Academic Licensing Agreements Using Academic License Agreements To Promote Global Social Responsibility By Ashley J. Stevens D.Phil (Oxon) and April E. Effort I. Abstract
Anderson, Anderson and Company; Alan Bennett, he impetus to use academic innovations to University of California Davis; Ian Bell and Angus Liv- enhance peoples' lives in the developing ingstone, University of British Columbia; Seema Shah Tworld, which we term promoting Global Basu and Frances Toneguzzo, Massachusetts General
Social Responsibility or "GSR," got its start with Hospital; Steve Ferguson and Mark Rohrbaugh, Na- healthcare and the need to ensure affordable access tional Institutes of Health; Lauren Foster and Lita to life saving medicines even during their period of Nelsen, Massachusetts patent protection in the developed world. However, Institute of Technology; ■ Ashley J. Stevens, Technology academic innovation has the potential to advance Tony Hickson, Impe- Transfer, Office of Technology living standards in the developing world in other rial Innovations Group ways in addition to healthcare, and it is equally plc; Sarah Sorscher and Development of Boston important that academic institutions commit them- Michael Steffen, Uni- University, Executive Director, selves to realizing this broader potential and adopt versities Allied for Es- licensing approaches that anticipate these broader sential Medicines and, Boston, MA, USA respectively Harvard and E-mail: [email protected] The purpose of this article is to present (a) a busi- Yale Law Schools; Todd ■ April E. Effort, Technology ness and licensing paradigm; and (b) a number of Keiller, University of Ver- Transfer Office of Technology sets of simple, readily implementable language that mont; Warren Kaplan, academic institutions can choose from if they wish to Gerr y Keusch, Kevin Development of Boston ensure that inventions emanating from their research Outterson and Christy University, Licensing Associate, programs are used to improve the human condition Talley, Boston Univer- in developing countries. sity; and Carol Mimura, University of California, We show how current academic licensing best E-mail: [email protected] Berkeley;. Finally we practices leave academic institutions vulnerable to thank our col eague Janine Anderson, without whose a repetition of the Zerit® story that attracted such meticulous proofreading no important document negative publicity for Yale and Bristol-Myers Squibb leaves our office.
We show that it is possible to achieve socially Starting in 2001 and driven by the controversy positive licensing outcomes without detracting (discussed in detail below) surrounding the licensing from academic institutions' ability to license their by Yale to Bristol-Myers Squibb of what became the innovations and get them developed. Our research very important antiretroviral drug Zerit®, academic has shown that the academic community is at the institutions identified the need to address the issue very earliest stages of including social responsibility of affordable access to their innovations in develop- in its licensing practices, and we identify the leading ing countries in their licensing agreements. institutions and the approaches they are following to The issue received new impetus in 2003 when achieve these ends. We also show that the pharma- the Bill and Melinda Gates Foundation launched its ceutical industry is starting to move in the direction Grand Challenges in Global Health, and included a we advocate of its own volition.
requirement for a Fair Access Policy as part of the Finally, we identify the risks from inaction—the proposal, to ensure that the resultant products would potential for congressionally mandated amendments indeed benefit the world's poor.
to the Bayh-Dole Act that we believe will make it More recently, this principle was enunciated as significantly harder to license academic inventions Point 9 in the Stanford University "Nine Points to in the first place.
Consider" document;1 the document included model We wish to thank the following for helpful dis- cussions and contributing license language: Mark Academic Licensing Agreements language for a number of the points, but did not in- guage that academic institutions can incorporate in clude model language for global health; and the need their form term sheets and license agreements. We to address global health issues was incorporated into also discovered that many of these options have been the Massachusetts Association of Technology Transfer contributed by academic institutions that have already Offices ("MATTO") Joint Invention Agreement.2 implemented them and are testing their acceptability Two groups that have devoted considerable effort in the marketplace. to raising awareness of this issue are the Technology IV. Yale, Bristol-Myers Squibb and Zerit®
Managers for Global Health ("TMGH") group within The events that first thrust the issue of universities' the Association of University Technology Managers intellectual licensing practices and their ability to ("AUTM") and the Center for the Management of impact global health onto center stage actual y started Intellectual Property for Health Research ("MIHR") in the early 1960's at the Detroit Institute of Cancer in Oxford, UK. Both groups received support from Research (now the Barbara Ann Karmanos Cancer the Rockefeller Foundation, and in addition TMGH Institute) where Dr. Jerome Horowitz, working on leveraged a considerable amount of volunteer effort the then prevalent theory that cancer was caused by both from within and from outside AUTM. MIHR viruses, synthesized a number of compounds that produced a more than 2,000 page handbook3 which would inhibit DNA replication in the expectation that comprehensively addressed all aspects of global they would cure cancer. The compounds included: health. The handbook included a section with form license agreements. However, the only licensing language to achieve social responsibility objectives in the handbook was developed by an independent working group based at Yale University and convened by Universities Al- The theory was of course incorrect for the over- lied for Essential Medicines ("UAEM"), a student whelming majority of types of cancer and so the organization discussed in more detail in Section XII compounds were ineffective against cancer and below. UAEM has done an effective job of disseminat- ing this language. In general, the members of UAEM When the HIV epidemic emerged in the early are students, and while many are in law schools, they 1980's, Horowitz' work was dusted off and several are not experienced licensing professionals. Their of his compounds were evaluated against HIV and proposed license structure, also discussed in more found to be effective. AZT (Burroughs Wellcome), detail in Section XII, appears likely to make it more ddC and ddI (NIH) were all discovered by following difficult to license academic inventions in the first this line of enquiry. place, which would be counter-productive.
Drs. Tai-Shun Lin and William Prusoff of Yale Uni- A thoughtful analysis of the issue of global health versity worked with another Horowitz compound, in academic licensing and one licensing approach was d4T (stavudine), with funding from the NIH and recently proposed in the UK.4 Bristol-Myers Squibb, and evaluated d4T's activity We therefore set out to analyze the issue and to against HIV. identify the underlying business and licensing para- Prusoff and Lin found d4T to be effective and Yale digms needed to achieve affordable access to essen- filed for a method of treating patent on December tial medicines and other innovations in developing 17, 1986 and U.S. patent 4,978,655 issued on countries. We wanted to identify a range of options December 18, 1990. Bristol-Myers had received an of simple, readily adoptable and implementable lan- exclusive option to an exclusive license to any patents that emerged from the work as part of the sponsored research agreement and exercised their option and signed a license on January 12, 1988. As is normal in 3. "Intellectual Property Management in Health and Agricul- academic licenses, Yale gave Bristol-Myers the right tural Innovation: A Handbook of Best Practices" (eds. A Krattiger, to file in foreign countries in Yale's name and Bristol- RT Mahoney, L Nelsen, et al.). MIHR: Oxford, U.K., and PIPRA: Davis, California, U.S.A. Available online at www.ipHandbook. Myers duly filed corresponding applications in major org. Vol. 1, 89, (2007).
western countries such as Europe, Japan, Canada, etc. 4. "Making Drugs Available at Affordable Prices: How Uni- Critically, they decided to include S. Africa, Mexico versities' Technology Transfer Offices Can Help Developing and Egypt in their filings. Countries," Mark Anderson, Journal of Intel ectual Property Law and Practice, 2007, Vol 2 # 3, 145-152.
