Sunday, March 14, 2010

A response to Francisco Prieto's vision of CIRM's IP

Francisco Prieto made a comment to a post on californiastemcellreport [titled
School Children vs. Stem Cell Scientists; A Public Perception Problem
] which comment included the text:

Whatever my own (somewhat jaundiced) view might be of big Pharma and some of the Biotech industry, I realize that without them, there is no way that any new medicine or treatment can be produced in the scale needed to make a difference in the lives of people with incurable diseases. I have my own opinions about the amount of regulatuion they should be subject to, and the return they should expect to give back to the people of California, and had the opportunity to voice those in the 2 years of public meetings I participated in as a member of our Intellectual Property task force. In marked contrast to Federal policy for more than a generation, I believe we came up with a very reasonable and progressive policy, one that means that a major success for CIRM will not only mean a cure for a chronic disease, but a direct financial return to California's general fund, as it should.

IPBiz has made several comments about deficiencies in the intellectual property program of CIRM [see below], and strongly questions the accuracy of Prieto's assertion of "a very reasonable and progressive policy" AND "one that means a major success for CIRM."

However, for now, let's walk through some of the people involved here. As of May 2009, Prieto was a member of CIRM's IP Task Force Subcommittee, of which Ed Penhoet, once of Chiron, was chairman and Duane Roth was also a member. The qualifications on IP of any of these people might be questioned. Within a post on californiastemcellreport in March 2009, there was discussion of a position by Prieto, a physician in Northern California, about the possible appointment of Roth as vice-chairman of CIRM:

In an op-ed piece in the newspaper, Prieto said he was surprised to see it endorsing a Republican from Southern California (Duane Roth) for any statewide position.

[The other candidate at the time was Art Torres, a former Democrat legislator.]

Prieto was appointed to CIRM by Phil Angelides, one-time California state treasurer and unsuccessful candidate for governor (Angelides lost to Republican Arnold Schwarzenegger in the 2006 California gubernatorial race):

Angelides also named to the board Dr. David Baltimore, president of the California Institute of Technology; Dr. Michael Friedman, chief executive officer of the City of Hope research and treatment center in Southern California; Michael Goldberg of Woodside, a board member of Genomic Health, a Redwood City company involved in cancer treatment; and Dr. Francisco Prieto, a physician in Elk Grove who is president of the Sacramento-Sierra Chapter of the American Diabetes Association.
[From SFGate, Dec. 2004, Stem cell board selected]

Of course, one of the IP problems at CIRM was the structure of the state's receiving patent royalties, such that the state could not use tax free bonds. [See for example Patent royalties and Proposition 71 on stem cells]. One might have thought a state treasurer might have been on top of this.

Notwithstanding that, Nancy Pelosi (of California) appointed former California Treasurer Philip Angelides to lead a panel charged by Congress with investigating causes of the financial crisis following public anger at the $700 billion taxpayer rescue of Wall Street banks. [See Bloomberg's California’s Angelides to Lead Financial Crisis Probe and note the text in a later report: Phil Angelides, chair of the Financial Crisis Inquiry Commission, said that he was particularly concerned about Goldman’s role in betting against securities that it had helped create. (Goldman was once headed by ex-New Jersey Governor Jon Corzine). One IPBiz reader had expressed an opinion: Angelides "contributed" in the past to Calif's felonious budget manipulations and current debt!!! Takes one to know one.]

Returning to IP, Edward Penhoet, who served as vice-chair of the Independent Citizen’s Oversight Committee (the governing board) of CIRM, stepped down around November 2008. Penhoet was cofounder of Chiron Corporation. Chiron had been involved in one of the more interesting "attempted IP grabs," discussed for example in LBE's article in JPTOS [JPTOS, pp. 743-746 (Sept. 2006) ]. When it came time for CIRM to appoint someone with IP expertise, a former Chiron employee, who was not a registered patent attorney, was selected. [See
CIRM hires attorney, not registered before USPTO, to give advice on IP
CIRM spending lots of money on lawyers

Returning to Prieto's assertion, IPBiz suggests that California taxpayers should not at all be happy with CIRM's position on IP.
Back in 2005, LBE had written:

When taxpayers in California, Kansas, New Jersey, etc. find out they are getting no benefits out of their tax dollars, there might be a bit of disenchantment. Taxpayers do not want to be, unknowingly, venture capitalists.

