, but in our case there is. It's not only illegal, it's certainly the way my colleagues feel about their responsibilities to the rest of the society as well as to their students. I want you to tell me that I'm wrong, but I'm not hearing anyone say that I am wrong. I'm testing this out on you because you should know if the dynamics that I am describing exist because it' s a small sample and because I'm not involved in the science. And I'm not hearing from you or my colleagues, who are in the Novartis agreement at Berkeley, that we are wrong about this, and that is scary. Michael Chartock, Lawrence Berkeley National Laboratory: I find many of your comments and arguments very interesting and compelling, but just because I am silent does not mean that I agree with all of them. Actually, I just have one small qualification. You didn't say that the Lawrence Livermore National Laboratory (LBNL) necessarily conducted classified research, and you say that the University of California had a good experience with outside research conducted at the national laboratories. But the LBNL does not conduct classified research. Todd La Porte: That is quite true. I appreciate that, but it's instructive why that is the case. Some time ago we decided that we couldn't have a good relationship with LBNL while it was conducting classified research. So part of the response to doing classified research is to figure out a way for them to exist without having to do it. So we have given it to Livermore and Los Alamos, which have a different kind of relationship with us as a university and as a campus. Michael Chartock: The handling of classified information and where you do it is very complex. Long before 1970 when the LBNL separated from the Lawrence Livermore National Laboratory, the Department of Energy had taken much of the classified research out of the laboratory. I think the department

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--> and the federal government realized that national labs were probably not the best location for doing classified work. Christopher Hill, George Mason University: I'd like to consider the comment about whether the state of industrial practice is in some sense so far ahead of what the universities know that we can no longer effectively teach what we know in anticipation of what will happen in industry in the future. Embedded in this comment is the implication that in the good old days we faculty members were always better informed and ahead of the state of the art of colleagues in industry. To the contrary, it seems to me that industry practice has nearly always been ahead of academic teaching. Todd La Porte: That's not the point here. Your point is also true, but in the past if we wanted to find out we could. Now we can't. We are sending our graduate students out to essentially enlarge their knowledge from outsiders. Right now this has declined in the view of the colleagues in that department. They say that this is the situation they confront. Their belief in this was strong enough to be troubling and they have had experience doing it. I have a lot of cunning colleagues at UC Berkeley in this matter. It seems clear that we need to learn some things that we don't know and that are not generally known about this type of relationship. Debonny Shoal, Idaho National Engineering and Environmental Laboratory: A couple of observations: You commented about the inaccessibility of some kinds of information because information is closely held, and that there exist proprietary constraints with respect to sharing information. As far as I know, sequestering information has existed as long as there has been intellectual exchange. I agree with you that it is important to question, to explore, and to contest the constraints on free flow of information; however, I believe that there are often good reasons and strong drivers for nondisclosure, and any attempts to change that would have little impact. The other observation is one that might be a little bit flip, but as you were referring to organizational models, you referred to the "predatory" nature of the industrial enterprise. I would refer you to an organizational model presented by microbial communities in nature. Although a population may be subject to predators, a good predator never completely destroys its host population. Todd La Porte: Then you want to make sure that you are involved with a good predator.