Patents to genetic discoveries made during university research can be pursued without disrupting the core values of publication and sharing of information, research results, materials, and know-how. Universities purse patents to gene discoveries in the context of the Bayh-Dole Act, the pioneering, enabling legislation that enabled universities to take title to inventions made with the use of federal research support. Within the concepts embodied in the Bayh-Dole Act, universities carefully consider and balance the needs for publication of research results, the sharing of materials with other researchers, and the desire for commercial development of discoveries in the public interest. Often, the technology transfer manager and the researcher work collaboratively to protect an invention within the deadlines that the researcher has for publication. Universities can, and do, protect inventions to genetic information for commercial development, and effectively disseminate research results and materials. This activity supports economic growth, allows universities to attract, retain, and reward talented faculty, and promotes closer ties with industry that often result in additional research support.

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In the context of my remarks to you, technology transfer refers to the transfer of research results from universities to the commercial marketplace for public benefit.

The growth of the pursuit of patents resulting from research on campus can be traced to the passage in 1980 of the Patents and Trademark Amendments Act (P.L. 98-620, also known as the Bayh-Dole Act). The Bayh-Dole Act was intended to promote investment by the private sector in the commercialization for the public good of discoveries made using research funds provided by the federal government. This pioneering legislation created a uniform policy among federal agencies that fund research to enable not-for-profit research institutions to elect to retain title to inventions made with grant funds provided by the federal government. Prior to the Bayh-Dole Act, the government retained title to these inventions, but it was cumbersome for a company to obtain a license, and, consequently, few inventions were licensed for development and commercialization.

The Bayh-Dole Act requires institutions that retain title to inventions and patent them to show a preference in their licensing activities for small companies and to require that products to be sold in the United States are manufactured in the United States. The government retains the right to practice the invention on a royalty-free basis and retains march-in rights to ensure that important inventions are commercially developed. Also, the Bayh-Dole Act specifies that any income derived from the licensing of inventions be used to support further research and education, support patent protection for other discoveries with commercial application, and to provide an incentive to researchers to participate in these activities.

By all accounts, this relatively simple change in the rules for the management of innovations has had a profound impact on the development and commercialization of inventions made at universities, and on the economy. Starting in fiscal year 1991, AUTM has conducted an annual survey of the patenting and licensing activity of U.S. universities, teaching hospitals, and research institutions. During the period surveyed, annual patent applications by universities doubled to 11,704, the number of licenses that universities have entered into grew 3-fold to over 3600, and in fiscal year 1998 364 new companies were formed with university technology. For fiscal year 1998, AUTM estimated that university technology transfer activity resulted in $33.5 billion in economic activity, supported 280,000 jobs in the economy, and resulted in $7 billion in federal and state tax revenues. These measures reflect the delivery of commercial products to the public; products that in many instances would not have reached the public without the protection afforded to institutions of higher education by the Bayh-Dole Act.

I understand that this subcommittee is interested in learning how patents for genes affect openness and sharing of information among academic institutions. This issue is complex and impinges upon the publication and dissemination of research results, and the sharing of research tools.

Should patenting go forward, one issue that is considered is the effect on the publication of the results of the research. Publication of research results is a core value for universities, and in my experience, the ability of university researchers to publish is carefully protected by university administration, grant and contract officers, and technology transfer managers. In practice, the pursuit of a patent rarely delays the publication of results. Technology transfer practitioners at universities work to protect an invention within the deadlines that researchers have to publish a manuscript or present data at scientific conferences. Often the parties must balance collaboratively the need to publish against the desire to protect valuable intellectual property. Accordingly, much of the gene sequence information that is developed at universities is placed into the public domain by publication in the scientific literature, or by listing the gene sequence in publicly available databases for broad access by the scientific community.

If a university pursues a patent, licensing on a nonexclusive basis (that is, making is available to a number of companies) is often the best means for technology transfer to benefit the public, especially if the gene is useful as a tool, or if the gene is a potential target for drugs. This practice makes the invention widely available and derives the broadest benefit from the invention. I would like to give you an example from our program at Cornell. In 1989, Professor Ray Wu of the Department of Molecular Biology and Genetics disclosed to the Cornell Research Foundation a gene that he isolated and sequenced from rice for a protein called actin and its associated promoter. The discovery was striking because of the strength with which the promoter affected the transcription of the gene. Feeling that the strong promoter might have value, the case manager at the Cornell Research Foundation initiated a patent application on the discovery. In addition to pursuing a patent for the discovery, Dr. Wu and Cornell made the invention widely available to other researchers through biological materials transfer agreements, a common mechanism for researchers to exchange research materials. As a result of this wide distribution, the promoter was available to numerous research programs, and, subsequently, it was discovered that this promoter is the best available in helping make plants tolerant to certain herbicides. At this point, Cornell Research Foundation has nonexclusive licenses with 12 companies that are developing crop plants with herbicide tolerance.

I make this example to illustrate two points. This first is that even if a patent has been pursued, there is still the opportunity for the university to share the gene itself, and associated information and biological materials, with other researchers for further discovery and potential development. The second point is that discoveries made at universities are an early stage and may take a significant time to their way into products. Professor Wu made his discovery in 1989, but products that make use of his discovery are still in development.

In other instances, exclusive licensing may be preferred, and may offer the only practical way to induce a company to assume the risks of time and investment in early-stage inventions. To illustrate with another example from Cornell, in 1994 William Holloman of the Department of Microbiology of the Cornell Medical College working with a colleague discovered a class of enzymes that is extremely efficient for the repair of breaks in chains of nucleic acids, the building blocks of genes. This basic repair mechanism is termed recombination, and is important from the standpoint of understanding the biology of how cells repair themselves. However, it was also recognized that these enzymes might be useful to develop novel methods to repair genetic defects in cells. A start-up company approached Cornell Research Foundation to obtain a license to the discovery. Because of the long period required to develop products, and the cost involved in development, the only means to attract venture capital backing was through an exclusive license to the patents for this discovery. Even though an exclusive license was granted for the invention, Professor Holloman published the results of his research after the submission of the patent application, and he continues to conduct basic research in the same area.

In summary, technology transfer, the transfer of research results to the commercial marketplace for public benefit, is an important way for universities, hospitals, and research institutes to demonstrate the relevance of their research programs, introduce innovation into the commercial sector, and enrich the lives of citizens. These discoveries can be pursued without disrupting the core values of publication and sharing of information, research results, materials, and know-how.

I appreciate the invitation to speak before you today and I look forward to your questions and comments.