Sunday, March 01, 2009

IP Scholars Roundtable at Drake 2

Panel 2: Patents and Science
Christopher M. Holman, UMKC School of Law ―University Patent Litigation

Are universities good guys or bad guys in patent? Mark Lemley asks whether they’re patent trolls. Surveys suggest academic researchers ignore patents all the time; are they being sued? Basic research has never been subject to suit, but most of the questionable enforcement, like patents on diagnostic testing or basic research, it’s always a university who’s the patentee.

He searched filings in US district court, and Federal Circuit just for interferences, 2000-2009. Universities accused of infringement: 3 athletics, 3 instructional/administrative software, 3 hospital—one involved software for monitoring OTC drugs provided to state health departments; a declaratory judgment action brought because they thought they were going to be sued. One university sued for selling crop seeds, and another sued for working with NOAA, were dismissed from the case on 11th Amendment grounds. Only 3 others after 2002, and they don’t seem to have involved basic research. Interferences: 10 appeals, 2 intra-university; 7 university victories; 6 biotech, others pharma, medical device, unknown. Also a lot of inventorship disputes, when a collaboration went bad; 2 intra-university, and one suit against HHS/NIH. Nine were internal relationships: mostly omitted graduate students and research fellows. Claims: biotech, pharma, medical devices, vaccine, and three non-pharmaceuticals. Pharma is what the universities invest in.

139 suits were filed by a university joining exclusive licensee; some exclusive licensees are NPEs. This fits the Bayh-Dole paradigm. But they may also be troll-like. 51 suits filed by the university alone, sometimes against a current or former licensee; no one needed to be an exclusive licensee to invest, because the companies were developing the tech without a patent. Sometimes the universities are suing a whole industry, troll-like.

Peter Lee, UC Davis School of Law ―Toward a Distributive Commons in Patent Law

Patents on health technologies are his concern. Dynamic incentives create static inefficiencies: supracompetitive prices for medicines and diagnostics. The price of antiretrovirals decreased from thousands to hundreds on patent expiration, as did the price of Paxil. Dynamic inefficiencies: burdening sequential innovation, such as beta-carotene enriched “Golden Rice” which has 40 input patents.

How to deal? We could limit patentable subject matter, but TRIPs says no. We could try compulsory licenses, never popular in the US. We could do remedies manipulation, following eBay; don’t know whether courts will do that. Direct price regulation of pharma by states has generally failed on patent preemption grounds.

His idea: public scientific capital. Public institutions make tremendous contributions to life sciences research. Public support mitigates the need for exclusive rights, and provides public institutions with a limited public ownership stake.

Conservative approach: NIH gives $30 billion/year for research. Bayh-Dole means recipients can patent. NIH hasn’t exercised its march-in rights; it has licensing guidelines, but they apply to research tools, and don’t govern what universities can do with end products. Rationales: worry about chilling research, fear over technical competence.

Aggressive approach: California Instititute for Regenerative Medicine: funds research, allows patents, but prefers nonexclusive licenses to increase output. Exclusive licenses require “access plans” and price discounts for individuals receiving public assistance. NIH’s Office of Tech Transfer: for NIH’s own research, joint ventures with pharmacos were allowed, but there was a reasonable pricing requirement. Many pharmacos protested and the pricing requirement was abandoned after a few years. University tech transfer: individual negotiations with licensees; humanitarian licensing.

Obstacles: Distributive claims must be proportional to contributions. NIH is too far upstream to place constraints on pharmacos. Universities are closer. Price discrimination is a more viable strategy than uniform price reductions. Allow patentee to recoup investments, but allow preferential pricing for a specialized group, and prevent arbitrage. Technical competence: focus on nonexclusive licensing rather than directly regulating price, which is something agencies and universities aren’t very good at.
Chidi Oguamanam, Dalhousie University Law School (Canada) ―Patent: Innovation or Market Success? Pharmaceutical R&D and Global Health Crisis

Almost 15 years after TRIPs, and 8 years after the Doha Declaration, what’s happened? There’s still no solid empirical evidence of the need for patents to spur innovation. However, patent guarantees the risk capital required for profitable innovation. Investment goes to the viable market opportunity. For every $100,000 worldwide in biomed research, $1 goes to tropical diseases. The average annual per capita private health expenditure in sub-Saharan Africa is $6; $4000 in the US and $1000 in most OECD countries, exclusive of public expenditure. 83% of the population accounts for 10% of global pharma sales.

Pharmaceutical R&D is expensive and long term; there’s a high risk of drug failure. Claim: $800 million for a new drug into the market, but that claim has been contested: there’s a public subsidy, a lax anti-trust regime, a big marketing budget that arguably shouldn’t count; transition from random screening to rational drug design; outsourcing of clinical trials leading to lower prices.

Global public goods: national governments, acting individually, can’t supply these goods. Nonmarket and coordinated efforts are necessary. Doha; UN human rights focus; other targeted interventions. Nonmarket actors, chiefly NGOs, have been working on this. Trends: collaborative models such as an advance market commitment for pharmacos; priority review guaranteed by FDA, potentially worth $321 million; prize funds; tax credits; development partnerships.

Current challenge: harmonization of approaches. Nation-by-nation ad hoc responses will no longer suffice. A global treaty on research is needed.

Greg R. Vetter, University of Houston Law Center ―Commercial Free and Open Source Software: Knowledge Production, Hybrid Appropriability and Patents

What should a court do when the entity involved in a lawsuit is entangled with FOSS? Traditional appropriation of value isn’t present. What do courts and policymakers think of free software? Appellate courts have given a positive narrative to FOSS in terms of spillovers, and Vetter wants to promote that, but he wants to know how that changes when commercial companies involve themselves with patents to increase their competitive position. FOSS companies could be involved either as plaintiffs or defendants, and that may change the injunctive relief calculus.

Discussants: Robert A. Bohrer, California Western School of Law

On universities: Integra v. Merck seemed to gut many of the worrisome patents: if data from use of a patent is intended to be submitted to the FDA, that’s not enough to infringe. Where the universities are suing on their own, do we know whether they’re nonexclusively licensing it widely? That might (or might not) be legit, if they say that everyone else is paying so the defendant should too.

Sharon K. Sandeen, Hamline University School of Law

One possibility for defending openness, as with FOSS, is to focus on industry- or sector-specific ways to convince people who want to claim IP rights about the flipside. The university, whose mission is to increase knowledge, is one example of that.

Clark Wolf, Departments of Philosophy and Political Science, Iowa State University

Query for Holman: is looking at litigation the best way to figure out how universities are dealing with patents?

For Oguamanam: The problem also extends to agricultural research—better manioc is underfunded. There are solutions proposed, but so far they’ve been entirely impractical.

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