U.S. Licensing Regulation as a Model for Developing Countries Benton Martin Emory University School of Law Juris Doctor Candidate 2010

Reason for Legislation Prior to Bayh-Dole: “the U.S. government owned approximately 28,000 patents, [but] less than 4 percent were licensed to industry.” Now: Licensing of government funded inventions has substantially increased post-Bayh-Dole Critics: argue that licensing would have increased even without Bayh-Dole  BUT: agree that Bayh-Dole “accelerated this growth by clarifying ownership rules, by making these activities bureaucratically easier to administer, and by changing norms toward patenting and licensing at universities.”

Needed in Developing Countries? Some scholars say NO- costs outweigh the benefits for developing countries Others say clarification of ownership should be emulated  But cautions that legislation must move beyond clarification to create socially beneficial national IP legislation Countries will likely continue to adopt Bayh-Dole like provisions due to its apparent success in the U.S.  China, South Africa, Brazil, Malaysia

U.S. Tech Transfer Regulations Stevenson-Wydler Technology Innovation Act of 1980 :  Required government owned and operated laboratory (GOGOs) involvement in technology transfer Bayh-Dole Act of 1980:  Allowed universities and small businesses to take title to inventions generated using federal funds Federal Technology Transfer Act of 1986:  Allowed government labs to enter into CRADAs. Recent Legislation:  Guarantees CRADA collaborator a license of their choosing  Requires Commercial Development Plan See National Technology Transfer and Advancement Act of 1995 & Technology Transfer Commercialization Act of 2000

Key Aspects of GOGO Tech Transfer compared to Universities Cooperative Research and Development Agreements (CRADAs): made in advance of invention and gives companies:  Purpose of lessening negotiation time needed for collaborations  Gives right to choose to enter into an exclusive or non- exclusive license  Ability to provide supplemental funds to federal projects Commercial Development Plans: Licensees must have a plan to bring the technology to practical application. Failure to take reasonable effort to follow the plan and result in canceling the license. Cannot Spin Off Start-up Companies

Key Aspects of Both No Research Exemptions: Neither law requires license exemptions for use in research of new inventions. See also Madey v. Duke University, 307 F.3d 1351, 1362 (Fed. Cir. 2002). Preference for Domestic Manufacturing and Small Businesses: Both laws express preference for small businesses and domestic manufacturing-licensees exhibiting these characteristics are given priority Access Provisions :  “March-in” Rights: Allows government to force the licensing of a technology to a licensee of its choosing if original licensee is not acting in the public’s interest  “Exceptional Circumstances”: Allows government to retain title in “exceptional circumstances” if it will promote the government’s objectives

Addressing Needs in Developing Countries “appropriate policy options will depend on regional, national and sectoral analyses of conditions and objectives” Sara Boettiger & Alan Bennett, The Bayh- Dole Act: Implications for Developing Countries, 46 IDEA 261, 262 (2006).

Positive Aspects of US Law for Developing Countries Clarity of ownership accelerates economic growth CRADAs have been successful in reducing negotiation costs Commercial Development Plans create transparency and allow for specialized licensing Domestic/Small Business Preference

Negative Aspects of US Law for Developing Countries Conservation of public domain Cost of establishing TTO system Lack of even a limited Research Exemption “March-in” Rights create uncertainty, yet haven’t proven to be useful

Aspects That May Need Modification “Domestic Manufacturing” preference may need to be changed to a “Domestic Benefit” requirement Must have clear and effective provision for access to essential medicines

Solution to Low Resources: Regional, rather than Institutional, Tech Transfer Approach uses regional or technology specific tech transfer offices (TTOs) rather than universities Pro : Addresses Problems of:  Scarcity of IP experts in developing countries  High cost of maintaining TTOs  Competing Patents causing Anti-commons Con : neglects non-patent management functions of institutional TTOs

Encouraging PPPs

Public-Private Partnerships Purpose : to improve access to immunization for children in impoverished countries Mechanisms : Innovative funding, partnerships, and technologies Important Partners :  Governments and vaccine industry of industrialized countries  Governments and vaccine industry of developing countries  World Health Organization, WHO  United Nations Children's Fund, UNICEF  The World Bank Group  Bill & Melinda Gates Foundation  Research institutes  Non-governmental organizations  Foundations  Technical health institutes For more information see

Solutions: Use of CRADAs to Allow Public-Private Involvement in Research PPPs like GAVI could use CRADAs to provide resources to research in exchange for increased control over the licensing of the resulting technology Pros : provides a possible mechanism to address neglected diseases Cons : may be used by corporations to gain exclusive licenses on technology  Could be addressed by careful regulation drafting

Access to Medicines

Solutions: “Open Licensing” Like free software licensing, this approach uses propriety rights to secure freedom for an open class of potential users. Pros: allows generic competitors to use the technology in developing markets, driving the price down Cons: lowers the value of granted license rights

Solutions: Research Institution Determines the License Type This approach give the research institution complete control over whether a license is non-exclusive or exclusive Pros : Allows discretion in limiting the amount of exclusive licenses Con : Discourages industry from licensing technologies due to heavy regulation of contract negotiation

Solutions: “Commercial Development Plan” (CDP) Tailored to Ensure Access Approach 1: Requiring licensing language that reserves rights for the research institution to use the technology for humanitarian purposes  Effect: Decreases the value of licensed patent rights, especially when the major market for the technology is humanitarian Approach 2: Require CDP to address humanitarian uses.  Effect: Gives licensee full rights but provides mechanism to keep them accountable Developed by Public Intellectual Property Resource for Agriculture and Universities Allied for Essential Medicines. See Michael S. Mireles, The Bayh-Dole Act and Incentives for the Commercialization of Government-Funded Invention in Developing Countries, 76 UMKC L. Rev. 525, (2007).

Solutions: Limited Research Exemption within the Legislation One suggestion is to require that all researchers supported by federal funding get a royalty-free license to use other technology than resulted from federal funding Pros :  Limits potential for anti-commons effect  Is less drastic than a complete research exemption Con : Any research exemption has some effect on the value of the licensed patent rights

Questions?