Tuesday, March 28, 2006

More on WARF demand to CIRM for patent royalties in stem cell area

Daniel S. Levine discussed the WARF demand on CIRM:

Elizabeth Donley of WARF recently told stem cell institute [CIRM] Chairman Robert Klein that WARF expects a piece of the action.

"We feel we should get a share of that," said Donley. "We haven't talked about the specifics of how that will work, but we have an open dialog. I think they are willing to discuss with us the idea of taking a license, and we're certainly willing to give them one."

The California Institute for Regenerative Medicine said it is assessing the WARF licensing issue and formulating a response.

The economic benefits of California's stem cell investment will likely be indirect -- the attraction of scientific talent, the creation of new jobs and companies, reduced cost of drug development and the possibility of cutting the long-term health care costs of people suffering from chronic conditions. But voter expectations of near-term financial benefits and political pressures to capture returns to offset the cost to taxpayers helped shape the institute's intellectual property policy.

[There was discussion from a report for the California state legislature]

We believe that a state IP policy that seeks to benefit the state by revenue sharing would not be appropriate and could well have the unintended consequence of decreasing, rather than increasing, the long-term economic benefits to the state," the report said.

The report [for California Council on Science and Technology, Jan. 2006] noted that a study of University of California inventions from 1975 to 1995 found that only 1 in 400 could be expected to generate more than $1 million in licensing revenue over its entire life. With state research funding in a typical year at $300 million, the report said that would be expected to produce 120 inventions. [IPBiz: huh?] That means that one invention every three years could be expected to generate more than $1 million over its life. [IPBiz: in 3 years, there are 360 inventions, which is less than 400. MORE IMPORTANTLY, the previous study concerned inventions over a wide range of technological areas, in different stages of development. The present funding is in ONE technology area, with ONE stage of development. The comparison is spurious. FURTHER, there are FDA approval issues for this technology area.]

"There was considerable political pressure, and it became clear there was a significant expectation on the part of the public and some political officials of a substantial revenue stream in the short term," said Danny DeCillis, research associate with the California Council on Science and Technology. "They were not happy with the message that this was not realistic." [IPBiz: the expectations came from promises made during the campaign for Proposition 71. The expectations were not realistic, but neither is the analysis about the expectations.]

It is unclear how an agreement between WARF and the California institute will be structured. Though WARF charges researchers a fee of just $500, its commercial licenses typically include an upfront fee, an annual maintenance fee and royalties. The size of the fees and royalties vary depending on the size of the licensee and the application of the technology.

[IPBiz note: as discussed before, contemplate Merck v. Integra (research exemption for work leading to FDA approval) and Florida Prepaid Postsecondary (about suing states or state entities for patent infringement).]


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