Statement of
E. Jonathan Soderstrom, Ph.D.
Before the
House Judiciary Subcommittee on
Courts, the Internet and Intellectual Property
On
H.R. ___ Cooperative Research and Technology Enhancement (CREATE) Act of 2003
June 10, 2003
E. Jonathan Soderstrom, Ph.D.
Managing Director
Office of Cooperative Research
Yale University
433 Temple Street
New Haven, Connecticut 06511
PH: 203-436-8096
FAX: 203-436-8086
jon.soderstrom@yale.edu
Testimony to the Judiciary Subcommittee on Courts, the Internet and Intellectual Property
Hearing on Cooperative Research and Technology Act (CREATE) of 2003
Mr. Chairman, thank you for the opportunity to testify before your Subcommittee on the important topic of promoting research collaboration.
My name is Jon Soderstrom. I am the Managing Director of the Office of Cooperative Research (OCR) at Yale University. The Office of Cooperative Research is the patent management organization for Yale University. My statement today is being made on behalf of Yale and the Association of University Technology Managers known as AUTM for which I serve as the Vice President for Public Policy. AUTM is a nonprofit organization created to function as a professional and educational society for academic technology transfer professionals involved with the management of intellectual property. AUTM was founded in 1974 as the Society of University Patent Administrators. That group laid the foundation for the association that exists today - more than 3,000 members strong representing over 1,500 institutions and companies across the globe. Neither Yale nor AUTM have received any federal grants, or engaged in any federal contracts or subcontracts that require reporting under House rules.
Yale’s Experience
Yale’s Office of Cooperative Research was created in 1982 in response to the passage of the Bayh-Dole Act that encouraged universities to seek commercial partners to move their discoveries out of the laboratory and into the marketplace. The Bayh-Dole Act allows academic institutions to retain ownership of inventions resulting from federally funded research and to manage the licensing of them to industry for commercial product development in the public interest. The fundamental thrust of the Act was to change the presumption of title to any invention made in whole or in part with federal funds from the government to the universities, other non-profit entities and small business. Prior to the Act, the Government owned the inventions and had responsibility for licensing them. Government policy at that time, was generally to offer non- exclusive licenses under all inventions which it owned – a licensing stance administered under some 24-26 different non-uniform agency policies, which proved to be highly unsuccessful. Since the passage of the Bayh-Dole Act numerous pharmaceutical and medical products, environmentally friendlier manufacturing technologies, inventions which improve public safety, and information technology services have resulted from the transfer of federally supported research results from academic laboratories to the business community and, ultimately, consumers. In many instances, these products and processes would not have reached the public without the incentives and procedures afforded to higher education institutions by the Act.
The OCR was charged with extending and expanding Yale University's interaction with the private sector. The duties of the OCR include oversight for patenting and licensing activities, as well as development of university inventions. OCR staff work with Yale researchers to identify inventions that may ultimately become commercial products and services useful to the public. OCR staff also helps create industrial partnerships to develop Yale inventions.
Yale technology transfer successes have had a profound and positive effect upon the welfare, health and safety of humankind. Researchers in the Department of Pharmacology of the Yale School of Medicine, for example, together with their research collaborators at other institutions, have played significant roles in developing two key ingredients of the so-called drug cocktail: the reverse transcriptase inhibitor d4T, known commercially as Zerit, and 3TC, known as Epivir. These medicines have fundamentally changed the nature of AIDS therapy during the past decade.
William Prusoff, Ph.D., Professor Emeritus of Pharmacology, has spent a 45-year career at Yale investigating potential antiviral and anticancer compounds, part of the traditional, small-molecule approach. In the late 1950s he synthesized idoxurine, an analog of thymidine, which was the first antiviral compound approved by the FDA for therapy in humans. It was used to treat herpes infection of the eye. Dr. Prusoff and his long-time collaborator, the late Tai-Shun Lin, Ph.D., discovered in the 1980s that a thymidine analog, reported in scientific literature by researchers from Wayne State University as a poor anticancer agent, was very effective in slowing the production of HIV. This compound is known as d4T or stavudine. Bristol-Myers Squibb developed the drug under the trade name Zerit and brought it to market in 1994.
