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DBL%20Hendrix%20small.png College chemistry, 1983

Derek Lowe The 2002 Model

Dbl%20new%20portrait%20B%26W.png After 10 years of blogging. . .

Derek Lowe, an Arkansan by birth, got his BA from Hendrix College and his PhD in organic chemistry from Duke before spending time in Germany on a Humboldt Fellowship on his post-doc. He's worked for several major pharmaceutical companies since 1989 on drug discovery projects against schizophrenia, Alzheimer's, diabetes, osteoporosis and other diseases. To contact Derek email him directly: derekb.lowe@gmail.com Twitter: Dereklowe

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« What's Really Killing Pharma | Main | R&D Is For Losers? »

April 8, 2011

Roche and Stanford: Academia v. Industry?

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Posted by Derek

One morning back in 1989, a guy from Stanford visited the biotech company Cetus and signed a few forms. That action has gradually become the central issue in a nasty patent dispute that's dragged on for years. Roche (who bought Cetus in 1991) and Stanford have been fighting it out through the judicial system, and earlier this year they made their cases before the Supreme Court, who will probably deliver a decision next month. So how did a quick signature

How did This article in Science has a good summary of the details (here's another). What seems to have happened was Thomas Merigan at Stanford sent a postdoc, Mark Holodniy, over to Cetus to learn about their PCR technology. Holodniy signed an agreement to respect Cetus' intellectual property, the standard sort of thing - you'd think. But that's the problem. Ten years later, Stanford (building on work from the Merigan lab and its collaboration with Cetus) received patents on a method to quantify viral RNA in human serum, which turned into a useful assay for monitoring HIV. Roche began to sell kits to do just that in 1996, and starting in 2000, Stanford started pressing them to pay licensing fees to the university.

Roche didn't, so Stanford sued, then Roche claimed that the Stanford patents were invalid, anyway. We'll get back to that question, but the rest of the court cases have turned on a different matter: did what exactly did Holodniy sign away, and was he bound by that agreement, or did that extend to the whole Merigan lab and to Stanford? A district court said that the Bayh-Dole act (which among other things prevents university researchers from cutting patent deals independent of the university), won out, and that Holodniy's Cetus form, which said that he was assigning patent rights to Cetus, was therefore invalid. But the Court of Appeals for the Federal Circuit completely reversed that, and said that Holodniy's agreement (when he was hired) to assign patents to Stanford was just a promise for the future ("I agree to assign. . .", whereas the Cetus agreement took force immediately ("I do hereby assign. . .") and took priority. And thus to the Supreme Court

Academia (and the US Solicitor General) have lined up on Stanford's side, and industry on Roche's, as anyone could have foreseen. If Roche wins, say the former, then no university research group will want to work with industry. If Stanford wins, say the latter, than no corporation will want to work with academia. Here's a hard-core legal summary from the Cornell law school. Their conclusion:

. . .the Supreme Court will decide whether the Bayh-Dole Act precludes an inventor working on a federally funded project from assigning his ownership rights in the invention to a third party. Stanford argues that both the Act and public policy considerations require that research institutions get an exclusive opportunity to patent their employees’ creations. Stanford contends that, if research institutions did not receive this privilege, they would hesitate to pursue costly and time-consuming research projects. Roche, on the other hand, argues that the Bayh-Dole Act did not affect the longstanding rule allowing inventors to assign their ownership rights to third parties. Constitutional and equitable considerations, Roche asserts, caution against Stanford’s interpretation of the Act.

My guess is that Roche will probably win, and that academic/university collaboration will continue anyway, but under even more strictly defined rules. MIT, for example, has already changed its patent assignment forms to the present tense, in a sign that they think that this argument has validity (even though the university has sided with Stanford in this case). One thing that's been lost in all the dust is whether this whole question had to come up. If Stanford's patents were to have been invalidated (another case in itself), then the whole Bayh-Dole argument would have been a moot point. None of the later legal wrangling has addressed this point. As often happens in the courtroom and on the battlefield, the armies end up fighting for larger stakes (and in a different place) than anyone would have predicted at first.

Comments (7) + TrackBacks (0) | Category: Academia (vs. Industry) | Patents and IP


COMMENTS

1. TypoTed on April 8, 2011 10:42 AM writes...

Derek,

Looks like some portions of sentences went missing upon posting.

Permalink to Comment

2. Rick on April 8, 2011 12:13 PM writes...

This could also go under your previous post, "What's Really Killing Pharma". The core concept behind the Bayh Dole Act, which Stanford succinctly summarizes in their statement that "...if research institutions did not receive this privilege, they would hesitate to pursue costly and time-consuming research projects.", represents the worst kind of intellectual sin one can commit short of outright lying: it's a non-falsifiable claim. As the Pauli quote someone shared here a few weeks ago goes, "It is not even wrong."