Bristol-Myers commenced clinical development les Nouvelles Academic Licensing Agreements of stavudine and received FDA approval on June its close ties to BMS—the company had donated 24, 1994. The product was trademarked Zerit®. It $250,000 to Yale in 1999.
became a critical component of the "triple cocktail" On March 9, MSF responded to Yale pointing out that turned HIV infection from a death sentence to that Yale's own policy stated that a key objective of a manageable, chronic condition. In 1998 it became their technology transfer program was intended to be the most frequently prescribed anti-retroviral in for "the benefit of society in general" and that d4T was not reaching those who need it in South Africa, In 2000, Zerit® was on the list of essential and suggesting that Yale had the ultimate power over medicines that the world's poor needed access to their patent and could breach their contract with compiled by Toby Kasper, the head of the Access BMS if need be.
to Essential Medicines Program for Medécins Sans On March 12, the New York Times ran a story Frontiéres. Kasper had met Amy Kapczynski, then a "Yale Pressed to Help Cut Drug Costs in Africa" on first year Law School student at Yale (and currently the front page of its Technology section. an Assistant Professor at the University of Califor- The impact was immediate. On March 14, Bristol- nia, Berkeley Boalt Hall School of Law) at an AIDS Myers issued a statement saying: conference in Durban in July 2000, and immediately The Company will ensure that its patents do not realized that Amy could help put pressure on Yale prevent inexpensive HIV/AIDS therapy in Africa. from within.6 Her first recruit to the cause was Dr. The patent for Zerit, rights to which are owned by Prusoff, the inventor of Zerit®. Then she obtained Yale University and Bristol-Myers Squibb, will be the support of Dr. Michael Merson, Dean of Yale's made available at no cost to treat AIDS in South School of Public Health, and former head of the Africa under an agreement the Company has re- World Health Organization's HIV/AIDS program.
cently concluded with Yale.
On February 14, 2001, MSF wrote to Yale and In June 2001, Bristol-Myers signed an "agreement not to sue" with Aspen Pharmacare, South Africa's …would consider the importation of generic ver- leading generic manufacturer.
sions of stavudine for use in providing treatment The high visibility of the Zerit® story gave consider- free of charge to people with HIV/AIDS unable to able momentum to an evolving change in the world afford treatment an infringement of your intel- pharmaceutical paradigm whereby the concept of lectual property rights, tiered pricing for patent protected drugs started to and if so, if Yale would be established, under which drugs could be sold at …issue a voluntary license to al ow the importation generic prices in developing countries during their and use of generic stavudine in South Africa.
period of patent protected exclusivity and at high prices in developed countries.
On February 28, 2001, Yale replied saying they were unable to agree to the request because they V. The Extent of Academic Innovation's Abil-
had granted an exclusive license to Bristol-Myers ity to Contribute to Enhancing Conditions
Squibb (BMS), under the terms of which, only BMS in the Developing World
could respond to the request.
The ability of academic licensing practices to influ- Kapczynski alerted reporters at the Yale Daily ence the quality of life in developing countries was News to the story, which published its first story first identified with the Zerit® case discussed above. on the subject on March 2, which served to mo- The full extent of academic research's ability to lead bilize opinion on campus. A group of students in to new drugs has only recently begun to be quanti- the Graduate Student Union—which had already fied. A study currently underway at Boston University been campaigning against Yale's relationship with has identified 131 vaccines, small molecule drugs, corporate sponsors—circulated a petition calling on biologic drugs and in vivo diagnostics that have been discovered in whole or in part at academic institu- the school to "ease its patent" and collected 600 tions, patented, licensed and have reached the public signatures from students, professors and research- since 19807; so clearly the licensing approaches that ers on campus. The students also criticized Yale for 7. For a preliminary report on this study, see: "The Role of Public Sector Research in the Discovery of New Drugs," Jonathan J. Jensen, Katrine Wyller, Eric R. London, Sabarni K. Chatterjee, Fiona E. Murray, Mark L. Rohrbaugh, and Ashley J. Stevens, print.html; accessed 1/2/07, on which much of this account Poster at Annual Meeting, Association of University Technology Managers, San Francisco, CA, March 2007. Academic Licensing Agreements were fol owed for these drugs are of enormous impor- from them are ready for the marketplace.
tance. Unfortunately, all were licensed years before VII. Business and Licensing Paradigm
global social responsibility issues were identified, An examination of the different segments of and, by and large, these genies are out of the bottle. the pharmaceutical industry clearly identifies the Universities cannot unilaterally change the terms of importance of competition on drug pricing. The exclusive licenses, and any changes will have to be pharmaceutical industry in fact consists of two quite made voluntarily by the drug companies. Outterson distinct segments:9 and Kesselheim have described this as a "Generic Open" or GO license.8 As we discuss in more detail • The research based pharmaceutical industry, in Section XII below, a number of companies are which develops new medications, obtains exten- starting to do precisely this.
sive patent protection and exclusivity, and markets the drugs for the duration of their patent lifetime Although healthcare was the first area where it at monopoly, premium prices that reflect the medi- was realized that academic innovation could make cal value they deliver; an impact on living standards, there are other areas of academic innovation with similar potential: • The generic pharmaceutical industry, which develops equivalents of the patent protected prod- • Nutritional products; ucts and launches them as their patents expire. • Agricultural innovations, e.g., those providing The Hatch-Waxman Act10 supplied the regulatory resistance to diseases prevalent in Developing framework for the generic industry, including Countries or which enhance efficiency of produc- creating the Abbreviated New Drug Application tion, preservation or nutritional value of crops ("ANDA"), in which generic companies only have to commonly grown in Developing Countries; show that their product is bioequivalent to the ap- • Sustainable high technology innovations such proved product. In the first six months after patent as inexpensive computers, cell phone networks, expiration only the first generic competitor to file solar power devices, irrigation technology, water an ANDA is allowed to enter the market and prices purification and so forth.
fall somewhat. After expiration of this 6 month pe- VI. The Problem with Current Academic
riod of semi-exclusivity, additional ANDA's can be Licensing Best Practices
approved, allowing additional companies to enter The issue that the Yale/Bristol-Myers Squibb/Zerit® the market and prices rapidly fall to one based on case highlighted is that academic license agreements cost of production plus a reasonable profit margin generally allow the licensee to determine in which ("cost+") basis, which frequently results in price foreign countries to file for patent protection. What reductions of 70 to 85 percent.
caused the problem with Zerit® was that Bristol-My- It appears therefore that an effective business ers Squibb elected to file for patent protection in paradigm for universities to utilize to ensure afford- South Africa and then asserted that patent.
able access to medicines in developing countries is Seven years after the Zerit® case first highlighted for them to license the underlying patents in a way this problem, most academic license agreements still that establishes generic competition (or at least the give the licensee complete discretion as to where potential for generic competititon) in developing to file patents. Indeed, most academic institutions countries so that products are sold at cost+ pric- will only file for foreign patent protection if there ing during their period of patent protection in the is a licensee in place to reimburse the costs of the developed world.
filings and welcome a licensee filing foreign patent Some would argue that this was the way the applications because these filings increase the size of pharmaceutical industry operated before the Trade- the sales base on which royalties will be paid.
Related Aspects of Intellectual Property Rights It is therefore imperative that institutions start to include a safeguard in their license agreements so 9. For a more extensive discussion of this issue, see "Valuation that licensee agreements signed today do not cause in Global Health Licenses," Ashley J. Stevens in "Intellectual problems in the future when the products that result Property Management in Health and Agricultural Innovation: A Handbook of Best Practices" (eds. A Krattiger, RT Mahoney, L Nelsen, et al.). MIHR: Oxford, U.K., and PIPRA: Davis, Cali- fornia, U.S.A. Available online at Vol. 1, 8. "Market-Based Licensing For HPV Vaccines In Developing Countries" K. Outterson and A. S. Kesselheim," Health Affairs, 10. PL98-417 "Drug Price Competition and Patent Term 27, 130-144, January 2008.