Yung-Chi (Tommy) Cheng, Ph.D., the Henry Bronson Professor of Pharmacology, has worked on a parallel course. While Drs. Prusoff and Lin found drugs that work against AIDS, Dr. Cheng has sought ways to reduce their toxicity. Long-term usage of anti-retroviral AIDS drugs leads to a decline in the mitochondrial DNA of certain organs, impairing their ability to function properly. After a month or two of use, these agents can cause problems in nerves, the pancreas, muscles and the liver. Dr. Cheng’s laboratory team studies drugs that will be active against the virus but will have no toxicity to the mitochondrial DNA.
One such drug turned out to be 3TC, a compound with positive and negative forms that mirror one another. Originally synthesized by a Canadian researcher and identified as an antiviral agent, samples were sent to Dr. Cheng for study of the drug’s toxicity. He found that 3TC's negative form reduced side effects when used in combination with AZT. The combination increases 3TC's efficiency at inhibiting an enzyme HIV uses to reproduce its genetic material. Dr. Cheng identified 3TC as an agent that would be less toxic to mitochondrial DNA than other retroviral drugs.
A new approach to combating AIDS may grow out of work led by John K. Rose, Ph.D., Professor of Pathology and Cell Biology. The agent he developed, based on a common virus found in cattle, has killed HIV-infected cells in culture. He also sees the possibility of developing an AIDS vaccine, using recombinant form of the virus as a vaccine vector. Researchers hope the vaccine will stimulate both parts of the immune system: antibodies to neutralize any free-floating HIV and specialized immune cells to kill any cells that HIV does manage to infect. Early results using a form of the engineered virus showed promise against SIV, the simian form of HIV, for use in animal trials. Dr. Rose is working together with scientists at Wyeth Pharmaceuticals in conducting further animal tests. If it is proven safe and effective in animals, human trials could follow.
These are only a few examples of the life-changing discoveries resulting from Yale’s scientific endeavors. Currently, Yale’s has licensed eight (8) novel therapeutic drugs being tested in thirteen (13) different clinical trials for such life-threatening diseases as various types of cancer, Hepatitis B and AIDS (see attachment 1: Yale Pharmaceutical Pipeline). The benefit to the public derived from these and other inventions created through the research at Yale and other academic research institutions is incalculable.
The Benefits of Collaborative Research
The success of bringing these and countless university inventions to the marketplace has depended on rich collaborations among scientists within the university; collaborations among scientists at different universities; and collaborations among university and industry scientists. Collaboration among scientists in husbanding research dollars makes good sense with the cost and complexity of research today, especially with various institutions engaged in essentially the same technological areas. Moreover, the evolution of science has made interdisciplinary research more and more common and, in fact essential, if solutions to complex problems are to be found. A very recent stunning example of this is the sequencing of the human genome.
Collaborative research among, private, public and non-profit entities is quantifiably important to the U.S. economy. In FY 2001 alone, based on data from 198 reporting institutions surveyed by AUTM:
· Sponsored research at academic institutions exceeded $31 billion.
· Over 4,000 new license and option agreements were executed with nearly 23,000 such agreements currently active.
· Nearly 360 new commercial products were brought to the market under license to a commercial partner. Since 1998, more than 1,500 new products have been introduced to the marketplace.
· 494 new companies were formed based on a license from an academic institution. Since 1980, over 3,800 such ventures have been created.
It is well known that industry depends heavily on collaborations with universities for basic research. In the pharmaceutical, biotech and hi-technology areas, America’s universities are the engines of generating cutting-edge ideas that have kept this country’s industries world leaders in new technology. Public funding of university research and the encouragement of collaborations among scientists at public, private and non-profit entities have been keystones of the United States’ strength and leadership in these sectors. With the bulk of university research being supported through federal grants and contracts, to be prudent with the taxpayer’s money, it again makes good policy sense to encourage collaboration among scientists for the public interest. These collaborations between scientists at separate universities and between industrial and university scientists often result in joint inventions. And actually, there has been an increase in the number of collaborations. Today Yale has over 100 inter-institutional agreements reflecting such collaborations. In these inter-institutional agreements, there is joint ownership of the results of the research by the collaborating scientists since most institutions operate under the provisions of the Bayh-Dole Act that give the institution the right to retain title to any invention made in whole or in part with federal funds. That is the applicable rule even where the institution is in a sub-contracting situation where the prime contractor is the recipient of federal funds. Thus, in inventions that result from collaborations, each party may hold ownership rights.
