1. Public Norms and Private Ordering: The Contractual Creation of a Biomedical Research Commons Prof. Peter Lee UC Davis School of Law October 4, 2008 Prof. Peter Lee UC Davis School of Law October 4, 2008

2. Introduction How can patent law strike a more optimal balance between exclusivity and access to foundational research technologies? Primary focus: – Contractual construction of a noncommercial biomedical research commons Broader phenomenon: – Consideration-based regulation as a means of advancing public policy

3. Patent-Enabled Research Holdup Patented biomedical research tools Patented Research Tool Research Application Theoretical models Empirical questions Implications

4. The Challenge of Appropriate Access to Research Tools Wide access to research tools generates significant positive externalities Disallow patents on research tools? Would reduce private incentives to invent research tools But, many research tools arise from public support Disallow patents on publicly-supported tools? Would reduce private incentives to develop Dual status inventions The Bayh-Dole Act

5. “Public Law” Approaches to Biomedical Research Tool Patents Common law experimental use exception Patentable subject matter doctrine Statutory experimental use exception Utility requirement Compulsory licenses Remedies analysis Traditional modes of patent regulation arising from broadly-applicable laws, decisions, and rules “Public Law”

6. Private Ordering in Intellectual Property Collective rights organizations Property preempting investments Open source software Norms Markets Contracts Norms Markets Contracts Private Ordering

7. “Public” Institutions Engaging in “Private” Ordering Public Institutions Downstream Patentees Consideration Qualified Access Consideration-based patent regulation: – Control of some valuable consideration (money, licenses, materials) contributing to patented research tools – Norms favoring access to research tools rather than exclusivity and profit maximization – “Contracts” ensuring access to patented research tools for noncommercial research purposes

8. “Public Institutions” in the Political Economy of Biomedical Research National Institutes of Health State Funding Agencies Universities Nonprofit Funding Organizations Disease Advocacy Groups Patented Research Tools

9. The National Institutes of Health $30 billion per year in research funds – Principles and Guidelines Wide availability of patented research tools for noncommercial uses Targeted exclusivity for commercial development – Compliance considered in awarding grants Patent rights (Bayh-Dole Act) NIH Downstream Patentees Consideration Qualified Access

10. The California Institute for Regenerative Medicine $3 billion over 10 years for stem cell research Explicit quid pro quos – “By accepting a CIRM grant award, the grantee agrees to comply with the provisions of these regulations.” 17 Cal. Code Regs. § 100300 Nonprofit grantees must make patented research tools available to noncommercial research institutions in California

11. Universities Vast patent portfolios – 18% of biotechnology patents Reserved research exceptions in technology transfer licenses “Harvard will retain the right, for itself and other not-for-profit research organizations, to practice the subject matter of the patent rights for internal research, teaching and other educational purposes.” Licensing Harvard Patent Rights: A Guideline to the Essentials of Harvard’s License Agreements

12. Non-Profit Funding Organizations Overall contributions: $2.5 billion per year Howard Hughes Medical Institute: $599 million in research funds – HHMI “expects all HHMI research tools to be made available to the scientific research community on reasonable terms and in a manner that enhances their widespread availability.” HHMI, Research Tools (SC-310), at 1 – Consistent with NIH guidelines

13. Disease Advocacy Groups Contribution: rare body tissues Leveraging assets to promote access to patented research tools: – PXE International – Conditional access to tissue registries

14. The Contractual Creation of a Biomedical Research Commons Provides working solutions to patent holdup Confers significant freedom to operate to government bodies Enables distinctions and context-specific interventions Patents Exclusion Governance

15. Challenges and Prescriptions Patchwork solution Overreaching and chilling Parochialism

16. Broader Implications The privatization of public policy in patent law – Unilateral regulation to contractual quid pro quos – Governments as lawmaking bodies to governments as dynamic market actors – Government institutions as policy actors to private institutions as policy actors as well – Centralized regulation to decentralized regulation

17. Broader Implications Contractually injecting access objectives in the patent system Robust research commons Public health/distributive justice objectives Preempting the threat of “patent trolls” Democratizing the management of innovation

18. Questions

20. Exploiting the Political Economy of Biomedical Research National Institutes of Health funding State funding Nonprofit funding Bodily tissues University research (patented and licensed) Private development