WASHINGTON _ The government's policy of aggressivelypatenting inventions from federally-funded research was launched inthe 1980's to spur technology transfer and aid U.S. industry. Butdoes it? Legal scholar Rebecca Eisenberg recently questioned coreassumptions of the current "pro-patent" policy at a lecture sponsoredby the National Institutes of Health (NIH).
Eisenberg, a law professor at the University of Michigan in AnnArbor, recently won a grant from the Department of Energy to studythe role of patents in technology transfer of discoveries from thenational Human Genome Project (HGP). Her study of the interactionbetween the HGP and the private sector has led Eisenberg toconclude that current federal policies are hampered by a static modelof technology transfer.
The driving logic behind the government's decision to pursue patentrights _ as opposed to the pre-1980 policy of placing all work in thepublic domain _ was to insure that federally-funded research andinventions did not languish in government archives, unexploited byindustry. Companies, it was believed, would not develop productsunless they could be sure of patent protection. If the governmentobtained patents on its inventions, lawmakers reasoned, it could inturn offer protection to industry via exclusive licenses.
But in recent times, the simple model of technology transferunderlying government policy has frayed. "Current policy is built ona model of technology transfer in which inchoate discoveries emergefrom government-sponsored research _ or maybe fromcollaborative research between government and industry _ and thenwork their way out into the private sector for downstream productdevelopment," said Eisenberg.
Technology Needs To Flow In Both Directions
In contrast, contemporary genetics and molecular biology researchengages scientists from academic, government and industry labsoften working on the same problems at the same time, whethercompetitively or collaboratively. In such a setting, according toEisenberg, technology needs to flow in both directions. A case inpoint is the breathtakingly rapid privatization of large-scale cDNAsequencing that has occurred in the last two years. This shift haspresented an entirely new challenge for technology transfer: how toget a vast private warehouse of information into the hands ofacademic and government researchers so that they can find a use forit.
The privatization of cDNA sequencing has revealed other flaws infederal policy and further challenged its wisdom. For example, whenthe NIH applied for patents on partial gene sequences in 1992 _with the ultimate goal of making the research more alluring toindustry _ industry objected strenuously. Indeed, the NIH movesparked intense national and international debate which did notsubside until the agency abandoned its patent pursuit earlier thisyear.
Eisenberg argues that the NIH gene fragment patent controversyunmasked the essential irony of usinggovernment-owned patents to achieve technology transfer: "Thestrategy places a government agency in a licensing role for thepurpose of promoting privatization, but the whole point ofprivatization is to get the government off of industry's back." Oncethe NIH backed off, industry quickly stepped in.
"Firms did not want a government agency, such as NIH, to be in aposition to grant or deny licenses to genome-related products," saidEisenberg. "If the NIH held patent rights to a significant portion ofthe human genome, it might use its position as licenser to regulatethe development of genome-related products, which is the last thingin the world industry wants." Licenses under NIH patents come withsome restrictions, such as domestic manufacturing requirements,and, in the case of exclusive licenses, "reasonable pricing" clauses.
A Case In Point
The gene fragments that NIH sought patents for in 1992 weregenerated by a researcher named Craig Venter and his team ofscientists. Eisenberg chronicled the dizzying blur of private sectoractivity that followed the NIH patent controversy, concluding thatthe unpredictable events prove there is a "multidirectional, non-linear quality" to technology transfer not accounted for in currentfederal policy:
* In July of 1992, Venter - unable to secure enough governmentmoney to scale-up his gene sequencing operation - left the NIH toset up a non-profit institute, The Institute for Genomic Research(TIGR), backed by a venture capitalist firm. Within weeks, a for-profit company, Human Genome Sciences Inc. (HGSI), of Rockville,Md., was organized to commercialize the findings of TIGR. The twoorganizations launched a massive, automated cDNA sequencingeffort. In May 1993, HGSI sold exclusive rights to proteintherapeutic products and diagnostic products from the TIGR-HGSIwork to SmithKline Beecham plc (SB), of Philadelphia.
* Meanwhile, on the West coast, Incyte Pharmaceuticals Inc. alsoturned its attention to large-scale partial DNA sequencing. Currentestimates put the TIGR-HGSI database at approx. 350,000 partialcDNA sequences and the Incyte data base at between 250,000 and300,000 sequences. Incyte, of Palo Alto, Calif., has already signedup two large data base subscribers, Pfizer Inc., of New York, andThe Upjohn Co., of Kalamazoo, Mich., on a non-exclusive licensebasis.
* In a startling move last September, Merck & Co. Inc., ofWhitehouse Station, N.J., took on the quasi-governmental mission ofgenerating a competing set of partial cDNA sequences to be placedin the public domain. The pharmaceutical giant will fund researchersat Washington University in St. Louis.
Eisenberg said the three different approaches taken by TIGR-HGSI-SB, Incyte and Merck _ the exclusive licensing, non-exclusivelicensing and public domain models, respectively _ offer a real-time, real-life experiment in technology transfer. The strikingdiversity in strategies is evidence that, as Eisenberg puts it, "industryis not monolithic." Government technology transfer strategies thatbenefit some players will harm others, notes Eisenberg.
The mad rush to privatize large-scale cDNA sequencing throwswater on another core assumption of government technology transferpolicies, namely, that firms won't pursue unpatented or potentiallyunpatentable technologies. "Substantial private funds have beeninvested in this effort without any pre-existing patent rights," pointsout Eisenberg, though most firms are clearly hoping for broadpatents. n
-- Lisa Piercey Washington Editor
(c) 1997 American Health Consultants. All rights reserved.