Restoration Act of 1984." les Nouvelles Academic Licensing Agreements ("TRIPS") agreement of 1994, which forced India, a Social Responsibility Program since 200313 and traditionally the "pharmacy of the developing world" the University of British Columbia has drafted to recognize composition of matter patents on Principles for Global Access.14 Imperial Innovations pharmaceuticals. Irrespective of the accuracy of this PLC has made global access a licensing policy.15 view, certainly it is not the way the pharmaceutical The University of Vermont has adopted a Global industry has operated post-TRIPS, and it represents Social Responsibility Policy that anticipates going a dramatic change in the pharmaceutical industry's beyond healthcare to encompass other sustainable business model.
Such pricing is not going to be able to justify the IX. General Issues and Concerns
private sector investment of $200 million to $1 bil- There are several issues that the licensee will have lion needed over 10 to 15 years to show that a new irrespective of the specific licensing approach that drug is both safe and effective. While a philanthropi- is being used.
cally-funded business model is starting to emerge A. Which IP Should be Covered by Social
to fund development of medicines which treat dis- eases which only afflict the developing world,11 the licensing challenge for drugs which treat diseases It is frequently the case that the licensee of a that afflict both the developed and the developing drug whose basic patents are owned by an academic world is how to achieve competition in developing institution makes further inventions in the course of countries while preserving their patent monopoly in developing the drug. Research carried out by Profes- sor Bhaven Sampat at Columbia17 in collaboration VIII. Make Social Responsibility
with UAEM suggests that about half of the NDAs in the FDA Orange Book which list a public sector a University Policy
patent also list at least one private sector patent We recommend that academic institutions make that also covers the drug, and UAEM and Professor Social y Responsible Licensing a formal, stated institu- Sampat feel there are a variety of reasons why this tional policy. Several benefits wil fol ow from this.
may be even be an underestimate.
First and foremost, it is the right thing to do and A number of the licensing frameworks proposed it is important for academic institutions to be seen below achieve their objectives through the terms by their stakeholders to be out in front on such a of access to the university's patents. If the licensee major issue of public policy.
develops their own IP that is an additive to but inde- Second, it will strengthen the licensing officers' pendent of the university's IP (i.e., the licensee's pat- hands in negotiations if they can point to an insti- ents are not continuations-in-part of the university's tutional requirement to include socially responsible patents), these mechanisms may not be effective. licensing terms in the agreement.
The licensee will indeed be incented to develop pat- Finally, it can be a positive in philanthropic ac- ents that are independent of the university's patents tivities, helping form the basis for public health because they will have their own, independent 20 initiatives in developing countries. For example, year term, thereby extending the effective patent the University of California Berkeley has recently re- life of the drug.
ceived three substantial donations for this purpose12 Using the university's patents to "reach through" that it attributes in part to its strong leadership in and impose terms on the licensee's independently socially responsible licensing. Interestingly, the most developed patents will likely be strongly resisted by recent, a $1.8 mil ion gift, was from Gilead Sciences, the licensee. For instance, licensing university–pat- a pharmaceutical company which, as noted above, ented drug targets under terms that paid royalties has implemented one of the most reaching global on drugs discovered using the target was highly health initiatives of any pharmaceutical company. controversial in the 1990's.
The University of California at Berkeley has had 11. See for example, the Institute for OneWorld Health at 15. Tony Hickson, Personal Communication.
16. Todd Keiller, Personal Communication.
17. B. Sampat, Unpublished Working Paper, Columbia Uni- versity (2007).
Academic Licensing Agreements One possible approach to this problem would be • Those countries eligible for support from the to explicitly limit the reach through to the licensee's Global Fund for Children's Vaccines (GAVI) or patents for purposes of implementing the social re- successor organization, which at the effective sponsibility protections. One contractual approach to date of this Agreement are those countries with a implement this might be to include in the definition Gross National Product of less than U.S. $1,000 of Patent Rights the following: per capita per year, and at the effective date of Solely for purposes of implementing the Social this Agreement include the countries listed in Responsibility Purpose, (and, for avoidance of Appendix XX.
doubt, not for purposes of determining royalties However, many of these lists exclude South Africa, payable to University) Patent Rights shal include all which is generally included in humanitarian terms patents owned or controlled by Licensee that are (and is even included within the list of countries co-listed with Patent Rights solely or jointly owned eligible for aid under the President's Emergency Plan by University in the Orange Book maintained by for AIDS Relief ("PEPFAR").19 the U.S. Food and Drug Administration.
Another approach is to allow competition only for B. What is a Developing Country?
supply to the Public Sector, broadly defined: This question is not as simple as it may seem "Public Sector" means the government of a De- at first blush. While there are countries that are veloping Country, or any entity empowered by unequivocally "developed"—the U.S., Canada, the the government of a Developing Country, to act European Union, New Zealand, Australia, the mem- for said government in matters applicable to this bers of the OECD, many oil producing Arab coun- Agreement, organizations within the United Na- tries for example—and there are countries that are tions system including the World Health Global equally unequivocally "developing"—say Botswana Organization and UNICEF, and other nonprofit or Myanma—there is a vast grey area in between. agencies which may purchase drugs or vaccines Countries such as Brazil, India, China and South for delivery, manufacture and/or sale in Developing Africa today, and doubtless numerous others over Countries, including but not limited to: the ten to fifteen years before a compound licensed a. Organizations which are members of the today will reach the market, have prosperous middle International Committee of the Red Cross and and upper classes which can and should afford to pay market rates for drugs, but also have large poor populations who cannot.
b. International charitable agencies (also known as Non-Governmental Organizations or NGO's) Therefore, an approach which defines "Developed including but not limited to Oxfam, Médecins Countries" and defines developing countries as ev- Sans Frontières, and so forth; ery country except Developed Countries would be problematic and would probably be the subject of c. Organizations substantially supported by phil- anthropic organizations including but not limited to the Bill and Melinda Gates Foundation, the There are lists of countries produced by interna- Rockefeller Foundation and so forth, specifically tional agencies that can be used to define where including global product development and dis- competition is to be encouraged, and the license tribution public-private partnerships including can be written to allow later, updated versions of but not limited to Global Fund for Children's these lists to govern. Suitable license agreement Vaccines, Aeras Global TB Vaccine Foundation, languages include: International AIDS Vaccine Initiative, Global Al- • Those countries listed on the United Nations liance for TB Drug Development, etc.
Conference on Trade and Development list of One of the situations that may prove problematic "Least Developed Countries," as such list may is if the country has a national health service that change from time to time or any subsequent covers both rich and poor and procures the country's list that may be agreed to by the University entire supply of drugs.
Relatively few developing countries have robust • Those countries listed by the World Bank as Low- generic drug manufacturing capacity, and those Income and Lower-Middle-Income Countries, as countries which are such as India, China and Brazil, such list may change from time to time.18 18. This is probably the most inclusive list.
les Nouvelles Academic Licensing Agreements are important suppliers to the developing world. It 3. Specifying desired outcomes of availability and is critically important therefore that the mechanisms affordability in developing countries and including used address not only the countries of sale, but also an enforcement mechanism to achieve competition the countries of manufacture.
if the specified outcomes do not occur.
