Event ID: 692849
Event Started: 3/27/2007 7:50:57 AM ET
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They turned to the Easter Bunny out word because "they wanted him to have been time." [ Laughing ]
So some lawyer for the government is running around, going inappropriate advertising. The might have to send a conflict of interest form that says I have no stock in the company. And going to move its more front and center just to cause that trouble because I don't have any stock. [ Laughing ] Want to thank hunt for leading a task force and for getting our report to the report doesn't look terrific and I want to commend the task force for a job well done trip and handed a copy firstly to the secretary and that was fun to do. Yesterday, we accomplished a great deal I am pleased about the task force that has been created. The challenge now is for that task force and Andrea and I and staff have already started to plan is the timing and timeline. We are going to ask Greg Dowling if the comes today, or we will call him on the phone -- let me be explicit here. What we need is to sit with you guys after an hour meeting adjourns and get a real sense of the time line for the department in terms of what it sees as what it needs. Then, we will piste up and perk out the committee's work based on on the deliverables to try to meet your timeline the messages we would appreciate you taking back to Sheila and to Greg and the secretary is that we've got the 664 days left in the secretaries of tenure. It he has taken next Wednesday off? [ Laughing ] And forgot about the Wednesday he has taken off. We want to make sure we are responsive to that.
That sounds fine, thanks.
So we will get that done. But I would like, what we are going to do before we leave today, if anybody during their spare intellectual moment wants to take a piece of paper and brought out what you think is the map. In your mind's eye, molecule creating an reagent. Molecule the get reagent, test kit be get laboratory, laboratory-eight, super power pharmaceutical company, laboratory-be, academic center and was a civilian, billion resources lambda three is one and a corner some are merely turning out one thing for a disease or condition. From there, it goes to room doctor and a genetic counselor decide do something with this or not. FDA and does something in the many who has in their mind the map. One page. Puts it right there and then. [ Laughing ] Morning has the map. And then, Maureen, because you are good, you take one color or a check mark and say, like CLEA, who got it. Mailed. Another one come on CLEA, not so sure FDA, nailed. Something else. Who knows! Open. Here are the human papillomavirus met things. So you can see where the holes are. If anybody has those things in there had and want to give it to Andrea that would be wonderful. Moving on. Don't do like I did yesterday. One thing I didn't do is I didn't order lunch. And they don't care. And so you either get it and by 10:00 -- by 9:30 if you don't order your lunch on the form, they don't care. Welcome again to Debra Leonard. Although she rotated off the committee, you never get to leave. She is now a serving and are genes patent tech Force the best taskforce tier and energy and November meetings we decided to pursue the study of the impact of gene patent licensing practice on patient access to genetic technologies. Consisting of several elements, data gathering and analysis, gathering public perspectives exploring international perspectives and ultimately returned to report to the secretary. The task force has been very active and our friend, Jim Evans M.D., PH.D.,.
It should be a great session. We have excellent people to help us understand this very complex and somewhat from up topic. In the interest of full disclosure, I want you to know that the DNA sequence on my tie is not a patented sequence. Sys is public meeting I won't show you my DNA boxer shorts. [ Laughing ]
Machine that mean we been talking about addressing for about three years on the committee since before I got to the committee. It is a topic I think perhaps second only to genetic discrimination raises a very strong passions. Unlike genetic discrimination those passions are from all ends of the spectrum. It is rare for somebody to get up and support it wholeheartedly. People have strong feelings about gene patents and in addition, to being something that evokes strong feeling it's highly complex topic come on one that many of us need a lot of education on. And the cornerstone of today's session for this morning really an as a series of educational talks from leaders in the field are going to help us understand the topics that are out there. I wanted to briefly review how we got to where we are and where we are going to written the task force and she patents and licensing practices consists of five of SAGHS the members and Andrea is going to be rotating off. Women number of extraordinarily helpful at hoc members and ex official members bers as well. Realized early on in this process that we needed a lot of help in understanding these issues and in dissecting the current landscape and the changing landscape of patents boss practices licenses executor. We were fortunate enough to persuade several people to help us I will be doing formal introductions later but Bob and Christopher on and had [ indiscernible ] nine will henceforth be known as Dr. C in keeping with yesterday. We were fortunate last night to meet these people after nine hours of meeting during the day, and we got to hear from I number of individuals listed here who had looked at specific aspects of patent law and patent and licensing practices with obvious reference to the genetics and gene tests. The history of this endeavor him dates back to March of 04 update that when Gene patents and licensing was identified as a priority issue for this committee. It was deferred to given the fact that the National Academy of Sciences at that point had an ongoing study that they have yet to report on a. By October of 2005 and insupportable just been released and a small group is formed to review that report and are thinking that it was entirely possible that the report would have done our work for us and we wouldn't need to pursue anything. However, in full committee in March of '06 the NAS report was summarized and reviewed and it was felt that more information was needed, specifically the NAS report spent on virtually all of