Tuesday, August 29, 2006

CIRM IP Policy and Business: New Principles Approved

(The following post contained an error that is corrected at the end of item)

Attention California stem cell businesses. Here's the deal. Or at least almost the deal.

But if you want cash from the California stem cell agency, you better listen up. And if you want to shape the rules for sharing the swag, now the time is to make your voice heard. It could be a done deal by this time next month.

On Tuesday afternoon, beneath replicas of a couple of twin-engine aircraft, the CIRM Task Force on Intellectual Property approved principles for handling IP generated as a result of CIRM grants to business. Hundreds of millions of dollars could be handed out to California stem cell businesses over the next few years, but oddly few were represented at the hearing at the aviation museum at San Francisco International Airport. A number have testified in the past, however.

Two key areas involved payments by grantee businesses to the state and creation of plans to help uninsured Californians and provide low cost access to CIRM-funded stem cell therapies.

The Task Force approved requiring a business that chooses to license a CIRM-funded invention to a third party to abide by the same requirements as for nonprofits except for the size of the share of any returns. Instead of the 25 percent sharing requirement (after $500,000) for nonprofits, the task force chose 17 percent. The Task Force initially called for the 17 percent to be shared out of "revenues" from the invention. However, questions were raised concerning the definition of revenues, and its meaning will be considered again later.

If the grantee chooses to develop a product themselves, the state would receive some sort of multiple of CIRM funding after the "success" of the product. Discussion seemed to favor a multiple in the 3 to 5 percent range, leaning strongly to the lower end.

The Task Force also approved a requirement that some businesses develop plans to provide access to CIRM-funded therapies to the uninsured and to provide them to public agencies at the federal Medicaid price. The plan requirement would be triggered when CIRM funding represents more than a yet-to-be determined percent of the invention.

Other principles approved include:
Ownership of the IP by the grantee.
Onetime "blockbuster" payments by the grantee after revenues exceed a yet-to-be-determined level.
Sharing of "publication-related," CIRM-funded biomedical material as in the nonprofit policy.

IP Task Force member Duane Roth told the group that it needs to set clear rules on IP. Businesses need certainty, he said. They need a "real clear matrix, that this is the deal."

The "deal" will come up again, possibly in September, preceding CIRM's Oversight Committee meeting in October. CIRM staff will craft IP policy rules based on Tuesday's discussion and bring them back to the Task Force. Ed Penhoet, chair of the Task Force, said he wants to present an IP policy for businesses to the Oversight Committee for action next month.

We will have more on the IP meeting in the next few days. And, by the way, the Task Force held its meeting in the aviation museum because it was free space provided as a result of San Francisco's bid to obtain the CIRM headquarters.

(Correction on the above item: The 5th paragragh contains an incorrect figure. It should have said that the multiple being considered was a multiple of total CIRM funding. For example, if the CIRM funding is $1 million, the return could be $3 million to $5 million. We incorrectly reported that the multiple being considered was in the 3 to 5 percent range.

(Our thanks to the CIRM staff for pointing out the error.)

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