University Technology Transfer Practices & the Bayh-Dole Act

What is Technology Transfer? Broadly: Sharing of skills, knowledge, technology among institutions to ensure that scientific and technological developments are accessible to a wider range Identify research that has a potential commercial interest and develop a strategy to maximize utilization First formal tech transfer program started in University of Wisconsin in 1924

Federal Government Support Largest support for academic research and development funding Typically accounts for over 60% of funding 1972: $1,795,045 billion Today: More than $50 billion!

Prior to 1980 The title (ownership) to any invention created using federal funding was owned by the U.S. Government No uniform policy among federal agencies for the transfer of the invention into private sector commercialization Government controlled the patents Wouldn’t grant exclusive licenses Separation of inventor from invention

Prior to 1980 con’t In 1978 Government owned over 28,000 patents but had licensed less than 4% Little incentive to develop any technology Inventions reported to the Government began to decline even though there was a boom in funding

Bayh-Dole Act 1980 Created uniform federal intellectual property policy Nonprofits and small business could elect title to inventions that were created in whole or in part with federal funding However, universities would have to agree to a set of due-diligence requirements http://biospectrumindia.ciol.com/content/topStory/10507072.asp

Bayh-Dole Act (P.L. 96-517) Since 1980, only 2 amendments & 3 legislative or agency actions added to the Act. 1982: Provided guidance on the implementation of the Act as well as implementing standard reporting requirements 1982: Extended Act to all federal contractors

Bayh-Dole Act (P.L. 96-517) 1984: Removed limitations on exclusive licenses & the Department of Congress was designated to oversee implementation of the Act 1987: Consolidation of regulations for all of the rights and obligation for inventions created with federal support 2000: Modification to streamline the process where federal agencies commercialize inventions made by their employees

Disclosure of Invention to Federal Government Within 2 months after an inventor discloses an invention to the Tech Transfer Office, the institution is required to disclose the invention to the Federal Government Must include: Grant # or Contract # Invention detail Inventor(s) names Any publication, on sale or public use of invention Whether a manuscript has been submitted or accepted

Election of Title Institutions must elect title in writing within 2 years of disclosure to the federal agency Can be made at the time of disclosure Sometimes done during preparation to file patent application Agency can shorten time to elect title when a publication, on sale, or public use has initiated the 1 year grace period for patent protection in the U.S.

Confirmatory License Gives the Federal Government royalty-free rights to the license for government use Confirmatory license must be submitted to the federal agency and is recorded in the Patent & Trademark Office (PTO) Not necessary for provisional applications

Patent Application & Issued Patents On both must cite: The invention was made with federal funds The U.S. Government has certain rights Example: This invention was made with government support under grant (contract) number _________ awarded by (name of agency). The government has certain rights in the invention.

When May the Government Obtain Title? Institution fails to: Disclose within the specified times Elect or retain title File patent applications in additional countries in the times specified In any country in which the institution decides to not: Continue patent prosecution Pay the maintenance fees

March-In Rights Federal Agency can exercise march-in rights if action is necessary: Because the assignee has not taken, or is not expected to take within a reasonable time, steps to achieve practical application of the invention To alleviate health or safety needs that have not been reasonably satisfied To meet requirements for public use specified by Federal regulations that have not been reasonably satisfied If the preference for U.S. industry has not been obtained To date no Federal Agency has exercised march-in rights 3 Petitions to NIH all denied (CellPro, NORVIR, Xalatan)

Reporting on the Utilization of Subject Inventions Institutions are required to make annual reports (if requested by the funding agency) Status of development of the Subject Invention Date of first commercial sale or use Gross royalties received by the institution

Sharing of Royalties with Inventors Institutions are required to share royalties with the inventors of the Subject Invention Most institutions have a royalty distribution formula that usually applies to all inventions The remaining royalties (after payment of expenses) utilized for the support of scientific research or education Boston College has a sliding scale for royalty distribution

Preference for Small Businesses When licensing, institutions must make reasonable efforts to attract small businesses as licensees Preference must be given to a small business when it has a plan for marketing that is equally likely to bring the invention to practical application Federal agency may review an institution’s licensing program

Non-federal Inventions Voluntary health organizations American Cancer Society: defers to the institution’s policies American Diabetes Association: the title to the invention is determined by the society Funding is usually supplemental to federal funds Bayh-Dole applies to all inventions that are conceived or reduced to practice in whole or in part with federal funding and dominates over other organization’s policies

Impact of Bayh-Dole The Economist’s (2002) claimed: “[p]ossibly the most important piece of legislation to be enacted in America over the past half-century” Steady increase in U.S. academic patenting, licensing, & associated revenues Other countries passing similar laws that promote the patenting of publicly funded research India: In Nov 2008, law approved by India’s Union Cabinet and is currently being considered by Indian Parliament

Royalty Income to US Academic Institutions Source: A. Stevens, les Nouvelles, 38, 133-140, September 2003; AUTM Annual Survey

Criticism of Bayh-Dole Misleading figures about lack of licensing prior to Bayh-Dole Most from Defense Department Many already declined for exclusive title by firms Little actual impact? Increase actually due to: Upswing in University Tech Transfer Ability to patent novel organisms Increased government spending in biomedical research

Criticism of Bayh-Dole Need for research exemption or reservation of research rights Madey v Duke University ruling argued that university research may be viewed as advancing a business Access to research tools: What if Stanford ‘recombinant DNA patent’ had not been licensed nonexclusively? “Anticommons” effects: Multiple parties involved leading to large transaction costs and delays in utilization of technology Humanitarian access: Problem of patents increasing the cost of product development

Benefits of Bayh-Dole 2007 survey by Association of University Technology Managers (AUTM) 686 new products introduced into the market 555 new start up companies established 3,622 new U.S. patents issued 5,109 new licenses and options signed

Recent Success Stories AxoGenTM (University of Florida): Nerve regeneration start-up founded in 2002, first product AvanceTM used for the treatment of long-gap nerve injuries in 2007 Biofuels Technology (North Carolina State University): Potential to turn any fat into fuel for power jet planes. Licensed to Diversified Energy Corp.

Web Resources AUTM: http://www.autm.net/AM/Template.cfm?Section=Bayh_Dole_Act PLoS Article: Is Bayh-Dole Good for Developing Countries http://biology.plosjournals.org/perlserv/?request=get- document&doi=10.1371/journal.pbio.0060262 Biotech Transfer Week Article: As India Mulls Bill Modeled on Bayh-Dole, Critics Claim It May Stile Innovation http://www.genomeweb.com/biotechtransferweek/india-mulls-bill-modeled-bayh- dole-critics-claim-it-may-stifle-innovation Nature Article: Bayh-Dole: if we knew then what we know now http://www.nature.com/nbt/journal/v24/n3/full/nbt0306-320.html