their time looking at the basic science landscape and how patents and patent practices and licensing were having an affect and might have any effect on basic research. That differs from the charge of this committee and which is more associated with the public's health and the political access and those types of things during since the NAS report did not address those in detail, we felt there was more work to be done. In June of '06, we held an information session and decided to move forward with a study. We began discussions about the study scope and work plan. We establish the task force and that time there was somebody foolish enough to take on the chairmanship of that task force. In October of '06 we had our first meeting we hammered out with the scope was and began to develop approaches for addressing that scope. In November of whole '6 we decided at the full meaning to move ahead with an in-depth study come and in December of '06 we refined the proposed scope and developed an approach for a study. In February, we were still working on the scope and decided we needed some new blood and we were again lucky enough to get Bob Cook Deakin and other members of Duke University Center to develop a view relevant case studies and help us to tackle this rather daunting topic. Just last night in this room we held a special task force meeting where we heard some great presentations by the CGE dukes that addressed some of these issues and discuss next steps in the bar times. [ Laughing ] We wanted to review with to the current scope. This is just to review the scope. We are done wordsmith thing and when deliberating on the scope and one of the things I would emphasize with unconscious of in this whole procedure and in fact the various stakeholders would appropriately insist that we do sole, and isn't that we need to maintain a level of neutrality and openness about the positive and negative effects in current gene patenting. If one agrees the popular press and media one might think mistakenly, there are only negative things about patents that couldn't be farther from the truth. Needed to look at both the positive and negative effects of a patent team and I would emphasize licensing practices on our core concern, patient access to genetic testing and ultimately. I emphasize licensing practices because I think there is a great deal of feeling if there are problems with the current landscape of patents, lot and application and practice that we're in the permit is like are and how these things are licensed and how that are applied. We want to focus on gene patents for health-related tests including diagnostic predictive and other clinical purposes. It encompasses both clinical and patient access just to fill you in on the perhaps obscure nuances between bolstering what we mean by clinical access would encompass a providers' ability to order a test to get that test for their patience which in a way is an intermediary step to our ultimate concern which is patient and public access to these technologies and test. We are interested in considering the effects on transitional research. If there are things that in a bull or block the ability of such new technologies to reach the clinic and reached the bedside. This is a diagram of our study plan of how you would like to go about this process. In part one, we will concentrate on data gathering and analysis to get a view on where we stand at this point. That will consist of literature review, consultation case studies and perhaps additional research. Gaps are identified in the current body of literature and his answers that are out there and give there are tractable types of things that can be done in an expedient fashion, we would consider funding something on a modest scale to try to fill those gaps. That would have to be practical and public. We don't have three years to wait for new answers to come in. These are divided conceptually into parts but there's no reason to have to be done serially, that can be at least addressed in a parallel fashion. But what to gather public perspective. This is a topic more and more in the news, something the public has concerns about, probably more uncertainty and concerns, but we would like to solicit public perspective, compile and summarize those comments have a roundtable and public hearing about gene patents and analyze those public perspectives. Part three is to try to gain insight from International perspective stridden this is not a subject that the U.S. alone has grappled with and although we are obviously and extraordinarily different, policy and governmental framework and other countries that doesn't mean we might not be able to learned important lessons about how other countries might address these thorny issues. We would like to gather data on those from that perspective, identified experts and address those things at a roundtable and analyze and summarize those International perspective of this with the intent of a final report to the secretary. I would emphasize the building and the analysts are interested in a completely impractical set of recommendations. What we would like to do would be to identify and practical sings that we would recommend that would enhance the benefits of patent practice and licensing practice, and if identified, surmounted some of the obstacles and problems. The goals of today's session of basically educational. We want to provide the committee and everybody attending with a primer and we will assist in the development of study. We want to overview various forms of intellectual property the use of gene licenses by federal and private sectors and the history and the current a very much changing landscape of gene patent policies. At this point I'd like to recognize our first speaker and that is Jorge and Goldstein. He will delve into various forms of intellectual property and the confirmed by each year is the director of the biotechnology chemical group at Stern, Kessler, Godlstein & Fox. He has prepared and prosecuted patent applications for the U.S. and patent office's in the areas many. He has also an expert on intellectual property in strategy trade secrets licensing, research, contracts, federal licensing, due diligence and acquisition. He will be providing us a background on the loss, legal decisions and policies that have influence is deemed patent some role with respect to jean material and I would like to turn the floor over to Dr. Goldstein.