C. Product Diversion ("Black Market
• Reserving a march-in right to grant additional Imports")
licenses to be exercised if the product is not Licensees may have a concern that their sales in made available in developing countries in a developed country markets may be undermined by timely manner or if prices in developing coun- low priced products from developing countries being tries are too high.
diverted back into those developed countries.
4. Specifying mechanisms to achieve competition.
This concern is legitimate and needs to be ad- • Excluding developing countries from the dressed. One solution is to require that products license and issuing non-exclusive licensee in subject to competition be produced in a trade dress developing countries separately.
(dosage size, shape, color, flavor, trade name, trade- mark, service mark, etc.) different from that used • Granting only non-exclusive rights in developing by the primary licensee. This principle was incor- porated in the 1994 TRIPS Agreement. The EU has • Requiring the licensee not to patent in devel- established an Anti-Diversion Regulation to protect oping countries.
against this problem.
• Requiring the licensee to grant sublicenses in While research by Outterson20 has shown that developing countries at low or zero royalty rates.
there is little evidence of product diversion having • Requiring the licensee to commit to not assert occurred with products made available at No Profit the licensed IP in developing countries.
Prices, Glaxo has used a distinctive trade dress ap- Next we show with specific examples that the porach to protect some of its AIDS drugs, and has mechanisms to include global social responsibility received regulatory approval for red versions of safeguards can be implemented with relatively simple Epivi®r and Combivi®r tablets in over 25 countries.21 additions to standard forms of license agreements.
Through 2005, over 200 million doses of Epivi®r and Combivi®r have been shipped under this program in This learning allows licensing officers to focus on special tri-lingual packs. Glaxo has nine ARVs regis- the business negotiation of agreeing a license; social tered under the EU's Anti-Diversion Regulation.
responsibility protections become just another busi- X. Licensing Frameworks
ness term and element of the overall negotiation.
We have identified four licensing frameworks that We do not in this article discuss the merits of will facilitate availability and/or affordability in devel- one approach relative to another. Only time and oping countries. One of these can be implemented experience will tell which approach or approaches through a number of different approaches: are (a) most acceptable to prospective licensees and (b) most effective in promoting affordable access 1. Contractual y requiring availability in developing in developing countries. What is important is that institutions start including these approaches in their • Requiring the licensee to include developmen- license negotiations and experimenting to see what tal milestones.
works. The lessons from these "early adopters" will 2. Contractually requiring availability and afford- be shared at academic licensing conferences over ability in developing countries without specifying the next few years. the way this will be obtained.
The licensing frameworks and approaches listed • Require the licensee to develop the product above were developed by us in the process of de- in developing countries and to sell it using veloping global socially responsible protections to cost+ pricing.
include in Boston University's licenses. We then tested our hypotheses by determining what other 20. "Counterfeit Drugs: The Good, The Bad And The Ugly" institutions were doing. We contacted institutions Kevin Outterson and Ryan Smith, Albany Law Journal of Science which we knew were already incorporating global and Technology, 16, 526-543 (2007).
social responsibility principles in their license agree- ments and asked them to share their language with Academic Licensing Agreements us. We also posted an enquiry on the techno-l listserv patient populations or geographic areas], and Li- on Wednesday, January 16, 2008.
censee acknowledges and agrees to carry out its Our conclusions were three-fold: activities under this Agreement in a manner de- signed to fulfill such needs, as set forth below; 1. We found examples of almost all of the licens- ing approaches listed above being used by at least one institution.
WHEREAS, University and Licensee understand 2. The relatively small number of replies we re- and accept that it may serve the public good ceived in response to the techno-l posting plus dis- for there to be competitive sources of Licensed cussions in various academic licensing conferences Product in certain markets, with appropriate safe- leads us to believe that relatively few institutions guards to Licensee's economic interests in other have yet incorporated global social responsibility markets as more fully specified herein, and that into their day-to-day licensing practices.
the result of this will be the availability of drugs at affordable prices to poor segments of the world's 3. Based on the relatively small number of institu- tions we have identified, the most common ap- proach utilized to date seems to be a continuation C. Specific Licensing Approaches
of exclusive licensing coupled with the reservation Framework 1: Require Developing Country De- of a "march in" right—the right of the institution to grant additional licenses in developing coun- This approach requires the licensee to develop tries, either at the institution's sole discretion or, the product for developing countries. Failure to do if defined objectives have not been met, by the so would be a material breach of the license, which primary licensee.
would at a minimum reopen discussion of license XI. Contractual Approaches
terms and in the extreme could lead to termination. The approaches below combine examples that The National Institutes of Health is using this ap- have either been provided to us by other academic proach through its "White Knight" mechanism.
institutions with whom we have spoken or were Implementation: developed by us to implement the licensing options • Include in Milestones: we identified from theoretical considerations. All Within six (6) months of New Drug Application/Bi- of the institutions cited gave permission for their ologic License Application approval in the United names to be used.
States or its equivalent in Europe, Licensee shall A. Term Sheet
send a written report to the Public Health Ser- It is imperative that the concept of Social Respon- vice detailing the potential Public Sector market sibility be introduced into the negotiations from the to fulfill the public health need for the approved outset. We therefore recommend that the concept drug or vaccine in Developing Countries, includ- be referenced (though, for simplicity, the precise ing the impact of any approved competing drug or mechanism not be spelled out) in the institution's vaccine. The report shall also include Licensee's standard Term Sheet.
proposed amendment to the Commercial Develop- ment Plan, Appendix XX, and the Benchmarks and Performance, Appendix YY, to address the needs • Include in "Exclusivity": for Licensed Products in Developing Countries. Non-commercial rights, Government Rights and Licensee will diligently consider if it is possible Humanitarian Rights reserved.
from a commercial and technical point of view, to B. License Agreement Preamble
satisfy said potential Public Sector market either No matter which licensing approach is being used, directly with Licensee's own resources and/or as a general proposition it is probably helpful to in- through joint ventures with third parties. Accep- clude in the "WHEREAS" clauses a general statement tance of this report and amendment is required of purpose, such as: by PHS in writing; such acceptance will not be WHEREAS, It is the policy of the University that its activities in licensing University intellectual Framework 2: Require Developing Country Develop- property take into consideration Global Social ment and Specify Pricing Structure. Responsibility Objectives to fulfill unmet needs in This approach requires developing country de- Developing Countries, [such as those of neglected velopment and specifies the pricing structure to les Nouvelles Academic Licensing Agreements be followed. Imperial Innovations Ltd. in the UK ket from Licensed Products sold in other markets is experimenting with this approach. The fact that and to prohibit their export into other markets Imperial Innovations incorporates this into their li- and territories, provided that such conditions or censing approach is particularly noteworthy because their implementation do not act as an unreason- they are a publicly traded company on London's able barrier to the prompt and efficient supply of Alternative Investment Market stock exchange. The Licensed Product in the At-Cost market.
model adheres closely to the Bill and Melinda Gates • Include a Section "Supply to Developing Foundation's Global Access Strategy guidelines.
a. Supply by Licensee. The Licensee shal use Dili- • Include in Definitions: gent and Reasonable Efforts to supply Licensed "At-Cost" markets means those markets in De- Products to customers in At-Cost markets at a veloping Countries where individual poverty Cost-Based Price and meet market demand.
and insufficient public funding prevent access to b. Sub-licensing in Developing Country markets. healthcare at developed country prices.