Moreover, this exemplifies how the damage Bayh Dole has done to biomedical innovation is so much greater than the short term profit it sought to create. Along with other schemes hatched in the 1980s in the industry, Bayh Dole is an example of neo-classical economics run amok - espeially its view that money isn't everything, it's the ONLY thing. If scientists only worked for the money we would never have had Galileo, Newton, Salk, etc. There are many kinds of value besides money (see Maslow), and scientists (damn them!) often work better and harder for those values than 20 pieces of silver. Focusing entirely on money predictably creates exactly the problem raised by this news, which we'd be better off without.

Permalink to Comment

3. dvizard on April 9, 2011 1:51 PM writes...

I really don't understand the anti-Bayh Dole argument. Are you (and others) arguing that academia, which is fighting for money already, should be giving away all its generated knowledge for free to any takers, just because scientists are oh-so-idealistic, and thus basically taxpayers should fund private economy?

(Note: Up to yesterday I didn't know something like a Bayh-Dole act existed, and I only know what I've read about it here.)

Permalink to Comment

4. Pharmaheretic on April 9, 2011 3:22 PM writes...

Any comments on this story about dual 5-alpha reductase inhibitors?

Sexual Side Effects From Propecia, Avodart May Be Irreversible

http://www.nlm.nih.gov/medlineplus/news/fullstory_109708.html

In my opinion, this is a classic example of potent drugs (for BPH) being used to treat a common condition (male pattern baldness), thereby vastly increasing the patient population. It is no surprise that adverse effects which were once limited to a percentage of older men are now seen in many younger men.

Who wants to buy more Merck stock?

Permalink to Comment

5. Anonymous Academic on April 9, 2011 8:15 PM writes...

As an academic computational scientist who finds the Bayh-Dole act a perpetual obstacle to my goal of writing code that people actually want to use, I'm sympathetic to the arguments against it. (There is truly a colossal amount of wasted effort because code isn't freely shared; I'm eternally thankful that academics have mostly avoided patenting software.) However, my understanding of the act isn't that it's intended to encourage academics to build up their IP portfolios - although that unfortunately became the major effect. The reason for allowing universities to retain the IP rights is that without exclusivity, no company will want to do the risky, difficult work of product development. In my field that's a bogus argument, but what about NIH-funded cancer researchers who stumble upon a potentially promising therapy? Academic groups aren't set up to run Phase III clinical trials, and why not let private enterprise cough up the hundreds of millions of dollars required to bring a therapy to market? This is not a universally applicable approach - writing software is not like drug development - but it is very relevant to many of the high-profile products that originated in academic groups.

dvizard: the way things work right now, taxpayers are already funding private economy under Bayh-Dole. You don't really think all of the money Stanford et al. make on tech transfer is going right back into basic research, do you? Anyone in my field knows of cases where grad students and postdocs ended up doing most of the grunt work for parasitic software companies. And in practice, the effect of restrictive licensing means that many useful tools are simply ignored by the rest of academia, which ends up holding everyone back.

Permalink to Comment

6. Anonymous on April 10, 2011 7:33 AM writes...

#3, dvizard:
Anonymous Academic (#5) gives a very good summary of some of the reasons BD ended up being bad for innovation. It created or exacerbated obstacles to sharing information that is often critical to innovation for a return that, on the whole, wasn't that great. Today, a large and growing number of universities literally expect much of their research and all of their technology transfer offices to be profit centers, which adds motivations that often do not serve academic innovation very well as #5 notes. Bayh Dole seemed like a good idea that was worth a try at the time (even to me), but by turning the "fight for money" into a fight for profit it has, however unintentionally, done damage.

A good analysis of the Bayh Dole and its unintended consequences has been done by Gary Pisano (Harvard Business School, of all places). He summarizes it in his book "Science Business: The Promise, the Reality, and the Future of Biotech". If you want to know more about this, as well as other possible root causes of biotech troubles and possible solutions, this is a very good start. He also still periodically publishes nice pieces in the Harvard Business Review that I wish more policy makers read as we allegedly try to fix innovation in the U.S. overall.

Permalink to Comment

7. Cartesian on April 11, 2011 4:00 AM writes...

It should be better that those who are paying for the creations (patents...) of innovators are able to innovate also, because if not it can be that this category of persons try to do that innovators do not have too much money, then they can have more power, and power on them (and possibly a part of the power that innovators should have).

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