Thank you for inviting me to give this primer on intellectual property. I am a practicing attorney. I do this in my spare time as a hobby. What I am involved in day in and day out is presenting the divers parties before the Patent Office, before the courts, the four international tribunals, each of them arguing their case. I take a very passionate and strong belief in whatever party I am representing. [ Laughing ]
That doesn't always represent my views on the things and I have learned to write articles and gives lectures like this, disclaiming that anything I say has nothing to do with the positions I take in court and vice versa. I have given a great deal of thought and written a fair amount including some debates with people present your indirectly about gene patents and have been enrolled in the field since the late 70's, early 80's when the patent was first allowed an issue and when Cesar Millstein failed to get a patent this so I have put together a combination set of slides which includes an introduction to intellectual property, and then some higher-level thinking about the gene patents and the different types of gene patents and so on. What forms of intellectual property are there? What is a patent? How can there be patents on genes? Who owns your genes? That is an interesting question, but the press is all over of this stuff. There was an article written in the New York Times about a month ago in which it was actually gone further and started talking about who owns your disease. I have some strong ideas about who owns your jeans and who doesn't. Obtaining and forcing pectins. The patent system and how it fits with Gene patents and some conclusions and recommendations from my perspective. So why to have intellectual property? They're is a number of discussions and there is. Historical patterns originated in Venice in the 15th century and to attract and retain Curtises who were coming from the Middle East so they would say in Venice and teach but the nation's the art of a canal building and ammunitions and silk weaving and so on and wouldn't go on summer else. So but the nation's cooked up this idea called a patent and which they would give them exclusive rights to canal-building as long as a state and taught full disclosure, all that was in there already and it worked. So the idea was to protect ideas, expressions, and encourage disclosure, and some forms of intellectual property are forms of information and a source identification such as trademarks. The source of intellectual property in the United States is the constitution. Article one, section eight talks about promoting the product success of science by securing for limited times, 20 years from the filing in the United States and pretty much the rest of the broad the exclusive right to the respective writings and discoveries. This includes the right to have copy rights and patents. Just a general introduction to intellectual property from secrets, trade secrets all the way to Pattons and I will very quickly give you a specific example so you walk away with a sense of what the difference is between a trade secret, trademark, copyright and the different forms of patents. The classic example of a trade secret which everybody talks about is the formula for Coca-Cola. It is still a trade secret. There are presently industrial espionage litigation going on in the secretary at the Coca-Cola company tried to sell some secret that she thought was "the" secret. She's being prosecuted under various different statues including trade secrets. The formula for Coca-Cola is, indeed, a secret. And [ indiscernible ] and only two or three people know it. A trade secret is knowledge that confers advantages to an entity, say the Coca-Cola company. It lasts as long as the knowledge is kept a secret. The disadvantage is that a secret is hard to keep. Although, Coca-Cola has done well. You need to make sure when you go to court you can demonstrate that you have done the best you could to keep it. You can't stop someone else from independently discovering it or inventing it, or, in fact, it has happened much to the chagrin of people that the independent invention or independent rediscovery results and the loss of the secrecy. The disadvantages to the public is the knowledge of the form of Coca-Cola is not placed in the public domain so it stays with Coca-Cola and nobody knows about it and have a right to exploit it. If Coca-Cola to sit for 300 years a secret as long as they can keep it, no limit.