In respect of each Licensed Product and At-Cost "Cost-Based Price" means, in respect of each Li- market, if the Licensee is unable to supply the censed Product, a price not exceeding that which Licensed Product at a Cost-Based Price to that fairly reflects the direct cost of manufacture of At-Cost market and meet market demand, it shall the Licensed Product plus a typical margin for a use diligent and reasonable efforts to license generic pharmaceutical product for the respective one or more Developing Country Manufactur- ers on Reasonable Developing Country License "Developing Country Manufacturer" means a Terms to manufacture, distribute and sell the manufacturer of pharmaceutical products that Licensed Product at a Cost-Based Price to that is able efficiently to manufacture (either within At-Cost Market.
or outside the Developing Country in which the c. Pass on terms to sub-licensees. The Licensee At-Cost market exists), distribute and supply shall ensure that the provisions of this Clause Licensed Product in an At-Cost market at a Cost- XXX form part of any sub-license agreement(s) Based Price.
with any sub-licensee (direct or indirect) of the "Reasonable Developing Country License Terms" means terms that meet the requirements of Clause Framework 3: Specifying Desired Outcomes And XXX and shall include terms based on the follow- Including A "March In" Right As An Enforcement Mechanism To Achieve Competition If The Specified i. The Licensee shall promptly transfer all re- Outcomes Do Not Occur. quired technology to the Developing Country This approach sets the institution's expectations Manufacturer to enable it to manufacture and for global social y responsible access and reserves the supply the Licensed Product(s).
right of the institution to grant additional licenses ii. The Developing Country License Terms shall ("March In") if they are not met. The University of not include any payments to be made to the British Columbia and the Massachusetts General Licensee in respect of the grant of the license in Hospital are experimenting with this approach.
the At-Cost market other than a fee that shal not exceed the direct cost of transfer of technology • Include in Definitions: to the Developing Country Manufacturer.
"Global Access Policy" means the commercializa- iii. If the Developing Country Manufacturer tion of the Technology, Improvements and any is granted any exclusive rights, the continued Products in a manner that enables availability and grant of those rights shall be conditional upon the Developing Country Manufacturer supply- accessibility at reasonable cost to the people in ing At-Cost markets at a Cost-Based Price and the Developing World.
meeting market demand in that market.
• Include in Grant: iv. The Licensee may impose reasonable condi- The Licensee agrees to commercialize the Tech- tions, including as to use of trademarks, trade nology and any Products in a manner consistent dress, format and pack size, to differentiate the with the Global Access Policy. Without limiting Licensed Product when sold in the At-Cost mar- the generality of the foregoing, the Licensee Academic Licensing Agreements agrees to require all sublicensees and other parties the Licensee will be required to give away the involved in any aspect of the commercialization Compound Products for free or at cost.
of the Technology and any Products to execute Notwithstanding other provision of rights granted agreements that bind such sublicensees or other under this Agreement, the University hereby re- parties (to the extent that they by agreement or serves the right to license the Compound Patent operation of law obtain any rights in or to the Rights to any third parties solely for Humanitarian Technology and any Products) to comply with the Purposes. Such licenses for Humanitarian Pur- Global Access Policy.
poses will expressly exclude the right of the third The Licensee acknowledges and agrees that: the party licensee to export or sell the Compound rights granted to the Licensee under this Agree- Products from an EDC into a market outside of ment shall at all times be subject to a reservation the EDC where Licensee has introduced or will by University of a transferable, irrevocable, per- introduce a Compound Product and where Patent petual, non-exclusive, royalty-free right to use and Rights exist. In any such license, the third party sublicense the Technology and to manufacture, licensee's commercial use of the Compound Patent have made, distribute, and sell the Products for Rights to make, use, sell, offer for sale and import the benefit of the Developing World. Exercise of Compound Products in EDCs will be royalty-free this right will be at University's sole discretion, and the third party licensee will be required to which University does not intend to exercise unless give away the Compound Products at no charge University determines that the Licensee is taking or at cost. For avoidance of doubt, the third party inadequate steps toward making the Technology or licensee may be permitted to export Compound any Products available to the Developing World in a Products from the EDC of origin to other EDCs manner consistent with the Global Access Policy.
and all other countries mutually agreed to by the University and Licensee. The University of California Davis is also experi- menting with this approach and goes further by re- Framework 4: Create Competitive Sources in Devel- quiring the primary licensee to give away or sell the oping Countries product at their cost of production. They would also Approach 4.1: Separate Licenses require any licensee granted a "march-in" license not This approach excludes developing countries to sell products in developed countries.
from the license, allowing the University to license the technology non-exclusively in Developing • Include in "Definitions" section: Countries. The National Institutes of Health is using this approach.22 "Humanitarian Purposes" means (a) the use of Licensed Products covered under Compound Pat- ent Rights ("Compound Products") for research • Include in Definitions: and development purposes by any organization or Territory shall exclude Developing Countries.
other third party, anywhere in the world, that has Approach 4.2: Grant only Non-Exclusive Rights in the express purpose of developing the Compound Developing Countries Products for use in an Economically Disadvantaged This approach reserves a non-exclusive right in Country, and (b) the use of the Compound Prod- the invention for use to develop products for de- ucts by any organization or other third party for veloping countries, allowing the University to issue Commercial Purposes in an Economically Disad- additional licenses in those countries. Public Intel- vantaged Country.
lectual Property Resource for Agriculture (PIPRA) "Commercial Purposes" means to make, have is experimenting with this approach in licensing made, use, have used, import, or export a product, agricultural inventions and germplasm.
good, method, or service for the purpose of selling or offering to sell such product, good, method, or • Include in "Definitions" section: • Include in "Grant" section: "Humanitarian Purposes" means (a) the use of Invention/Germplasm for research and develop- In any license to the Licensee, Licensee's com- ment purposes by any not-for-profit organization mercial use of the Compound Patent Rights to make, use, sell, offer for sale and import Com- pound Products in EDCs will be royalty free and 22. Mark Rohrbaugh, Personal communication.
les Nouvelles Academic Licensing Agreements anywhere in the World that has the express pur- California, Berkeley which first developed the ap- pose of developing plant materials and varieties for proach in 1998 in response to the report of a working use in a Developing Country, and (b) the use of group on the licensing of research tools convened Invention/Germplasm for Commercial Purposes, by Harold Varmus, the then Director of the National including the use and production of Germplasm, Institutes of Health, which encouraged universities seed, propagation materials and crops for human or generally to reduce their use of exclusive licensing. animal consumption, in a Developing Country.
