History of University IP Policies: Changing Objectives?

1. History of University IP Policies: Changing Objectives? Yale AIDS Network April 19, 2003

2. Why Care About University Patenting? • While academic R&D is a small proportion of total U.S. R&D, academic basic research comprises roughly 40-50 percent of total U.S. basic research. • Nearly 60 percent of academic R&D is funded by the federal government. Source: NSF Science and Engineering Indicators, 2002.

3. For Most of 20th Century, Universities Rarely Patented Research Output • While patenting activity dates back to 1900s, most universities resisted direct involvement and some discouraged it. • Rights to inventions from federal funds typically remained in the public domain. • Cumbersome process required for patenting – univs. had to request waiver Source: Mowery and Sampat (2001)

4. University Patenting – Phenomenon of the 1980s and 1990s • University patenting surged in the 1970s, from less than 250 patents granted in 1975 to over 3,000 patents granted in 2000. • Publicly funded biomedical research accounts for a major share of patents Source: Jaffe (2000)

5. University Patenting in Perspective Total U.S. Patents (Left Scale) Domestic U.S. Patents (Left Scale) University Patents (Right Scale) • University patenting has grown much faster than other patenting activity in the U.S. Source: USPTO (http://www.uspto.gov/web/offices/ac/ido/oeip/taf/h_counts.htm), NSF Science and Engineering Indicators, 2002.

6. University IP Policies – Early Years • Academic community not always accepting, virtual taboo initially • Patents were generally managed by independent, non-profit entities • UC & Research Corporation - 1912 • Cottrell’s 1907 patent to clean smokestack emissions • UC refused to accept rights to the patent • Independent, non-profit group that managed patents • Used income to support further research • Wisconsin Alumni Research Foundation (WARF) - 1925 • Steenbock’s method for enriching Vitamin D content • University clung to “hands off” attitude • Butter vs. margarine and vested interests in Wisconsin • Patent managed by WARF • Exclusive license given to Quaker Oats in 1927 for Vitamin D oil • Concern over licensing fees and price of irradiated milk • WARF amassed large endowment, but received much criticism

7. Medical Patenting Was Particularly Controversial • Scarlet Fever Case – Widely Criticized Decision to Patent • Chicago physicians’ 1924 discovery of antitoxin • Numerous companies interested in commercializing • Concern about quality control led to patenting • AMA declined patents • Independent committee established instead • Criticism from medical community re: exercise of control over substance with public health consequences • Lancet and BMJ on danger of monopoly – high prices, hindrance of further research, commercialization of research process • Affected decisions of many other researchers

8. Universities Often Prioritized Public Health Over Profits • Harvard’s Decision to Not Patent in 1920s • Discovery of treatment for anemia at Medical School – 1926 • Corporation considered strategies of developing discovery, both to protect public interest and ensure availability • Discussion centered on whether to patent or not, with concern about profession’s long-standing ethical tradition against patenting • Consideration of precedents at Berkeley (tethelin) & Toronto (insulin) • Consensus was that patenting not essential to protect public interest (quality-control, piracy, etc.) and that patents would generally result in limited competition and higher prices • Decision to not file patent applications • Harvard declined to profit from innovations in public health or medicine

9. The “Patent Problem” in 1930s • Active debates over patenting in 1930s led American Association for the Advancement of Science (AAAS) to survey the “patent problem” • Advantages • Incentives for commercialization lacking w/out exclusive license (a key argument made in support of Bayh-Dole in 1970s) • Reduced risk of “patent piracy” • “Quality control” in inventions based on biomedical research • New sources of revenue to strengthen academic research

10. The “Patent Problem” in 1930s • Disadvantages • Negative effects on progress of research, esp. in fields where advances are cumulative (required permission to use patents on “liberal terms”) • Tension between patenting and open science norms • Potential to bias academic inquiry away from basic research • Medical patents as a special case • Widespread opposition and concern that public would perceive universities profiteering at public expense in field of public health

11. The Norm Before World War II • Most universities lacked patent policies before World War II • Yale: (adopted 1938) “. . . it is, in general, undesirable and contrary to the best interests of medicine and the public to patent any discovery or invention applicable in the fields of public health or medicine; but if, at any time, any member of the faculty deems it necessary solely for the protection of the public, without profit to himself or the University, to control any invention or discovery by means of a patent, he shall bring the matter before the Prudential Committee” • Harvard: (no formalized patent policy except following, adopted 1934) “No patents primarily concerned with therapeutics or public health may be taken out by any member of the University, except with the consent of the President and Fellows; nor will such patents be taken out by the University itself except for dedication to the public” Source: Palmer (1948)

