The “Anticommons” Effect: What is the Evidence?

1. The “Anticommons” Effect: What is the Evidence? • Definitions: commons/anticommons • Examples • Evidence? • Responses of stakeholders to Real or Perceived Anticommons Effect • Summary

2. Take Home Messages • There are many examples freedom to operate/access issues that lead to underutilization of biotech IP resources • Little evidence to date that this effect has actually stopped new R&D • Stakeholders have evolved different kinds of transactions to deal with the issue • New and creative solutions are needed to reduce IPR transaction costs under “anticommons” conditions.

3. Definitions “Tragedy of the commons” - Hardin: Science, 162:1243 (1968) - Too many owners of a common resource, each having the right to use … leads to overuse The “anticommons” • Heller & Eisenberg: Science, 280: 698 (l998) • Multiple owners, each having the right to exclude others from a resource, leads to underuse since no one person can use the whole

4. Genomics R&D Expenditures ($)(JIEE: Bjornstad & Dummer http://www.jiee.org/pdf/2002_05_patent.pdf)

5. “Cost of doing business” disrupts efficient patent practices - ‘Upstream’ IP owners can be public entities with limited IP licensing resources - Many IP stakeholders drives up the cost of establishing value for the IP - Incompatible ownerships require individual negotiations - R&D costs increase and incentives decrease if licensing is required before research undertaken

6. The “Anticommons”: Sources of under-utilization (I) • Multiple/conflicting IP ownership leads to multiple access requirements • Ag biotechnology (vitamin A Golden rice) • Assays/diagnostics (TB, malaria) • Fixed dose combinations (ARVs)

8. Between zero and 44 patents apply. • USA and most EU countries: (40) • In the 10 top rice producing countries: China (11); India (5), Indonesia (6), Bangladesh (0), Vietnam (9), Thailand (0), Myanmar (0), Japan (21), the Philippines (1) and Brazil (10). • In the top ten rice importing countries: Iran (0), Brazil (10), Nigeria (0), Philippines (1), Iraq (0), Saudi Arabia (0), Malaysia (0), South Africa (5), and Côte d'Ivoire (10). • ISAAA Briefs: 20 – 2000: Kryder, Kowalski, Krattiger

11. Fixed Dose Combination Drugs • Components of FDCs may be patented separately and owned by different parties • All components may be owned by the same party • Requiring a license to even one component of an FDC is enough to block access to the whole

12. TRIZIVIR ® TRIMUNE lamivudine + zidovudine + abacavir stavudine + lamivudine + nevirapine Adults and children Botswana + + (n,l) 330,000 Zimbabwe  + +( n,l) 2,300,000 Swaziland + + (n,l) 170,000 Lesotho + + (n,l) 360,000 Zambia + + (n,l) 1,200,000 South Africa ** + Aspen license?** 5,000,000 Source: UNAIDS (2000) Attaran (JAMA: 2001)

13. (Source UNAIDS 200; Attaran, (JAMA: 2001) TRIZIVIR ® TRIMUNE lamivudine + zidovudine + abacavir Stavudine + lamivudine + nevirapine HIV + Adults and children Cote d'Ivoire + ( l) + (n,l) 770,000 Rwanda + (combivir ) 500,000 Burundi + ( z) 390,000 United Rep. of Tanzania + +(n, l) 1,500,000 Congo + (l) + (n, l) 110,000 Sierra Leone + (a) 170,000

14. The “Anticommons”: Sources of under-utilization (II) • Presence of broad, “dominating” IP • MIT/Harvard/Ariad: modulating NF-kappa B transcription factor activity • Housey patent: drug screening technology- “reach through” to screened drug?

15. MIT/Harvard  6,410,516 (June 2002) • Transcription factor NF-kB is present in many, if not all, cell types • Acts as an intracellular messenger capable ofplaying a broad role in gene regulation1. A method for inhibiting expression, in a eukaryotic cell, of a gene whosetranscription is regulated by NF-kappa B, the method comprising reducing NF-kappa B activity in the cell such that expression of said gene isinhibited.

16. Housey Patent: 5,688,655 (exp. 2017) • A screening method to determine if substance X modulates the activity of any protein: • provide cell which overproduces the protein relative to a control cell • make sure the protein is “readable” in some type of assay • treat the test cell containing the overproduced selected protein with substance X, and • check the test cell to determine whether it exhibits a change in the assay in response to substance X.

