Download Licensing University Technology to Assure Access

Assuring Fair Access in
Licensing of University
Technology
Are there new strategies?
Lita Nelsen
Mass. Inst. of Tech.
MATTO
July, 2007
The Dilemma
Universities want to “do the right thing”
in the licensing their technology—which
should include assuring fair access
 But most university technology is very
hard to license, because its practicality
is unproven
 Exclusive licenses are usually necessary
to incentivize investment
 “Unusual and burdensome provisions”
inhibit licensing

And Furthermore:
Most very new vaccine and drug technology
will be licensed to small biotech companies
(Big Pharma wants more proven
technology)
 The biotech company will eventually need to
form a strategic alliance with Big Pharma to
bring the product through clinical trials and
to market
 Going into the deal, Little Bio is particularly
wary of “burdensome clauses” that might
hinder future alliances with Big Pharma

And there are no “norms”
Universities have little guidance as to
“practical, workable clauses” that will
assure fair access without impeding
development of new technology
 Companies have no experience with
“practical workable clauses” that assure
access without impeding profitable
business

What Can Be Done?
1.
Educate university executives and tech
transfer professionals of the need to
assure fair access
•
2.
3.
but the “educators” must show
knowledge of the practicalities, not just
preach
Collect and publicize clauses and
model agreements that have worked
for both universities and companies
Educate companies and investors to
“the norms” and even the “nonnegotiables” in university licenses
Will Norm-Setting Work?
Analogous examples of consensusforming in university/industry relations
in:
– Open publication of all research
results
– Full overhead payment for sponsored
research
– University retention of title to patents
– (evolving) Conflict of interest rules
Example of how Norm-Setting has been
done in other contexts: university/industry
relations
1.
2.
3.
4.
5.
A few elite institutions decide to “hold the
line” (they have the power in negotiating
with industry)
A national dialogue develops on “what’s
right”
Societies of university professionals educate
their members
More universities “hold the line”
Industry learns to work with the rules since
“they are not negotiable”
Some evolving norms in
university licensing for health
research

Free access to materials for other nonprofit institutions
– No “reach through” to other universities’
inventions
– [Dirty secret]: Access sometimes inhibited
by academic rivalries

University licenses beginning to reserve
rights for themselves “and other nonprofits” in exclusive licenses
More evolving norms
Research tools: “Should this particular
invention be exclusively licensed?
What’s the justification?”
 Great care in licensing “future
inventions”:
 Limiting fields of use, where appropriate
 Greater emphasis on diligence
provisions (Are they developing it or
sitting on it?)

Examples of potential new
norms

Forego patents in lesser developed
countries—when it’s the “best way”
– But that’s not always the “best” thing to
do
– Sometimes it is necessary to offer
exclusivity in order to create a big
enough market to justify product
development
 Or even to justify scale up for
manufacturing and regulatory approval
Other potential clauses

Restricting pricing of medical products
sold to public sectors of developing
countries
“Products sold to the public sector of
developing countries shall be sold at
prices no higher than the marginal
cost of manufacture and distribution,
plus 10%, and royalties shall not be
paid on these sales”
More
Limited terms for exclusive rights to
discovery technology (not drugs)
 Reserving “march in rights” for medical
products for sales to public sectors of
[lower tier] developing countries
 Arbitration provisions for sublicensing
when unexpected new applications arise—
and exclusive licensee is not developing

A lovely example of what TTO’s
can do
IAVI wished to sponsor a program to
develop an effective cross-reactive
antigen for a multi-clade HIV Vaccine
 Four different investigators at four
universities had expertise to contribute
 All universities had background IP (!!)
Full open sharing of materials and
scientific cooperation was critical. What
to do?

What they did
Agreement to share royalties from all
foreground IP (extra share for named
inventing institution(s))
 Allowed IAVI to manage licensing of
foreground IP
 Made background IP available as
needed
 Implicitly allowed low or no royalties for
sales in developing countries

A positive move: Out-Licensing
Modified from a proposal by Friedman et al.
(Lancet 1/23/03)
Exclusive license to specifically allow
outlicensing to generic manufacturers for
distribution only in (lower tier) developing
countries. Multiple generic licenses can
foster price competition and lower prices.
 Agree that royalties will be reduced to,
e.g. “no more than 20% of the reduced
royalties received by licensee”—including
zero royalties

Some Cautions
Fair access provisions must be reasonable
for both sides and reflect the investment
and risk in development
 Price controls have thus far proven
impractical (viz. the NIH “fair pricing”
provision)
 Special access for developing countries
depends on non-corrupt prevention of
back-importing
 U.S. Congress must appreciate the
fairness of “tiered pricing” for developing

We can make a difference
Raise awareness of developing country
health care needs and problems in
licensing
 Discuss and learn from our licensing
mistakes
 Teach our administrations and licensees
about our concerns—with sophisticated
understanding
 Teach each other about effective
clauses and other mechanisms

Let’s start now

We need examples of:
– Written policies, if any, that address access to
health products in developing countries
– Licensing clauses that address these issues

How do we get these aggregated? Who?
– AUTM (TMGH?)
– Other (the demise of MIHR)