That is a trade secret. Trade secrets are enforced in state court term they're not dead appeared there is a federal espionage Act that protects the secret of them, but trade secrets are state-created. Trademarks. The classical trademark I will talk about is in the health scientist the trade mark for [ indiscernible ]. A trademark is something. It need not be a word, it could be a building like McDonald's, for example. It is something that distinguishes the goods and services from one company from those of another. The same [ indiscernible ] is called [ indiscernible ], and in J and J Europe had been selling [ indiscernible ] and a license and they called it a [ indiscernible ]. So the application apparently committed Lake causes everybody to know this is coming from the reliable source that they have taken it from for the last ten years and is not some other drug. It is not a different source. It's the same drug, but it's the source they have relied on. It's source identification. What can be traded market, a product like I just showed, a building like the golden arches, that's a trade mark. What is not always clear to people is that a sound can be a trade war. If you think about Intel inside, that little sound Intel has, that's a trademark of Intel to her is registered as a sound trade mark at the Patent and trademark office. A color can be a trademark. Brown or pink for insulation that you put in your attic for the winter. Is a color and color is in fact trade Markable. Trademarktrademark s give you a sense for a source. The advantages are they last as long as you use employer it to prevent others from using similar remarks tear it makes it quick and there's an advantage to the public to connect the source with a product. If you don't use it, you lose it. Next intellectual property section. Copyrights'.
Is a trademark for ever?
A trademark is forever as long as you use it and you do not abandon it. If the trade mark becomes the generic word, you lose it. For example, the Xerox is a trademark for copying using zero graphic methods, but when people say I want to Xerox something they are using it generically and the Xerox company is constantly reminding people not to use a Xerox generically because they will lose as a trademark. To Hoover in England there's a generic word for vacuuming. The Hoover company doesn't like that, and one of the dangers with a trademark becoming very famous is that you can lose it if you don't protect it as a trademark copyrights are yet a different form of intellectual the classic example here if you think about and Jim Watson's molecular biology of the gene, a copyright is a protection for an expression. It is not the idea but the style, the format in which the idea is presented. If you think about Watson's book, there are obviously an infinite number of ways of describing and writing a book on molecular biology. You can write a book on molecular biology without copying Watson's book, without copying his style, his chapter organization, where he puts the figures, the phrases and you are fine. You can write as many books as you want. But if you photocopy and the page of Watson's book, you are violating the publishers copyright. The idea is it is not to protect, the concept of writing, it's the particular way, format, a style that is predictable by copyright. The copyright is owned initially by the author and then by the publisher if the author is writing on behalf of. The expression can be independently created and not unique. It has to be capable of being fixed in a tangible medium. A whole bunch of stuff can be copyrighted and we are talking again about expression and not ideas. Literary works, musical works, sound recordings, dramatic works including choreography, including the NFL games, for example, is pretty dramatic. Pictorial graphic sculptures, motion pictures, architectural works. How about outside this classical field of literature or part? The best example of re quasi utilitarian application of copyright is the software industry. The problem was software copyright is while you can protect the form in which a particular flow of ideas is created, so you or your publisher only copyright on the code and how you have interpreted the flow of information, I cannot look at your code, figure out what is you are trying to protect and write my own code different than yours and I am not violating your copyright. That is why protecting software by copyright is a limited proposition. The best way to protect software is to protect the flow of the information and that is done by patents and the particular way in which you interpret the flow is done by copyrights. In the late in the 70's, early eighties there were papers that came out on the possibility of copywriting genetic sequences and my only answer is what I say there. I don't think so. The problem with copy writing a utilitarian objects is a lot does not allow you to use copyright to protect the function of the object. You need to be keenly aware of the limitations of copyright to just protect the style or the particular mode of expression and not the underlying idea.
How about copyright, is there a time for it?
It can be extended. It can be for the life of the author plus.
Why did the wiki mice -- Mickey mouse, right last for ever. The copyright is still in place?
I don't know, but I can look it up.
It is.