12. Post-World War II TrendsFederal Government R&D Support Rises • Substantial increase in federal funds for universities • Univ share of basic research doubled 25% - 50% between 1953-1968 • Third party involvement common into 1960s, primarily via Research Corp. • Some universities allowed patenting only if clearly in public interest • Prohibitions on medical patenting remained until 1970s Source: NSF Science and Engineering Indicators, 2002.

13. Academic R&D in Biomedical Sciences Surged in 1970s… • Molecular biology emerged as field of major advances in basic science • Many of these advances had commercial applications • Greatest increases in funding in 60s & 70s were in biomedical sciences • Growth of biomedical sciences played a role in 1970s rise in univ patenting 56 pct. of total academic R&D expenditures went to the life sciences. Source: NSF Science and Engineering Indicators, 2002.

14. …as did Patents in Biomedical Sciences Percent of total academic patents in three largest academic utility classes • Changes in 1970s • Universities began direct management of patent portfolios • Process of getting patents and rights to license remained cumbersome • IPAs between federal agencies and universities emerged as a common way for to patent and license • Decline in federal funding led to more aggressive patenting efforts • 1974 - Harvard ends stance against patenting medical innovations Source: NSF Science and Engineering Indicators, 2002.

15. Effects of Bayh-Dole? • Growth in the proprietary nature of university research began to occur in 1970s. Source: Jaffe (2000)

16. 1980 – Patent and Trademark Law Amendments Act (Bayh-Dole) • Goal to increase technology transfer and utilization of federally-funded research • What did it do? • Universities given right to retain the property rights to inventions made under federal funding • Exclusive licensing permitted • No distinction between downstream inventions and fundamental research discoveries • Rationale • Commercialization: Basic nature of university research requires further development by industry • Industry won’t take on risk without exclusive licensing rights • Universities won’t transfer as much without financial incentives

17. Bayh-Dole Had Special Provisions for Preserving the Public Domain • Funding agencies permitted to restrict patenting ex-ante only in “exceptional circumstances” that contradict goals of Bayh-Dole (such determinations can be challenged – and provision is cumbersome) • Agencies can exercise “march-in rights” to compel licensing of a university patent if necessary to alleviate public health or safety needs • NIH has never exercised these rights – significant administrative obstacles • For human genomic DNA sequencing information, NIH issued statement against patenting – effectively contributing to a “no-patenting” norm w/out forbiding it • NIH has sought to promote goals through hortatory statements • Reasonable pricing clause for commercialized federal research existed initially, but was repealed by the Clinton Administration

18. Factors Behind the Rise in University Patenting • Causes unclear • Widely believed that all due to Bayh-Dole, but other factors also important • Creation of technology transfer offices • Wider scope of patent law in biotechnology & software • Changes in acceptability of patenting • Development of new fields of science • Increased industry funding • Orientation toward applied research

19. Universities Have Become Aggressive in Claiming IP Rights Membership in the Association of University Technology Managers (AUTM) Source: Bremer, 2001 speech (http://www.autm.net) - data from AUTM Licensing Survey

20. Licensing Activity Has Surged… Number of Licenses Issued Annually Source: Bremer, 2001 speech (http://www.autm.net) - data from AUTM Licensing Survey

21. …as Have Royalties from Licensing Royalties to Universities/Hospitals in Millions of Dollars Source: Bremer, 2001 speech (http://www.autm.net) - data from AUTM Licensing Survey

22. Widespread Patenting Leads Raises Many Concerns Even Today • Access to medicines and other technologies developed with federal funds • Pajaro Dunes Conference– 1982 • Organized by President of Stanford – worried about patents making university environment “so proprietary, so secret, so discouraging to exchange that in the long run it induces an inhibiting effect on the research enterprise” • Guidelines essential for healthy academic science • Prompt publication of research results • Conflict-of-interest policies • Licensing okay, but agreements should not be exclusive • Slower rate of technological advance? • Less basic research • Restrictive licensing agreements • Increased secrecy and delay in publications • Reduced access to early stage innovations