University Technology Transfer Practices & the Bayh-Dole Act

Boston College Office of Technology Transfer & Licensing

What is Technology Transfer?

Broadly: Sharing of skills, knowledge, technology among institutions to ensure that scientific and technological developments are accessible to a wider range

Identify research that has a potential commercial interest and develop a strategy to maximize utilization

First formal tech transfer program started in University of Wisconsin in 1924

Federal Government Support

Largest support for academic research and development funding

Typically accounts for over 60% of funding 1972: $1,795,045 billion 2007: $30.4 billion

Actually a slight decrease over the past 2 years

Prior to 1980

The title (ownership) to any invention created using federal funding was owned by the U.S. Government

No uniform policy among federal agencies for the transfer of the invention into private sector commercialization

Government controlled the patents Wouldn’t grant exclusive licenses Separation of inventor from invention

Prior to 1980 con’t

In 1978 Government owned over 28,000 patents but had licensed less than 4%

Little incentive to develop any technology Inventions reported to the Government began

to decline even though there was a boom in funding

Bayh-Dole Act 1980

Created uniform federal intellectual property policy

Nonprofits and small business could elect title to inventions that were created in whole or in part with federal funding

However, universities would have to agree to a set of due-diligence requirements

http://biospectrumindia.ciol.com/content/topStory/10507072.asp

Bayh-Dole Act (P.L. 96-517)

Since 1980, only 2 amendments & 3 legislative or agency actions added to the Act.

1982: Provided guidance on the implementation of the Act as well as implementing standard reporting requirements

1982: Extended Act to all federal contractors

Bayh-Dole Act (P.L. 96-517)

1984: Removed limitations on exclusive licenses & the Department of Congress was designated to oversee implementation of the Act

1987: Consolidation of regulations for all of the rights and obligation for inventions created with federal support

2000: Modification to streamline the process where federal agencies commercialize inventions made by their employees

Disclosure of Invention to Federal Government

Within 2 months after an inventor discloses an invention to the Tech Transfer Office, the institution is required to disclose the invention to the Federal Government

Must include: Grant # or Contract # Invention detail Inventor(s) names Any publication, on sale or public use of invention Whether a manuscript has been submitted or accepted

Election of Title

Institutions must elect title in writing within 2 years of disclosure to the federal agency Can be made at the time of disclosure Sometimes done during preparation to file patent

application

Agency can shorten time to elect title when a publication, on sale, or public use has initiated the 1 year grace period for patent protection in the U.S.

Confirmatory License

Gives the Federal Government royalty-free rights to the license for government use

Confirmatory license must be submitted to the federal agency and is recorded in the Patent & Trademark Office (PTO)

Not necessary for provisional applications

Patent Application & Issued Patents

On both must cite: The invention was made with federal funds The U.S. Government has certain rights

Example:This invention was made with government support under grant (contract) number _________ awarded by (name of agency). The government has certain rights in the invention.

When May the Government Obtain Title?

Institution fails to: Disclose within the specified times Elect or retain title File patent applications in additional countries in the times

specified In any country in which the institution decides to not:

Continue patent prosecution Pay the maintenance fees

March-In Rights

Federal Agency can exercise march-in rights if action is necessary:

Because the assignee has not taken, or is not expected to take within a reasonable time, steps to achieve practical application of the invention

To alleviate health or safety needs that have not been reasonably satisfied

To meet requirements for public use specified by Federal regulations that have not been reasonably satisfied

If the preference for U.S. industry has not been obtained To date no Federal Agency has exercised march-in rights

3 Petitions to NIH all denied (CellPro, NORVIR, Xalatan)

Reporting on the Utilization of Subject Inventions

Institutions are required to make annual reports (if requested by the funding agency) Status of development of the Subject Invention Date of first commercial sale or use Gross royalties received by the institution

Sharing of Royalties with Inventors

Institutions are required to share royalties with the inventors of the Subject Invention

Most institutions have a royalty distribution formula that usually applies to all inventions

The remaining royalties (after payment of expenses) utilized for the support of scientific research or education

Boston College has a sliding scale for royalty distribution

Preference for Small Businesses

When licensing, institutions must make reasonable efforts to attract small businesses as licensees

Preference must be given to a small business when it has a plan for marketing that is equally likely to bring the invention to practical application

Federal agency may review an institution’s licensing program

Non-federal Inventions

Voluntary health organizations American Cancer Society: defers to the institution’s policies American Diabetes Association: the title to the invention is

determined by the society Funding is usually supplemental to federal funds Bayh-Dole applies to all inventions that are conceived

or reduced to practice in whole or in part with federal funding and dominates over other organization’s policies

Impact of Bayh-Dole

The Economist’s (2002) claimed: “[p]ossibly the most important piece of legislation to be enacted in America over the past half-century”

Steady increase in U.S. academic patenting, licensing, & associated revenues

Other countries passing similar laws that promote the patenting of publicly funded research India: In Nov 2008, law approved by India’s Union

Cabinet and is currently being considered by Indian Parliament

Royalty Income to US Academic Institutions

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

1980 1985 1990 1995 2000

Ro

ya

lty

Inc

om

e (

$ m

illio

n)

Source: A. Stevens, les Nouvelles, 38, 133-140, September 2003; AUTM Annual Survey

Criticism of Bayh-Dole

Misleading figures about lack of licensing prior to Bayh-Dole Most from Defense Department Many already declined for exclusive title by firms

Little actual impact? Increase actually due to: Upswing in University Tech Transfer Ability to patent novel organisms Increased government spending in biomedical research

Criticism of Bayh-Dole

Need for research exemption or reservation of research rights Madey v Duke University ruling argued that university research may

be viewed as advancing a business

Access to research tools: What if Stanford ‘recombinant DNA patent’ had not been licensed nonexclusively?

“Anticommons” effects: Multiple parties involved leading to large transaction costs and delays in utilization of technology

Humanitarian access: Problem of patents increasing the cost of product development

Benefits of Bayh-Dole

2007 survey by Association of University Technology Managers (AUTM) 686 new products introduced into the market 555 new start up companies established 3,622 new U.S. patents issued 5,109 new licenses and options signed

Recent Success Stories

AxoGenTM (University of Florida): Nerve regeneration start-up founded in 2002, first product AvanceTM used for the treatment of long-gap nerve injuries in 2007

Biofuels Technology (North Carolina State University): Potential to turn any fat into fuel for power jet planes. Licensed to Diversified Energy Corp.

Web Resources

AUTM: http://www.autm.net/AM/Template.cfm?Section=Bayh_Dole_Act

PLoS Article: Is Bayh-Dole Good for Developing Countries http://biology.plosjournals.org/perlserv/?request=get-document&doi=10.1371/journal.pbio.0060262

Biotech Transfer Week Article: As India Mulls Bill Modeled on Bayh-Dole, Critics Claim It May Stile Innovation http://www.genomeweb.com/biotechtransferweek/india-mulls-bill-modeled-bayh-dole-critics-claim-it-may-stifle-innovation

Nature Article: Bayh-Dole: if we knew then what we know now http://www.nature.com/nbt/journal/v24/n3/full/nbt0306-320.html