CHICAGO - Given the disfavor shown genetically modified plants, the phrase "amber waves of grain" might be an unfortunate choice in relation to a biotechnology conference. But in a time of war-pumped, anthem-singing patriotism, such an event in America's heartland of cornfield and soybeans turned out to be a good idea for the Biotechnology Industry Organization.
With 392 registrants, the first BIO Mid-America VentureForum Conference at the Hotel Inter-Continental here opened on a gloomy spring morning of rain and fog. VentureForum is a collaboration of biotechnology associations from eight Midwestern states: Illinois, Indiana, Iowa, Michigan, Minnesota, Missouri, Ohio and Wisconsin.
Attendees clutching Starbucks cups crowded a first-floor conference room to hear panel members in the opening workshop talk about what moderator John Skilton called the "panoply of problems" associated with assembling a solid patent estate and protecting it.
Skilton, litigator and shareholder with Heller Ehrman White & McAuliffe LLP, of Washington, D.C., sought counsel on behalf of the audience from the likes of Thomas von Ruden, vice president and chief scientific officer of Martinsried, Germany-based MorphoSys AG.
As battles in Iraq raged on, a lineup of industry figures - some seldom heard from in forums such as that provided by the conference - shared their own war stories and offered strategic advice from the field of patent law.
"On the day of our [initial public offering] road show, the first lawsuit came from our biggest competitor," Von Ruden said. More followed. "At one time we had to deal with six or seven patent infringement suits," in the U.S. and Germany, he added, and all but one has been resolved.
He said companies should strive to "create an atmosphere in the marketplace" that lets would-be competitors know they must either license or face trouble - and if someone already holds patents, inspect them.
"I've not seen a single patent in my life where there is not a hole somewhere," Von Ruden said. "If you start poking at those holes, they get bigger."
Should the worst happen, said Irene Hrusovsky, president and CEO of Madison, Wis.-based EraGen Biosciences Inc., a gene-based diagnostics and drug discovery firm, "every effort should be made to have a dialogue with the person suing you. Being the defendant in a case vs. being the plaintiff is not where you want to be."
EraGen "was very fortunate to be founded upon a handful of revolutionary patents that the founder invented when he was in Switzerland, and therefore was the owner of the patents," she said.
Von Ruden advised companies placed in the unenviable defendant's position to refuse to panic.
"Even if investors call every other hour, stay cool," he said. Beyond this, one strategy is to quickly ask a court to rule on the infringement matter - hoping for a favorable decision that could end the case before it goes much further, he added.
"We had to go down this road three times," Von Ruden said, calling the proactive stance "painful," but at least "you're not sitting in a corner like a little duckling, waiting to be eaten up. If the plaintiff is dangling the sword over you, it doesn't cost him a dime."
Even better, of course, is to avoid the conflict altogether. A fairly reliable way to make sure you can head off legal challenges, or handle them if they arise, is to lay the foundation with care, said panel member Richard Kaufman, attorney in the firm with Skilton.
"Once time goes by, you're stuck with what you've got," he said - and in a competitive arena, you may need plenty.
Before the passage of the Bayh-Dole Act in 1980, Kaufman noted, the federal government took title to federally funded research inventions, there was no unified policy with regard to licensing and the feds offered nonexclusive licenses to "all comers. The problem was that nobody came, especially from the life sciences industry."
Development timelines were too long, and no company wanted to invest time and money without protection from competitors in the same area. After Bayh-Dole, "there was a sea change," Kaufman said. The door was opened for private firms to get exclusive licenses.
"It's been wildly successful," he said. A survey in 1997 showed that, since 1980, about 2,200 companies had been founded on technology transfers resulting from Bayh-Dole, and more than 1,000 products had entered the market, accounting for about $30 billion worth of economic activity per year.
But, in order for universities (where much of the early research is conducted) to license out technology, they must take title to the invention, filing patent applications in the appropriate jurisdictions, Kaufman said.
"At the time that's required, generally speaking, there's nobody around with a checkbook," he said. "Money rears its ugly head very early in the process."
Panel member Joseph Feder, president and CEO of Isto Technologies Inc., a tissue engineering-based biotechnology firm in St. Louis, said companies using technology from universities may mistakenly count on the latter to pursue and prosecute the patent.
"Usually in today's market there are angels' coming in to support [the research begun by universities] at an early stage," he said. "Because of that, one might be a little lax with regard to IP. Often, angel investors are na ve, and the questions asked are not appropriate," and new enterprises run into patent trouble.
Skilton mentioned a claim by some that, in the Midwest, universities "don't get" the concept of helping to commercialize products, and may even block progress.
Panel member Elizabeth Donley answered the charge. General counsel to the Wisconsin Alumni Research Foundation, which helps patent discoveries by researchers at the University of Wisconsin-Madison and license those technologies, Donley said WARF plays "a role not dissimilar from an early venture capital funding."
She described WARF as "quite aggressive in our filing" and "always cognizant of worldwide rights," another important consideration.
"People often think you just file one patent on the sunscreen in the orange beaker," Donley said, referring to a hypothetical example presented by Skilton, "but there is often follow-on improvement technology and a family of patents that evolve from there. It's important to get not only good advice about how to file, but also important to have that early stage funding to cover the protection of the intellectual property. At WARF, we take equity in lieu of license fees to help cover and offset those costs."