Patent policy flaws complicate commercialization of federally funded university discoveries

December 11, 2002

DURHAM, N.C.-- The process of commercializing university research discoveries is beset with complex problems: excessive secrecy, inadequate government policy and inappropriate patent law that affect academe, government funding agencies and industry, according to a new study published in the December 2002 issue of The Milbank Quarterly.

The case study analyzes the patent infringement battle between Johns Hopkins University and CellPro, a biotech startup. The findings argue for significant changes to the Bayh-Dole Act of 1980, a somewhat controversial piece of legislation that sought to spur the interaction between private and public research through the transfer of university research results to the commercial marketplace for the public good.

According to the authors, that case -- in which Johns Hopkins claimed that CellPro had infringed upon its patents on a cancer treatment technology -- exemplifies the problems arising from academic secrecy, broadly defined patents, and the lack of government oversight of commercialization of university discoveries made using federal funds. CellPro's loss of the patent infringement case ultimately caused its demise.

"The secrecy that currently surrounds licensing transactions at academic research centers seems likely to come under fire, as well it should," wrote the paper's authors, Avital Bar-Shalom and Robert Cook-Deegan. "In our view, terms should be public when the research underlying intellectual property involves public funds."

Bar-Shalom is currently an American Association for the Advancement of Science Risk Policy Fellow, and Cook-Deegan is director of the Duke University Center for Genome Ethics, Law, and Policy. They began this research as staff for the National Cancer Policy Board, Institute of Medicine and National Academy of Sciences. Cook-Deegan was also supported by a grant from the Investigator Awards in Health Policy Research program, funded by the Robert Wood Johnson Foundation.

In an interview, Cook-Deegan explained that he and Bar-Shalom undertook to explore the conflict between Johns Hopkins and CellPro as part of the Institute of Medicine's National Cancer Policy Board's efforts to streamline the process of developing cancer diagnostics and therapeutics. Both are former staff members of the board.

"Patents are not good or bad," said Cook-Deegan. "They can be both good and bad at the same time; patent policy is about finding the right balance. Simple formulations are inadequate."

The CellPro case represented an important study of the pitfalls inherent in transferring a basic cancer research discovery to the marketplace. "CellPro is a cautionary tale that there is also a dark side of patenting that needs to be assessed, and current data simply do not speak to it."

The case revolved around a dispute over patent rights to a technology for isolating immature cells, called stem cells, from bone marrow. Such stem cells have the capability of maturing into a range of immune cells to reconstitute a destroyed immune system. Thus, such separation technology can be used as the basis for cancer treatments in which stem cells are used to restore a patient's bone-marrow-based immune system, which had been destroyed by radiation or chemotherapy to eliminate cancers.

In 1981, a Johns Hopkins scientist developed antibodies that could recognize such stem cells, enabling the cells to be isolated. Hopkins received a broad patent that the university believed covered any use of antibodies for such isolation. The antibody-based technology was ultimately licensed to Baxter Healthcare, which began to develop cell-separation instrumentation based on the technique.

Significantly, noted Bar-Shalom and Cook-Deegan, Johns Hopkins did not make public its licensing agreements, which is common practice and entirely permissible under the Bayh-Dole Act. This secrecy, asserted the authors, reduced the university's credibility and complicated efforts to judge the merits of the technology and of Johns Hopkins' position.

Meanwhile, researchers at the Fred Hutchinson Cancer Center in Seattle had developed a different antibody-based separation technique, which was the basis for the 1989 founding of the startup company CellPro. The company decided that it did not need to license the Johns Hopkins technology and began to develop and clinically test its own bone marrow reconstitution technique for use following chemotherapy for breast cancer.

In 1994, Johns Hopkins and the companies to which it licensed its technology filed a patent infringement suit against CellPro. CellPro ultimately lost the suit and as a result, was driven out of business. Of significant importance, said the authors, the National Institutes of Health decided not to exercise its right of "march-in" to compel Johns Hopkins to license its technology to CellPro.

The case illustrates why federal agencies such as the NIH should shoulder more responsibility for the conduct of commercialization of technology arising from federally sponsored research. "There is no option of government non-interference," they wrote. "NIH expressed a reluctance to act against one company on behalf of another, but it did so by not marching in just as much as it would have by marching in. CellPro's survival was in its hands, whether NIH wanted it or not. NIH can wash its hands, but cannot elude responsibility for the consequences," wrote Bar-Shalom and Cook-Deegan.

The case study also shows that along with government reforms, universities must also commit to change. "The secrecy issue is not new for universities, if you look at the history of clinical research," said Cook-Deegan. "However, molecular biology and immunology did have an open science norm, but when universities began interacting with companies in those fields, the patent process imposed a cloak of secrecy, at least up to the point of filing a patent application. And such secrecy has intensified the tension in those areas of science where the norm use to be open sharing of information."

One final lesson to be learned from the CellPro case is that both academic scientists and industry could benefit from greater education on the complexities of the technology transfer process. "Scientists must understand that industry needs intellectual property protection if it is to invest in developing basic discoveries, and that complete, open sharing of information is not possible. On the other hand, the norms of secrecy that pervade business don't belong in academe."
-end-
Cook-Deegan's research was supported in part by the Robert Wood Johnson Foundation (www.rwjf.org). The Foundation was established as a national philanthropy in 1972 and today it is the largest US foundation devoted to improving the health and healthcare of all Americans.

The Duke Center for Genome Ethics, Law, and Policy is part of the university-wide Institute for Genome Sciences and Policy, which represents the university's comprehensive response to the broad challenges of the Genomic Revolution. Because advances in genome science and its applications raise a broad spectrum of ethical, legal and policy issues, the IGSP comprises -- in addition to scientists, engineers and physicians -- scholars in law, business, economics, public policy, ethics, religion, environmental studies and other humanities and social sciences.

The Milbank Quarterly (www.milbank.org/quarterly.html) publishes scholarly papers that enhance understanding of significant research questions and policy issues pertaining to health and health care. It presents original research, syntheses, policy analysis, and commentary from academicians, clinicians, and policymakers.

Duke University

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