Which is a patented? At patent is the right to exclude. It is not the right to do anything, it is a right to exclude others for a limited period of time from a number of things such as make, use, sell it is a right granted by the government and the quid pro quo is the government gives you the right to exclude and you need to disclose fully the invention that he wanted to patent. If the quid pro quo is not met, and if you disclose it fraudulently or if what you disclose is an operative, the patent is invalid. Litigators let me go into court all the time trying to prove that a particular patent was granted by mistake, the patent office missed some piece or this was reproducible and it was not reproducible at all. The quid pro quo is private disclosure that would otherwise not become public like the disclosure of a corporation. Admissions who live for doing basic research and making it available to the public don't always understand the concept of the alternative is to keep it secret. Keeping things secret is -- the point of doing research is to make it available. For industrial and corporate scientists come secrecy is the norm. It is the daily -- their daily life. The concept of disclosing its to the public fully is a strange concept for corporate research and the patent says to them "if you disclose its, I will give you 20 years exclusivity. You'll be the only when that will be able to do this." You can talk about in DuPont for the Grand Canal, it is basically the same idea. What kinds of patents do we have? The classic patents that to all talked-about are so-called utility patents, 20 years from filing, takes about three years to prosecute sold 70 years of issuance. The invention must be useful, novel, not obvious. There are design patents which protect the design, look of something. Similar to copyright in some way in the sense there are probably many, many ways of designing a Speaker of a microphone like this, for example. If I have a particularly fancy 1 I could probably protect it through design patents. There are multiple ways of designing a utilitarian objects, and one of those can be protected by patent design grid for decorative design and planned patents which you don't have to worry about to much grid 20 years for filing an for a sexually reproduced plants. We're not for the talk about copyrights, trademarks, trade secrets, primarily a utility patents. What can be patented? Certainly, processes. Methods of producing compounds. Methods of using them in therapy and diagnosis. Instrumentation, machines. Manufacturers, things like plastics and paper. Particular chemical entities or genetic entities. Software can be patented. That's a relatively new one and is causing a great deal of consternation and especially in the financial industry that is giving him sued by inventors that have patented methods of calculating bond fund balances at the end of a day, for example pretty abstract ideas cannot be patented, that thematic equations, algorithms cannot be patented and laws of nature. This has become a controversial issue recently in the sense that it is being brought in to try to capture within the concept of the law of nature things like correlation between diagnosis. There was a case called the metabolite case in which that was tested but the Supreme Court said we shouldn't have granted, there's another issue you want to deal with the whole bio-tech patent was left holding their breath as to what was granted happen with diagnostic correlation patents.
He made a distinction on the copyright you can't copyright --
Where is the question?
Copyright does not protect the function of an object. Can you patent the function?
Yes. The patent covers the military aspect of what the object does -- utilitarian aspect. The copyright protection the form, the stock, the look of it. That's what patents are more powerful to protect the ideas than the copyrights. If I can patent the basic concept or idea that I developed, and then you can in body that in many different ways to rid and yet if you a copy of my idea I got you.
How about something with a function like an object or something like gene that is happen in nature?
Bear with me for a minute. As long as you take it out of nature and introduce some sort of intervention and make it is separate from nature you can patent it. Patton's encourage disclosure. They encouraged investments. They can prevent others from using the invention as a trade secret. That's interesting if I were to reDiscover the formula for Coca-Cola and it is not public and I got a patent, Coca-Cola would have to stop using the form electorate if Coca-Cola wanted to patent it now it to be too late. They're is a trade law that says you have to choose secrecy or patents. You cannot keep your inventions or discoveries a secret for 25 years and when it is about to be discovered, you patent it. That is called an estoppel in law, it means you can't do it. Whereas if I were Matt discover it by myself and I patent its, the fact that it is secret is not against me. They're is a risk in keeping things things a secret. If I was Coca-Cola's patent lawyer 65, 70 years ago when -- he came to me and said should I keep a secret? I would have said no. A set I swear I will be able to keep this a secret for 65 years, I would have given him that advice. Thank God it didn't come to me, right? He did much better I don't believe secrets can be kept that long especially in a product that is going to be drawn up by billions ions of people. Common sense. And disadvantages of patents. To the corporate how scientists the patent needs to pretty much laid out a blueprint of what the intention is. The formula, the Coca-Cola from the, the process of what goes in it. It is expensive to obtain. It is even more expensive to litigate. Litigate can cost 2 million to $3 million. When people say to me how much is going to cost me to litigate this? My rule of thumb is about 8 million a year. How many years? 