At least the voters in New Jersey wised up. The stem cell bond issue was defeated, and Corzine, who attacked Cristie on his non-support of stem cell research, was defeated, even as an incumbent. Times have changed, Dr. Prieto.

***Relevant links

Edward Penhoet: only 1 in 200 NIH grants results in intellectual property

LA Times on patent issues with Proposition 71 on stem cells

***Related to "City of Hope," readers might want to review the case "City of Hope v. Genentech," which includes the text:

This case arises out of a 1976 patent agreement (the agreement) that governs the
right of respondent City of Hope National Medical Center (City of Hope) to receive
royalties from appellant Genentech, Inc. (Genentech) with respect to patents1 worth
billions of dollars.


While they were working for City of Hope in the mid-1970’s, Riggs and Itakura
achieved a breakthrough in biotechnology by inventing a way to genetically engineer
human proteins.4 At about the same time, Dr. Herbert Boyer (Boyer) and a businessman
named Robert Swanson (Swanson) joined forces to form a venture to exploit
biotechnology. Boyer, who had worked with Riggs and Itakura in the past, called Riggs
and proposed that they collaborate together on a project to make bacteria produce human
insulin. Riggs was amenable. In fact, when he received the call, Riggs was in the
process of writing a grant application for the same sort of project.
Genentech came into being on April 7, 1976, when Boyer and Swanson
incorporated their venture.

Separately, from Columbia University’s Axel Patents: Technology Transfer and Implications for the Bayh-Dole Act :

Although the Cohen-Boyer and Axel patents are sometimes cited as exemplars of Bayh-Dole, the first of the Cohen-Boyer patents had been granted ten days before the Bayh-Dole Act passed in Congress, on December 2, [1980] and Columbia had applied for the first Axel patent ten months before Bayh-Dole was enacted. Because Bayh-Dole had not yet been implemented, the NIH, which had funded the research, could have asserted ownership of the patents, imposed requirements on them (e.g. required the institution to send annual reports, allowed nonprofit institutions to license them free of charge, etc.), or decided not to apply for patents at all. At that time, if an institution wanted to patent an invention stemming from research funded by NIH, it had to request the right to do so, often under terms of an Institutional Patent Agreement, and sometimes as an ad hoc request.


Conclusions This case study raises several important questions about the logic of Bayh-Dole and future revisions of the Act: are revenue generation and financial rewards for inventing valuable technologies legitimate goals for the Bayh-Dole Act? If so, does the federal government need credible mechanisms for oversight, or checks and balances on the rights conferred?

One might well ask the same questions about CIRM's IP policy.

**UPDATE from
High Costs of Stem Cell Therapy: Will Stem Cell Firms Share More Risk?

The California Stem Cell Report asked CIRM for a copy of the document, which is a public record. Don Gibbons, communications chief for the agency, said,

“Please note that CIRM commissioned the attached report to provide a background survey regarding reimbursement for medical therapies. We are providing the report to you for information purposes only. The report and its recommendations do not reflect the views of CIRM's management or the Board’s leadership. We had intended to post this report at the same time that we post the full economic impact study that is underway, which will be later this spring.”

***UPDATE, 24 May 2010-->

In terms of press coverage, note the book review in the NYT of "Tech Transfer," which review notes of the fictional Dr. Swinger:

Dr. Swinger’s specialty lay in instantly redirecting his center’s activities to whatever scientific fad was highest on legislators’ priority list. He would have been first to set up a stem-cell research institute and get the California Institute for Regenerative Medicine to promise him a building.


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