Berkeley adopted the following as a balance between "Commercial Purposes" means to make, have their need to grant exclusivity to allow licensees to made, propagate, have propagated, use, have used, justify investing in developing early stage technolo- import, or export a product, good or service for the gies and the need to ensure that technologies that purpose of selling or offering to sell such product, were exclusively licensed are fully developed:23 good or service. "If REGENTS or a third party discovers that the • Include in "Grant" section: INVENTION is useful for an application covered Reservation of rights. Notwithstanding any other by the LICENSED FIELD OF USE but for which provision of rights granted under this agreement, LICENSED PRODUCTS have not been devel- University hereby reserves an irrevocable, non- oped or are not currently under development by exclusive right in the Invention/Germplasm for LICENSEE, then the REGENTS, as represented Humanitarian Purposes. Such Humanitarian by the Office of Technology Licensing, shall give Purposes shall expressly exclude the right for the written notice to the LICENSEE.
not-for-profit organization and/or the Developing Within ninety (90) days following LICENSEE's Country, or any individual or organization therein, receipt of REGENTS' notification LICENSEE shall to export or sel the Germplasm, seed, propagation give REGENTS written notice stating whether LI- materials or crops from the Developing Country CENSEE elects to develop LICENSED PRODUCTS into a market outside of the Developing Country for the application. where a commercial licensee has introduced or If LICENSEE elects to develop and commercialize will introduce a product embodying the Invention/ the proposed LICENSED PRODUCTS for the new Germplasm. For avoidance of doubt, not-for-profit organization and/or the Developing Country, or application, LICENSEE shall submit a progress any individual or organization therein, may export report describing LICENSEE's commercialization the Germplasm, seed, propagation materials or efforts in developing the new application every crops from the Developing Country of origin to six months to REGENTS pursuant to Article xx other Developing Countries and al other countries mutually agreed to by Licensor and Licensee. If LICENSEE elects not to develop and commer- Approach 4.3: Don't Allow Licensee to Patent in cialize the proposed LICENSED PRODUCTS for use in the new application, REGENTS may seek (a) third party(ies) to develop and commercialize This approach requires the Licensee not to patent the proposed LICENSED PRODUCTS for the new in developing countries, therefore permitting ge- application. If REGENTS identifies a third party, neric manufacturers and not-for-profit organizations it shall refer such third party to LICENSEE. If the freedom to operate in those developing countries. third party requests a sublicense under this Agree- We did not identify examples of this approach be- ment, then the LICENSEE shall report the request to REGENTS within thirty (30) days from the date of such written request. • Include in Patent Rights If the LICENSEE refuses to grant a sublicense to The University and Licensee on behalf of them- the third party, then within thirty (30) days after selves and any successors-in-interest to the In- such refusal the LICENSEE shall submit to RE- tellectual Property covenant that they have not GENTS a report specifying the license terms pro- previously, are not currently and will not after posed by the third party and a written justification the date of this agreement, obtain Patent Rights for the LICENSEE's refusal to grant the proposed in Developing Countries. Approach 4.4: Mandatory Sublicensing with Res- ervation of a March-In Right This approach is being used by the University of 23. Carol Mimura, Personal communication.
Academic Licensing Agreements sublicense. If REGENTS, at its sole discretion, de- developing countries, with the University reserving termines that the terms of the sublicense proposed the right to issue a license itself directly if the li- by the third party are reasonable under the totality censee does not respond to the request promptly.
of the circumstances, taking into account LICENS- EE's LICENSED PRODUCTS in development, then • Include in "Definitions": REGENTS shall have the right to grant to the third party a license to make, have made, use, sell, offer "Charitable Objective" shall mean the availability of the Licensed Products in developing countries for sale and import LICENSED PRODUCTS for use at affordable prices.
in the LICENSED FIELD-OF-USE at substantially the same terms last proposed to LICENSEE by the • Include in "Grant" section: third party providing royalty rates are at least equal If Licensee elects not to develop and commer- to those paid by LICENSEE.
cialize the proposed Licensed Products for the This approach is included in the "Nine Points to Charitable Objective, University may seek one or Consider" document referenced above.
more third parties to develop and commercialize the proposed Licensed Products for the Chari- Berkeley has included the provision in most of its table Objective. If University identifies a third exclusive licenses and option agreements starting in party, it shall refer such third party to Licensee. 1997, and has executed over 25 licenses containing If the third party requests a sublicense under this it, including four with large companies (one negoti- Agreement, then the Licensee shall report the ated directly, one due to a large company acquisition request to University within thirty (30) days from of a startup and assignment of the license to the the date of such written request. If the request acquirer, while another was due to a sublicense by a results in a sublicense, then Licensee shall report licensee to a large entity).24 Berkeley's experience has it to University.
been that companies find the provision acceptable, rather than being punitive, because it is tantamount If the Licensee refuses to grant a sublicense to the to free market research, since they get first shot at third party, then within thirty (30) days after such fulfilling the newly identified opportunity. That said, refusal the Licensee shall submit to University a the details frequently change during the course of report specifying the license terms proposed by negotiations. The provision has been invoked at least the third party and a written justification for the twice. The resolution in each case was that, rather Licensee's refusal to grant the proposed subli- than the licensee issuing a sublicense, they elected to cense. If University, at its sole discretion, deter- renegotiate the license to a narrower field of use. In mines that the terms of the sublicense proposed by one of the two cases, Berkeley issued a new license the third party are reasonable under the totality of to the second company, so clearly, the mechanism is the circumstances, taking into account Licensee's both acceptable to licensees and effective.25 Licensed Products in development, then Univer- sity shall have the right to grant to the third party MIT has also used this approach, particularly in a license to make, have made, use, sell, offer for exclusive licenses to start-ups, for a number of years. sale and import Licensed Products for use in the MIT reports that licensees have found the measure Licensed Field-of-Use at substantially the same acceptable because they get the first opportunity terms last proposed to Licensee by the third party to develop the newly identified opportunity. Like providing royalty rates are at least equal to those Berkeley, MIT has had to implement the process on paid by Licensee.
more than one occasion and the outcome has typi- cally been a narrowing of the field of use.
Approach 4.5: Non-Assert Approach Berkeley as well as MIT and the University of This approach requires the primary licensee to Vermont apply the approach to socially responsible agree not to assert the licensed patents against licensing, defining a "Charitable Objective" as being third party manufacturers and sellers in developing the availability of the product in developing countries countries. It therefore al ows for generic competition at low cost and requires the licensee to issue subli- in developing countries.
censes to additional parties that request licenses for The approach protects against parallel imports by requiring a distinctive trade dress for products for which the non-assert is invoked, and it allows for commercial markets within developing countries by limiting the non-assert to sales to public agencies, broadly defined.
les Nouvelles Academic Licensing Agreements Boston University is experimenting with this Emergency Plan for AIDS Relief) program.
Gilead, the world's second or third largest bio- technology company by market capitalization, has • Include in "Grant" section: also voluntarily adopted this strategy. Gilead sells Non-suit: University and Licensee on behalf of four HIV/AIDS drugs—Viread® as well as Emtriva®, themselves and any successors-in-interest to the together with Truvada® and Atripla® which are com- Intellectual Property covenant that they will not, binations of these drugs—and so has been on the before or after the date of this Agreement, as- front line of the debate over global access. In a talk sert any claim of patent infringement (including at the Infectious Diseases Society of America meet- direct infringement, contributory infringement, ing in October 2007 and an interview afterwards, and inducing infringement) under the Intellec- Gilead's CEO, John Martin talked about Gilead's tual Property for manufacture, use, sale, offer strategy in the developing world.27 Martin said: for sale or importation of Product against any "Gilead's access programs provide HIV drugs third party engaged in the manufacture, use, free of charge to poor patients or those without sale offer for sale, or importation of Licensed insurance in the United States and have tradition- Product, in, or into, Non-Suit countries for sale ally offered no-profit pricing in under-developed to Public Sector Entities.
countries. It has done so at a loss.
