Tuesday, August 29, 2006

A 'Good Citizen" Research Exemption

Ken Taymor, who is with the San Francisco law firm of MBV Law LLP, has offered the following on one of the issues confronting the CIRM Intellectual Property Task Force this afternoon. We welcome additional comments and contributions on all subjects related to the California stem agency.

A research use exemption (RUE) allows researchers to use patented
inventions without obtaining licenses and paying license fees, royalties
and other payments to the inventor. Courts have recently concluded that
contrary to widely held belief, there is no automatic research use
exemption under U.S. patent law. Many universities and non-profit
institutions, however, frequently allow other academic researchers to
use patented inventions for non-commercial research without paying the
university or institution any fees. This has not been the case with
human embryonic stem cell (hESC) research. The holder of the very broad
patents over human embryonic stem cells and the core process for
creating them, the Wisconsin Alumni Research Foundation (WARF), insisted that all academic and non-profit researchers pay substantial license
fees for the right to experiment with hESC or to create new hESC lines.

CIRM initially adopted an RUE as one of its core Intellectual Property principles. CIRM stated that it sought to "ensure broad access for
California research institutions to patented inventions made under CIRM
funding for research purposes through a research exemption." CIRM
stated in its original discussion of its IP Rules that a research
exemption would "promote the advancement of research and medical
therapies through broad use of patented inventions developed under CIRM
funding . . . . This policy will allow researchers to experiment
with state-of-the-art technology generated as a consequence of CIRM
funding without constraints which might otherwise apply under patent
law."

CIRM unexpectedly dropped the RUE after several industry representatives
objected to it. This move has surprised and concerned a number of
independent observers in light of the strong arguments CIRM advanced in
favor of the RUE up to the point of eliminating it. By not guaranteeing
that CIRM funded non-profit grantees will allow free use of CIRM funded
inventions for non-commercial research, CIRM opens the door for a repeat
of the problems WARF created in its licensing policies. Under CIRM's
latest proposal, scientists at a California university could receive a
large CIRM grant and make a path-breaking invention, such as
"reprogramming" adult cells to behave like stem cells (currently done
through cloning in animals), and then require that each academic or
non-profit researcher in California who wishes to make or use such
"reprogrammed" cells pay the university $10,000 (or more) annually for
the right to do so. This is why proponents of the RUE have complained
that CIRM's new position can require CIRM, and the California taxpayers,
to pay twice (or multiple times) for the research discoveries made under
CIRM grants. Of course, what is worse, is that under this scenario many
researchers would be unable or unwilling to pay the licensing fees and
stem cell scientific advances (and resulting therapies) would be further
delayed.

A RUE that would address many of industry concerns, and in fact reflect
the "good citizen" practices of many universities today (practices
incidentally that industry readily accepts) would simply provide that
"CIRM Grantee organizations shall allow Non-Profit Organizations,
without payment, to practice CIRM-funded patented inventions in
California for any non-profit purpose."
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3 comments:

  1. Of the text --A research use exemption (RUE) allows researchers to use patented inventions without obtaining licenses and paying license fees, royalties
    and other payments to the inventor. Courts have recently concluded that contrary to widely held belief, there is no automatic research use exemption under U.S. patent law. Many universities and non-profit
    institutions, however, frequently allow other academic researchers to
    use patented inventions for non-commercial research without paying the
    university or institution any fees. This has not been the case with
    human embryonic stem cell (hESC) research. The holder of the very broad
    patents over human embryonic stem cells and the core process for
    creating them, the Wisconsin Alumni Research Foundation (WARF), insisted that all academic and non-profit researchers pay substantial license
    fees for the right to experiment with hESC or to create new hESC lines.--

    one has to distinguish between the common law research exemption (at issue in Madey v. Duke University) and the statutory research exemption under 35 USC 271(e)(1) (for things requiring government approval).

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  2. Of the specific text --the Wisconsin Alumni Research Foundation (WARF), insisted that all academic and non-profit researchers pay substantial license
    fees for the right to experiment with hESC or to create new hESC lines-- one has to make further inquiry as to whether or not the magnitude of the WARF licensing demands arose because of possible commercialization by the academics/nonprofits and/or partners thereof. Is WARF impeding research per se, or is WARF an obstacle to those who do research AND plan to commercialize? It is hard to see that WARF would be going after people who are ONLY doing research. Separately, someone doing research in the "therapeutic cloning" area (implementation of which does require FDA approval) will, with high probability, enjoy the statutory research exemption under 35 USC 271(e)(1). For more, see 88 JPTOS 239 (March 2006) and IPBiz.blogspot.com

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  3. Of the text --A RUE that would address many of industry concerns, and in fact reflect
    the "good citizen" practices of many universities today (practices incidentally that industry readily accepts) would simply provide that
    "CIRM Grantee organizations shall allow Non-Profit Organizations,
    without payment, to practice CIRM-funded patented inventions in
    California for any non-profit purpose."--

    one notes that the case Madey v. Duke University, which impacted the common law research exemption, involved a university professor (Madey) suing a university (Duke) over a patent Madey obtained through the Bayh-Dole Act while working at Stanford University (you know, the one in California). Although the case Merck v. Integra "sounds like" it involves two companies, the underlying problems arose between two research institutions. ACT was involved in a patent interference based on rights it obtained from the "Dolly the Sheep" research group.

    The issue may be the meaning of for any non-profit purpose.

    ReplyDelete