A Threat to Collaborative Research
In spite of the trend toward scientific collaboration and the economic and practical necessity for such collaborations, the recent decision of the U.S. Court of Appeals for the Federal Circuit in OddzOn Products, Inc. v. Just Toys, Inc. threatens to discourage such collaborative activity. We are seriously concerned about the implications of this decision.
In OddzOn, the Federal Circuit interpreted subsection 103(c)of the Patent Act to hold that prior art under subsections 102(f) or (g) could be used to determine the obviousness of an invention in situations where:
(a) there was no common ownership or assignment of the invention and information being shared among the collaborators, and
(b) the information exchanged was not publicly known.
Prior to the OddzOn decision, it was uncertain whether information under 102(f) and (g) of the U.S. Patent Act (35 U.S.C.) that was shared among collaborators, but was not published or generally known, would qualify as prior art in determining whether an invention was obvious under section 103. Thus, there was some doubt as to whether courts would interpret 103(c) to distinguish collaborations involving one entity from those involving more than one entity.
The holding in OddzOn, while accurately interpreting the law, nonetheless is a wake-up call to the patent community that information under 102(f) or (g) could invalidate a patent in the circumstances of a collaborative research effort. The OddzOn decision creates a significant threat for the loss of intellectual property rights for inventors who engage in joint research and development projects with scientists not employed by the same company or institution. The implications of the OddzOn decision are significant. Researchers who enter into a well-defined and structured research collaboration, but who do not at that time transfer their rights (not only rights in future inventions, but also the background technology on which the collaboration is based) to a single entity can create obstacles to obtaining or enforcing a patent on an invention that arises out of the research collaboration. The information exchanged under the collaboration does not have to be publicly disclosed or commonly known. Instead, all that is required is that the collaborators exchange the information without first designating common ownership of the information or of any invention that may arise from the collaboration.
Conclusion
The OddzOn decision creates significant problems due to the very nature of collaborative research and development projects among universities, government labs, and industry. The unhindered flow of information among researchers within these collaborations is essential to the conduct of research and crucial to a successful outcome. Laws and policies that have the effect of impeding the flow of information among researchers will, for obvious reasons, have a stifling effect on the progress and success of such projects. We support efforts that will help to remedy undesirable impediments to collaborative research created by the OddzOn decision. This could readily result in more efficient development of products utilizing tax supported research results, and an increase in the transfer of technology for the public good.
Mr. Chairman, thank you again for your time and attention. If there are any questions, I will be pleased to answer them.
Attachment 1: Yale Pharmaceutical Pipeline
PATENT
AGENT LICENSEE INDICATION STAGE EXPIRATION
Zerit® Bristol-Myers Squibb HIV / AIDS Marketed June 2008
Coviracil® Triangle Pharmaceuticals Hepatitis B Phase III January 2010
Pexelizumab™ Alexion Pharmaceuticals Cardiopulmonary Bypass Phase III Pending
Troxatyl® Shire Pharmaceuticals Acute Myelogenous Leukemia Phase II April 2017
Troxatyl® Shire Pharmaceuticals Solid Tumors (pancreatic cancer) Phase II April 2017
Triapine™ Vion Pharmaceuticals Leukemia Phase II January 2011
Triapine™ Vion Pharmaceuticals Metastatic Breast Cancer Phase II January 2011
Clevudine™ Triangle Pharmaceuticals Hepatitis B Phase II December 2013
Elvucitabine™ Achillion Pharmaceuticals Hepatitis B Phase II May 2014
Elvucitabine™ Achillion Pharmaceuticals HIV / AIDS Phase II May 2014
TAPET™ Vion Pharmaceuticals Anticancer Phase I March 2013
TAPET-CD Vion Pharmaceuticals Anticancer Phase I March 2013
VNP40101M Vion Pharmaceuticals Anticancer (Solid Tumors) Phase I March 2010
VNP40101M Vion Pharmaceuticals Anticancer (Leukemia) Phase I March 2010
IoddU Achillion Pharmaceuticals Epstein-Barre Virus Pre-clinical Pending
ACH0630 Achillion Pharmaceuticals Hepatitis B and C Pre-clinical Pending
VSV Vaccine Wyeth Pharmaceuticals HIV / AIDS Pre-clinical Pending