Public Norms and Private Ordering: The Contractual Creation of a

Biomedical Research Commons

Public Norms and Private Ordering: The Contractual Creation of a

Biomedical Research Commons

Prof. Peter LeeUC Davis School of Law

October 4, 2008

Prof. Peter LeeUC Davis School of Law

October 4, 2008

IntroductionIntroduction

• How can patent law strike a more optimal balance between exclusivity and access to foundational research technologies?

• Primary focus: – Contractual construction of a noncommercial biomedical

research commons

• Broader phenomenon: – Consideration-based regulation as a means of advancing

public policy

Patent-Enabled Research HoldupPatent-Enabled Research Holdup

• Patented biomedical research tools

Patented Research Tool

Patented Research Tool

ResearchResearch

ResearchResearch

ApplicationApplication

ApplicationApplication

ApplicationApplication

ApplicationApplication

• Theoretical models• Empirical questions• Implications

The Challenge of Appropriate Access to Research Tools

The Challenge of Appropriate Access to Research Tools

• Wide access to research tools generates significant positive externalities

Disallow patents on research tools?

• Would reduce private incentives to invent research tools

• But, many research tools arise from public support

Disallow patents on publicly-supported tools?

• Would reduce private incentives to develop• Dual status inventions• The Bayh-Dole Act

“Public Law” Approaches to Biomedical Research Tool Patents

“Public Law” Approaches to Biomedical Research Tool Patents

• Common law experimental use exception• Patentable subject matter doctrine• Statutory experimental use exception• Utility requirement• Compulsory licenses• Remedies analysis

Traditional modes of patent regulation arising from broadly-applicable laws, decisions, and rules

“Public Law”“Public Law”

Private Ordering in Intellectual Property

Private Ordering in Intellectual Property

• Collective rights organizations• Property preempting investments• Open source software

NormsMarkets

Contracts

NormsMarkets

Contracts

Private Ordering

“Public” Institutions Engaging in “Private” Ordering

“Public” Institutions Engaging in “Private” Ordering

Public Institutions

Public Institutions

Downstream Patentees

Downstream Patentees

Consideration QualifiedAccess

• Consideration-based patent regulation:– Control of some valuable consideration (money, licenses,

materials) contributing to patented research tools– Norms favoring access to research tools rather than

exclusivity and profit maximization– “Contracts” ensuring access to patented research tools for

noncommercial research purposes

“Public Institutions” in the Political Economy of Biomedical Research

“Public Institutions” in the Political Economy of Biomedical Research

National Institutes of Health

National Institutes of Health

State Funding Agencies

State Funding Agencies

UniversitiesUniversities

Nonprofit Funding Organizations

Nonprofit Funding Organizations Disease Advocacy

GroupsDisease Advocacy

Groups

Patented Research ToolsPatented Research Tools

The National Institutes of HealthThe National Institutes of Health

• $30 billion per year in research funds– Principles and Guidelines

• Wide availability of patented research tools for noncommercial uses

• Targeted exclusivity for commercial development– Compliance considered in awarding grants

• Patent rights (Bayh-Dole Act)

NIHNIH

Downstream Patentees

Downstream Patentees

ConsiderationQualifiedAccess

The California Institute for Regenerative Medicine

The California Institute for Regenerative Medicine

• $3 billion over 10 years for stem cell research• Explicit quid pro quos

– “By accepting a CIRM grant award, the grantee agrees to comply with the provisions of these regulations.”

• 17 Cal. Code Regs. § 100300

• Nonprofit grantees must make patented research tools available to noncommercial research institutions in California

UniversitiesUniversities

• Vast patent portfolios– 18% of biotechnology patents

• Reserved research exceptions in technology transfer licenses• “Harvard will retain the right, for itself and other

not-for-profit research organizations, to practice the subject matter of the patent rights for internal research, teaching and other educational purposes.”

• Licensing Harvard Patent Rights: A Guideline to the Essentials of Harvard’s License Agreements

Non-Profit Funding OrganizationsNon-Profit Funding Organizations

• Overall contributions: $2.5 billion per year• Howard Hughes Medical Institute: $599

million in research funds– HHMI “expects all HHMI research tools to be

made available to the scientific research community on reasonable terms and in a manner that enhances their widespread availability.”

• HHMI, Research Tools (SC-310), at 1– Consistent with NIH guidelines

Disease Advocacy GroupsDisease Advocacy Groups

• Contribution: rare body tissues• Leveraging assets to promote access to

patented research tools:– PXE International– Conditional access to tissue registries

The Contractual Creation of a Biomedical Research CommonsThe Contractual Creation of a

Biomedical Research Commons• Provides working solutions to patent holdup• Confers significant freedom to operate to

government bodies• Enables distinctions and context-specific

interventions

PatentsPatentsExclusionExclusion GovernanceGovernance

Challenges and PrescriptionsChallenges and Prescriptions

• Patchwork solution• Overreaching and chilling• Parochialism

Broader ImplicationsBroader Implications

• The privatization of public policy in patent law– Unilateral regulation to contractual quid pro quos– Governments as lawmaking bodies to

governments as dynamic market actors– Government institutions as policy actors to private

institutions as policy actors as well– Centralized regulation to decentralized regulation

Broader ImplicationsBroader Implications

• Contractually injecting access objectives in the patent system• Robust research commons• Public health/distributive justice objectives• Preempting the threat of “patent trolls”

• Democratizing the management of innovation

QuestionsQuestions

Exploiting the Political Economy of Biomedical Research

Exploiting the Political Economy of Biomedical Research

National Institutes of Health funding

State funding

Nonprofitfunding

Bodily tissues

University research (patented and licensed)

Private development