17. CAIP Patent: 6,423,824 (exp. 2016) • A purified preparation of a polypetide, the sequence of which comprises the sequence of a CD2 associated intracellular polypeptide (CAIP), wherein said polypeptide (i) has at least 80% sequence identity with at least 20 contiguous residues of the amino acid sequence of SEQ ID NO: 2; (ii) is at least 20 amino acids in length; and (iii) is capable of binding to the intracellular domain of CD2.

18. What’s the Evidence that the “Anticommons” Problem is Real • Historical Precedent: Airplane patents • Anecdotal • Theoretical models • Empirical Studies • Walsh et al. (interviews w/pharma, academe, biotech) • Herz et al. (clinical researchers using patented tests) • Behavior/perception by relevant stakeholders • Consistent with a perception of a real anticommons effect

19. Walsh: Is the “anticommons” severe enough so that R&D/commercial progress is literally stopped? PROBABLY NOT • Vast majority of respondents (over 90%) say: “Never happens” • Walsh: Does the “anticommons” encourage sufficient IPR access “costs” such that R&D/commercial progress is slowed down? YES • Increased IP due diligence • Litigation costs • Increased transactional costs for licensing

20. Responses of Stakeholders • Put the ‘invention’ into the public domain

21. The genomes of major parasites are being sequenced and the data released into the public domain. Blackwell and Melville, Parasitology 1999; 118 (Suppl): S11-4. Degrave et al. Int J Parasitol, 2001; 31 (5-6): 532-6. (trypanosomes) http:// www.tigr.org/tdb/parasites/ http://www.sanger.ac.uk/Projects/Protozoa/ Gardner, M.J., et al. 2002. Nature 419(Oct. 3):498. (Plasmodium) Hall, N., et al. 2002. Nature 419(Oct. 3):527-531. (Plasmodium) Genome Web Sites Sanger Center: http://www.sanger.ac.uk/ TIGR Center: http://www.tigr.org/ Washington University, St. Louis: http://genome.wustl.edu/est/leishmania_esthmpg.html Leishmania Genome Network: http://www.ebi.ac.uk/parasites/leish.html Monsanto rice genome: http://www.rice-research.org

22. Responses of Stakeholders • Rely on existing IP law and courts: • Housey: written description/enablement of downstream products • “Design around” • Do users (NGOs, developing countries) have the means? • Make patents harder to get • “utility requirements” • Kaplan and Krimsky (J. Biolaw & Busines, Supp. 2001)

24. Responses of Stakeholders • Ignore IP entirely • Universities (research exemption?) or those very sure of victory in lawsuit • For those not so sure: • Wait until research is further along, then license • Make sure you don’t divulge your methods to IP owner…ever

25. Responses of Stakeholders (II) • Create a common cause • Cre-lox Dupont/NIH • Infringement exceptions • Bolar safe harbor • Research exemption: “Universities are special” • Compulsory licenses • Manage risk by licensing • Cross licensing • “set off” language

26. Third Party Patent Offsets (“Anti-stacking” language) • For licensees’ benefit: • “ If I need any patent from a third party that is not part of this license package, I will pay the ‘rent’ but decrease my rent to you (licensor) by: • “Fully creditable” • Same as above but no more than X % as a floor • Some fixed % (Y) regardless of how much the third parties get

27. New directions? • Carve out infringement/licensing exceptions for those who may not have the IP expertise to perform FTO “due diligence”: an IP “means” test • Create a dedicated group of IP specialists who provide advice on FTO issues to NGOs, developing countries • CAMBIA (ag biotech) : non-exclusive, fees determined by ability to pay. • http://www.cambia.org.au/main

28. Contractually or legislatively require non-exclusive licenses for critically needed IP • Golden rice: non-exclusive licenses to developing world/NGOs • Create voluntary or compulsory patent pools • Move offshore so the products are made where they are not patented • Bayer v. Housey (selling a drug identified by screening method is NOT the same as infringement of a manufacturing process) • LEGAL RESPONSE: include “manufacturing steps” in screening patents to create a starting material?

29. Create an IP clearinghouse to reduce costs of transacting for IP rights, stimulate private sector incentives, education in practical policy/legal IP issues, conduct objective “due diligence”, coordinate IP policies • February 2001: “IP Clearinghouse Mechanisms for Agriculture” • http://www.farmfoundation.org/pubs2/berkeleyagbioworkshop.pdf

30. SUMMARY • “Anticommons” is a problem of ACCESS • Perceptions of the IPR stakeholders have lead to the evolution of different kinds of transactions • For developing countries, IP- resource poor inventors, NGOs, end users: creative ways are needed to reduce IPR transaction costs.