This non-suit provision shall only apply to Products It's not something we've debated. It just is some- which are in a physical form when offered for thing we had to do.
sale to end users in a Trade Dress that is different We are disappointed that dominant Gilead HIV from Licensee's Trade Dress in every respect and products in the United States and Europe don't which Products have gained regulatory approval have greater market share in the no-profit market. from either the U.S. Food and Drug Administra- So Gilead has tweaked its global access program tion (FDA), the European Agency for the Evalua- over the past year, allowing several drug makers in tion of Medicinal Products (EMEA) or have been India to produce generic versions of Gilead drugs pre-qualified by the World Health Organization and market them in 95 countries. Those companies can charge more than Gilead XII. The Pharmaceutical Industry is Start-
was charging for the drugs, but the profit motive ing to Move in this Direction by Itself
actually could drive greater access.
It is not the purpose of this article to document the Gilead wil receive a royalty on those drug sales." humanitarian activities of the pharmaceutical indus- Eli Lilly which, as part of a $70 million worldwide try. However, in proposing this model to universities, partnership to treat multi-drug resistant tuberculosis we are encouraged by signs that the pharmaceutical ("MDR-TB"), is transferring manufacturing technol- and biotechnology industries are already moving in ogy and expertise for both of its antibiotics that are this direction.
effective against MDR-TB: Glaxo has implemented a Voluntary Licensing pro- • cycloserine and gram which enables local manufacturers to produce and sell generic versions of some of its products. Since October 2001, Glaxo has signed seven licens- to four pharmaceutical companies in countries with ing agreements for antiretrovirals in Kenya and South the highest MDR-TB burdens: Africa, the first of which was granted to Aspen Phar- • Aspen Pharmacare in South Africa, macare in October 2001. Some cover just parts of • Hisun Pharmaceutical in China, Africa and others all of sub-Saharan Africa.26 • Shasun Chemicals and Drugs in India, and Voluntary Licenses allow the holder to produce • SIA International in Russia.
fixed dose combinations and to use the U.S. Food The final example of dual markets in action we and Drug Administration's fast track approval process will cite was described by Bill Gates in his talk on for anti-retrovirals to accelerate the availability of "Creative Capitalism" at the 2008 Davos World generic anti-retrovirals for PEPFAR (U.S. President's 27. "Gilead taking a global view," San Francisco Business Times, Ron Leuty Friday, October 19, 2007.
Academic Licensing Agreements "In another case, a Dutch company, which sufficiently well funded that two of its members holds the rights to a cholera vaccine, retains take a year off from their studies to devote their the rights in the developed world, but shares full time efforts to the organization's objectives. those rights with manufacturers in developing UAEM organized a conference in November 2006 in countries. The result is a cholera vaccine made Philadelphia to address global health issues and cre- in Vietnam that costs less than $1 a dose—and ated a statement called the Philadelphia Consensus that includes delivery and the costs of an im- Statement32 addressing the issue of universities and munization campaign. There are a number of the contributions they can make to global health. industries that can take advantage of this kind A substantial number of distinguished academics, of tiered pricing to offer valuable medicine and including a number of Nobel Prize winners have technology to low-income people." Gates was referencing the cholera vaccine Du- An independent working group based at Yale koral® developed at the University of Gothenberg University convened by UAEM developed a form by Professor Jan Holmgren. In Sweden, professors of license agreement, Equitable Access License own their own inventions and Holmgren assigned ("EAL"),34 as a mechanism to implement global health the patents to the cholera toxin subunit B technology safeguards. The full text of the EAL forms Appendix which underlies Dukoral® to Vitech AB,28 a company 1 to this article. he wholly owned. Vitec licensed the technology to The licensing paradigm for the EAL is a (a) a res- a Swedish vaccine start-up called SBL Vaccin, which ervation of humanitarian rights in the intellectual developed it for developed countries and sells it for property included in the license and (b) a mandatory around $10/dose. SBL was acquired by another Swed- grantback of all improvements made by the primary ish company, Active Biotech, and was later acquired licensee to the academic institution, which can then by Powderject and finally by Crucell in Holland in license the complete package of intel ectual property non-exclusively to third parties who wished to make The University of Gothenberg licensed the tech- and sell the products in developing countries. The nology to a Vietnamese company in the 1980's,29,30 university would charge a 2 percent royalty for sales which developed a formulation suited to developing in Low Income Countries or 5 percent for sales in country needs. The cost of production was 20¢/dose. Middle Income Countries (using the World Bank's The International Vaccine Initiative has worked definitions), which would be split with the primary with Vietnam on quality control and on transfer- ring the technology to other producers in India and The major advantage of the EAL is that it explic- itly addresses and solves the problem of follow-on XIII. Universities Allied for Essential Medi-
Licensee-developed patents discussed in Section cines and the Equitable Access License
Universities Allied for Essential Medicines The drawback of the EAL is that pharmaceutical ("UAEM") is a student organization that evolved from companies with whom we have discussed this ap- the work of Amy Kapczynski at Yale.31 It has chapters proach have told us they would not license academic at an increasing number of institutions and tends to inventions if the license agreement contained these bridge law schools, medical schools and schools of provisions. This reaction is not surprising—it is a public health.
universal experience of academic licensing nego- UAEM is a highly effective organization. It is tiations that licensees strongly resist grantbacks of the developments they make to the licensed intel- lectual property even for non-commercial research purposes, so they are even less likely to be receptive 28. Press Release 06/29/98, "Active Biotech steps up efforts to it for commercial purposes. We have suggested in ETEC and cholera vaccine through acquisition of VITEC," accessed through 2/24/08.
an approach in Section IX.A above that may address this use in a more acceptable manner.
b021bc8e68f8b805bf7f3d6cf, accessed 2/24/08. cessed 2/24/08.
les Nouvelles Academic Licensing Agreements It is also extremely burdensome on academic our concerns are similar.
licensing offices, who are not equipped to manage While Vermont does not provide substantial fund- the flow of information that would result from the ing for scientific research, states such as California, Massachusetts, New Jersey, New York and Texas UAEM has frequently reiterated that it is not wed- have announced initiatives to invest almost $8 bil- ded to the EAL as a mechanism for implementing lion in life sciences research over the next ten years. generic competition,35 but offers it as one model. It would have a significant impact if these license In the absence of other models, such as we have provisions were required to be attached to licenses presented herein, it is certainly the most widely to any resulting intellectual property.
XV. Will Incorporating Global Social Respon-
XIV. The Risks of Inaction—Legislation
sibility in License Agreements Diminish the
A. The Federal Level—S.4040
Value of Academic Technologies?
On September 29, 2006, the "Public Research in The ultimate question that could slow adoption of the Public Interest Act" (S.4040) was referred to global social responsibility safeguards in academic the Senate Judiciary Committee by its Chairman, licenses is whether it will diminish their value.
