Text of Ortiz Letter to Klein, Penhoet

Here is a copy of the Jan. 30, 2006, letter from Ortiz to Klein and Penhoet.

I want to commend the Independent Citizen’s Oversight Committee (ICOC) working group on intellectual property for the progress it has made in developing a proposed policy for handling intellectual property for grants to nonprofit organizations from the California Institute for Regenerative Medicine (CIRM). The proposed policy will help ensure that findings and discoveries developed with Proposition 71 funds In particular, I support and urge the ICOC to adopt the proposed policies requiring grantees to negotiate nonexclusive licenses of CIRM-funded inventions wherever possible, make licensed inventions reasonably accessible for research purposes, and make CIRM-funded patented inventions available at no cost for further research. These policies will ensure that research findings and inventions developed with Proposition 71 funds are freely and openly disseminated among researchers.

I similarly support the proposed requirements that grantees share 25 percent of net royalties received with the state and that they license inventions to organizations that 1) agree to provide resulting therapies to Medi-Cal and other state health care programs at the lowest cost they provide them to other purchasers and 2) have plans for access to the therapies for uninsured patients.

Finally, I agree that CIRM must retain march-in rights in cases where grantees or licensees have not made reasonable efforts to achieve practical application of a CIRM-funded patented invention.

However, I believe it is important that the proposed policies be regarded as a floor for negotiation of intellectual property agreements. I believe the ICOC. I believe this is required by the balancing language of Proposition 71, which clearly states the “ICOC shall establish standards that require that all grants and loan awards be subject to intellectual property agreements that balance the opportunity of the State of California to benefit from the patents, royalties, and licenses that result from basic research, therapy development, and clinical trials with the need to assure that essential medical research is not unreasonably hindered by the intellectual property agreements.”

The policy also should not preclude the ICOC from requiring a larger share of royalties when necessary to offset the higher cost to the state of using taxable bonds and ensure a net return to the state, as suggested by Treasurer Phil Angelides in his letter to Dr. Hall, dated October 26, 2005.

Finally, I believe the provisions requiring licensees to sell resulting therapies to Medi-Cal and other state health care programs at the lowest cost should also apply to county health programs and community clinics since they operate health care safety net programs that serve low-income uninsured patients.

The intellectual property policy the ICOC is on the verge of adopting is very important and will set a precedent that will affect the state for years to come. I look forward to working with the ICOC to advance stem cell research while ensuring that California receives a fair return on its investment in stem cell research, consistent with the intent of Proposition 71 and the promises made during the campaign.