Wednesday, September 15, 2004

Professor Tony Smith challenges Iowa State U plan in patents

Under the Bayh-Dole Act of 1980, various non-profit organizations, including universities, can take title to patent rights derived from research funded by the federal government. This transfer requires the permission of the federal funding agency, and the transfer remains subject to certain march-in rights of the federal government. If neither the agency nor the university are interested in patent rights, the professor who obtained the grant may obtain the patent rights; an example of this is Professor Madey in the case of Madey v. Duke University. Under the Bayh-Dole Act, the non-profit is required to report patentable inventive activity to the funding agency, and to follow a certain schedule.

The arrangements can be complicated and involve lots of money, as seen in the relationship between the University of California at Berkeley with Novartis, involving the transfer of $25 million. However, there was no commercialization of technology obtained from Berkeley. More than $200,000 was later spent in analyzing the propriety of the arrangement. [See the discussion of the report by Lawrence Busch of Michigan State University;
and text in L.B. Ebert, Int. Prop. Today, pp. 34-37 (Sept. 2004);
see also L.B. Ebert, The Bayh-Dole Act in the Age of Proteomics,]

In the following (an article by Tracy Skadeland in the Iowa State Daily), Professor Tony Smith questions the involvement of Iowa State in the patent business.

Of the text--"What we're doing to underdeveloped countries is we're saying you can't use the means that we used to become developed."-- one observes that U.S. patents have no legal effect in countries other than the U.S. People in underdeveloped countries are free to utilize the published information within U.S. patents, and are free to practice that technology, provided there are no patents covering that technology in the underdeveloped country. An issue related to this concerns drugs for treating AIDS, and is discussed elsewhere in IPBiz.blogspot.

Of the text--The patent system is also unfair to Iowans, because it asks them to pay twice for the same innovation. They pay to fund Iowa State's research, which frequently includes research that private companies don't want to pay for, and they pay a second time in monopoly prices charged by the company that owns or licenses the patent.-- one observes that this is true, and has been inherent in the Bayh-Dole Act since its passage in 1980. Private companies can effectively leverage their research by making the U.S. taxpayer a co-adventurer in the enterprise. If the research does not produce a useful product, the U.S. taxpayer loses as to potential commercial gains, although the value of the research performed remains. If the research does produce a useful product, the U.S. taxpayer does have to pay the royalty on the product.

At least one ISU professor believes that the university's policy of seeking to increase the number of patents awarded at Iowa State does not necessarily serve the public good.

Tony Smith, chairman and professor of philosophy and religious studies, said he objects to a goal set by the university in the current draft of its 2005-10 strategic plan calling for Iowa State to "lead the nation in the number of new patents awarded, licenses issued and successful business ventures initiated."

"My problem is with the idea that extending intellectual property rights is always the best thing to further technical advance and always the best thing for society," Smith said.

James Bloedel, vice provost for research administration, said licensing intellectual properties and obtaining patents is not a new emphasis at Iowa State, but is consistent with Iowa State's "Science with Practice" motto.

"[The increasing patents] component of the strategic plan is a statement of Iowa State's commitment to transferring the technology that is generated in the university to the public at large for the benefit of economic development in the state," Bloedel said.

Smith said the areas in which researchers can get patents has broadened in the past 20 years, which hurts smaller companies.

"If you extend patent rights, then you're giving a benefit to the large corporations because they can afford to hire armies of patent lawyers to defend their patents, extend their patents aggressively and go after anybody who might remotely be infringing them," he said.

A lot of technical advances come from small companies, but they cannot afford to license patents or enter into cross-licensing agreements, he said. Underdeveloped countries face a similar problem, because approximately 97 percent of all patents are given to individuals or corporations in the countries where only 20 percent of the world's population live, Smith said.

"The United States and most industrial countries developed by taking advantage of scientific and technical knowledge as a free good," Smith said. "What we're doing to underdeveloped countries is we're saying you can't use the means that we used to become developed."

The patent system is also unfair to Iowans, Smith said, because it asks them to pay twice for the same innovation. They pay to fund Iowa State's research, which frequently includes research that private companies don't want to pay for, and they pay a second time in monopoly prices charged by the company that owns or licenses the patent, he said.

Bloedel said the Iowa State University Research Foundation owns the patents for faculty research. It handles administrative aspects of obtaining a patent, including analyzing the invention to ensure similar inventions have not already been patented or licensed. If the U.S. Patent and Trademark Office grants a patent, royalties for licensing the technology are used to pay the expenses of management and obtaining the patent. The inventor, the college and ISURF equally share royalties from licensing, Bloedel said.

"The patent system is one of the features that motivates additional research," Bloedel said. "One of the objectives in performing applied research is to create intellectual property that can benefit mankind and be transferred to the public for use, and that's part of the enjoyment a faculty member receives from performing applied research."

**from -->

The stage is set for a clash over the future of international intellectual property protection, with Brazil and Argentina planning to call for a "development agenda" at the World Intellectual Property Organisation's annual meeting later in September 2004.

Intellectual property protection is a means of promoting innovation and the transfer and dissemination of technology and "cannot be seen as an end in itself", the proposal by the two countries says.

Among their more controversial suggestions are negotiation of a treaty to promote developing-country access to knowledge and technology; work on collaborative information-sharing mechanisms to stimulate innovation; and an amendment to Wipo's constitution stressing the need to take the development concerns into account.

Brazil has been in the vanguard of moves to ensure intellectual property rights enshrined in international pacts do not override public interest or development needs. This reflects its domestic agenda, which includes promotion of generic drugs and open-source software.

Brazilian negotiators played a key role in drafting a landmark World Trade Organisation agreement in 2001 that affirms developing countries' right to give public health needs priority over drug patent protection.


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