Senator Patrick Leahy (D., VT). The bil proposed that We believe not, because the developing world life-saving medications resulting from publicly-fund will not be a significant market for newly developed research be made available in certain developing drugs at Western prices; but only time can answer countries at the lowest possible cost. this question. However, a clue may be provided by The bill would amount to a substantial amend- looking at the experiences of Gilead ment of Bayh-Dole. Additional obligations would be As we discuss in Section XII above, Gilead chose attached to "Subject Inventions," which are defined to do voluntarily what the licensing paradigms de- in the same way as in Bayh-Dole. The Bill includes, scribed in this paper will enable generally. During verbatim, the licensing construct of the Equitable this time, Gilead's stock price continued to climb Access License, so this construct would be imposed (see Figure 1), indicating that any loss of market on academic institutions as a matter of law. As we share in the developing world didn't diminish the noted above, this would make it harder, if not impos- company's value.
sible, to license academic healthcare inventions in We believe that academic institutions, which are the first place, and so we believe would be counter- charitable organizations with a public service mis- sion, should give even less weight to hypothetical B. The State Level
financial concerns than publicly traded companies On January 28, 2008, at the request of a University of Ver- Figure 1: Gilead Five Year Stock Price History mont Medical School student, Representative Ann Pugh, of 5 Year S. Burlington, VT introduced a bill into the Vermont House of Representatives titled: "The Vermont Public Research in the Public Interest Act of 2008." The licensing paradigms and structure of the bill are very similar to those of S.4040, and 35. See, for example, "Universities Have a Key Role in Global Access to Medicines," by Rajesh Panjabi, Rahul Rajkumar, and Jim Yong Kim, Point Of View, Chronicle of Higher Education, February 22, 2008, http://chronicle. Academic Licensing Agreements who have a fiduciary responsibility to maximize e. "End Product" means any product whose shareholder value.
manufacture or use relies upon or is covered by the Licensed Technology. We believe the conclusions are clear—Universi- f. "Fair Royalty" means: ties should act and should be seen to be acting to i. For countries classified by the World Bank as ensure that their innovations reach the developing "Low-income" at the time of the sales on which world affordable and expeditiously before either royalties are due, 2 percent of Notifier's Net the federal government or state legislatures act for Sales of End Products in the Notified Country them. We hope that this article has shown that it is straightforward contractually to do so, so that ii. For countries classified by the World Bank the issue will devolve to a business negotiation. as "Middle-income" at the time of the sales on Academic licensing officers have consistently shown which royalties are due, 5 percent of Notifier's ingenuity, resiliency and creativity in their business the Net Sales of the End Products by the Noti- negotiations, and we are confident that academic fier in the Notified Country in question. institutions will increasingly not only incorporate g. "Licensed Technology" means the rights li- one of these licensing approaches into their standard censed by University to the Licensee pursuant to license agreements, but will make it a formal policy [Main Agreement]. of their institution to use licensing to promote global social responsibility. h. "Neglected Disease" means any disease, con- dition, or affliction that, at the time Notification Appendix 1
under Section 3.a. is made, either affects less than Model Provisions For An "Equitable Access And 200,000 persons in the United States or for which
Neglected Disease License"
there is no reasonable expectation that the cost of 1. Definitions developing and making available in the United States a. "Licensed Technology" means the rights licensed a treatment, prophylaxis, or device for such disease, by the University to the Licensee pursuant to [Main condition, or affliction can be recovered from sales in the United States of such treatment, prophylaxis, b. "Associated Licensee Rights" means all rights in data, information, know-how, methods, procedures i. "Neglected Research" means any use of the and processes, including patent and marketing rights, Licensed Technology or Associated Licensee Rights possessed by Licensee during the term of this Agree- in an effort to develop treatments, prophylaxis, or ment that are necessary to make, use, sell, offer to devices for a Neglected Disease. sell, import or export an End Product or to perform j. "Notification" means a writing that announces Neglected Research, including but not limited to the intention of a party to receive an Open Li- biological, chemical, biochemical, toxicological, pharmacological, metabolic, formulation, clinical, k. "Notification Fee" means: analytical and stability information and data. i. For Notification to receive an Open License c. "Associated Notifier Rights" means all rights in to supply End Products to an Eligible Country data, information, know-how, methods, procedures that is classified by the World Bank as "Low- and processes, including patent and marketing rights, income" at the time of Notification, $5,000; possessed by a Notifier during the term of the Open ii. For Notification to receive an Open License License granted to such Notifier that are necessary to supply End Products to an Eligible Coun- to make, use, sell, offer to sell, import or export try that is classified by the World Bank as an End Product or to perform Neglected Research, "Middle-income" at the time of Notification, including but not limited to biological, chemical, biochemical, toxicological, pharmacological, meta- iii. For Notification to receive an Open License bolic, formulation, clinical, analytical and stability to perform Neglected Research, $500. information and data. l. "Notified Country" means an Eligible Country d. "Eligible Country" means any country classified indicated by a Notifier in a Notification. by the World Bank as "Low-income" or "Middle-in- m. "Notifier" means a party that has submitted come" at the time a Notification is made.
a Notification to the University and Licensee[along with an appropriate Notification Fee]. [University or les Nouvelles Academic Licensing Agreements Licensee acceptance of the Notification and Notifica- and Licensee payment of a Fair Royalty on sales of tion Fee are not required for a party to be a Notifier End Products covered by the Licensed Technology or for a Notifier to receive an Open License.] or Associated Licensee Rights within 90 days of n. "Open License" means a non-exclusive license such sales, such Fair Royalty to be divided equally to the Licensed Technology, Associated Licensee between University and Licensee. [Failure or re- Rights, and Associated Notifier Rights granted by fusal of University or Licensee to accept the Fair the University to a Notifier from University upon Royalty shall not terminate or affect in any way Notification. There are no limitations on the number the Open License.] of Open Licenses that may be received or the parties c. Notifier Grant: In exchange for receipt of an whom may receive an Open License. Open License to Supply, Notifier grants University a 2. Licensee Grant license to its Associated Notifier Rights for the sole Licensee hereby grants University a license to the purpose of granting Open Licenses either to Supply Associated Licensee Rights for the sole purpose of in accordance with Section 3.a. or for Neglected granting Open Licenses either to Supply in accor- Research in accordance with Section 4.a. dance with Section 3.a. or for Neglected Research 4. Notification for Neglected Research in accordance with Section 4.a. [The licensee also a. Grant of Open License for Neglected Research: agrees to include, in any patent application for a Upon providing to University and Licensee Notifica- Licensee Improvement, a sentence reading: "This tion to receive an Open License to perform Neglected patent is subject to the provisions of the Equitable Research, a Notifier automatical y receives a world- Access and Neglected Disease License."] wide, irrevocable, and perpetual Open License from 3. Notification to Supply the University to perform Neglected Research. a. Grant of Open License to Supply: Upon pro- b. No Royalty: No royalty shall be payable to either viding to University and Licensee Notification to the University or the Licensee for the Open License receive an Open License to supply End Products to for Neglected Research. an Eligible Country, a Notifier automatically receives c. Notifier Grant: In exchange for receipt of an an Open License from the University permitting the Open License for Neglected Research, Notifier grants making, using, sel ing, offering to sel , importing, and University a license to its Associated Notifier Rights exporting of End Products in the Notified Country for the sole purpose of granting Open Licenses either and the making and exporting of End Products in any to Supply in accordance with Section 3.a. or for Ne- country other than the Notified Country for the sole glected Research in accordance with Section 4.a.
purpose of supplying End Products to the Notified Country. If Notifier exercises its right to make and 5. Assurance of Freedom to Operate export an End Product in any country other than a No license or other transfer of the Licensed Tech- Notified Country for the sole purpose of export to nology or Associated Licensee Rights by the Univer- a Notified Country, then Notifier shall use reason- sity or Licensee shal be valid unless the terms of this able efforts to visibly distinguish the End Product it Equitable Access and Neglected Disease License are manufactures from the End Product sold distributed incorporated therein. by the Licensee in the country of manufacture, but 6. Transparency such reasonable efforts do not require Notifier to Notwithstanding any other agreement or provision expend significant expense. between the parties, either party may publicize the b. Fair Royalties: The Open License to supply End fact that the Licensed Technology and Associated Products received by Notifier shal be irrevocable and Licensee Rights are subject to a license that includes perpetual so long as Notifier submits to University this Equitable Access License. ■


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