2 to 3 years and you can multiplying that by two or three. Is a multimillion dollar business to the gate patents. You may need to seek patents in many countries. Idea of a patent in the U.S., people could go abroad and bring the data entered there is case law that says you could do it drug screening internationally and send the data in by Internet and bring in data is not a [ indiscernible ] of a screening patent. The technology is developindevelopin g very quickly, patents are a limited appeared in consumer products patent is have a limited use. No talk about patents on a genes Terry patents on naturally occurring materials claim isolated and purified molecule's. There is lots of legal -- adrenaline and purified form was patented in 1912. Insufficiently pure form that was the word of the patent claim. In 1977, in a case called [ indiscernible ] there was a patent of cultures of struck a myiasis grid the critical words that need to go into the patent plan. In 1979 strawberry flavor in compositions were patented where acid derivatives were the one set of compounds give strawberry flavored to the strawberry and they were isolated and purified and compositions containing them. A composition contained [ indiscernible ] acid reached on a strawberry, right? But if you put it substantially. [ indiscernible ] acid, that is the way it is construed that it doesn't read on a strawberry because say strawberry as a composition of matter is a natural and the flavoring compound that is not isolated and purified put in there. In 1980 the famous case from GE, made a common bacteria that was able to grow and metabolize a whole set of hydrocarbon fractions patented. The thinking went up to the Supreme Court and the Supreme Court said in a famous statement that is to reproduce by patent lawyers in the biological sciences "anything under the sun made by a man can be patented." I am sure today the Court might say anything under the sun made by a person or man or woman, but those are the days, 1980. That is used by patent attorneys of lot. "anything under the sun." Meeting if the hand of man has intervened like Pierre find the Star break extract, that it is patentable. Let's look at what a jean patent actually looks like. A gene patent ultimately is a gene claim, a patent contains a whole bunch of disclosure at the beginning and then there is a number of numbered claims at the end of the patent. And claim one of engines is reproduced in this slide. That's the double 08 patent issued in '87 and that patent has actually expired the DNA patent is gone. Although it has made subsequent violence and has patents on all kinds of other things it was a four, $5 billion market and they have held tight. That let no one in because of these patents. What is claimed it is -- I am going to use this one appeared purified and isolated DNA sequence, that is the critical wording, it has to be purified and isolated. This sequence and codes people, it is selected from two and some parts of this claim. The first one is a DNA sequence actually set out in the patent. Is a vigorous fight and six are the complementary strengths. That happens to be the human gene sequence. That [ indiscernible ] as all biotech patent lawyers doesn't want to just protect the particular human gene sequence, it wants to protect all of the genes to machines that come from other species, a modified in some way from the human gene, otherwise the patent could easily be avoided. It is not that difficult to envision the possibility of changing a few basis here or there or maybe a neutral and non-impacted mentation and developing an alternative. If you have a patent limited to just the one sequence the patent could be easily avoided. What is really critical in this claim is DNA sequence under it stringent conditions to meet sequences defined A in. Also, to the occasional variants of the basic human gene. It is interesting how is defined. It is defined by habitus Asian under stringent conditions which I defined in the Patent and it's test to see what inferences and what doesn't. This little primer question, who owns your genes? I would like a buddy to walk away from here and reading to see how wrong he is. He's a great novelist and I love his books, but as far as policy is concerned, I think he should just keep on writing fiction. Close your genes? If they are in your body, the genes are yours. On the other hand, if you are in the hospital or your doctor's office and blood has been taken, the law has been clear for many years and there was a case that confirmed it and 99 game at the University of California, the famous [ indiscernible ] case, once your genes are extracted from your body they belong to the hospital. So the act of extraction changes legal ownership of the jeans, of the genetic material let's say look, before people my lab I want to own my genes. They will say are you crazy? This is not crazy. What happened, is that this and discovered that his jeans and his cells had been isolated and used sed commercially to produce some material and he got pretty upset that people were exploiting them. Let's assume you do a deal with the lab. If you do a deal with a lab it and change by contrast the operation of law which is what the more case said. You can walk home with the test tube of your genes. And if I ever patent on you're isolated genes, and you have this little test tube that you go home with and the art yours, but if I got a patent on them because they are now isolated can you commercialized at? The answer is no. You on your genes but I of the intellectual property on your genes. Just like if you own a copy of [ indiscernible ] book of Internal Medicine, I own the intellectual property it is yours but the copyright is mine, you can go to the grave with that book budget cannot reproduce it, sell its, too stupid it make copies of its. So there's a big difference between owning the book and on and the copyright. Only the genes and owning the patent. You own your genes but I may all the right to exploit them. Can I use my patent on the isolated genes? That's a trick question. I hope in of the answer? Of course not, patents are only isolated genes they're not your chromosomes. How easy is it to obtain a gene patents queue queue by this I mean isolated. They're is a number of standards in the patent office that go from the genetic sequence that you disclosed needs to be useful and fertility is one of the most difficult parts to overcome when he or trying to obtain a gene patent. In has to be substantial, credible and specific. You need to have a written description of the gene and berries of the gene in order to get scope. You need to reproduce the invention. Indeed for the gene to be novel, namely and has not been published an isolated farm, this sequence and another publication before you filed. It cannot be obvious. The standards roughly are much harder to overcome at the utility of written description that at the obvious nests and of things. In the indebted states as I come up with a new sequence for a jean well-known but I've modified the sequence RI have a variant of it, I can get it. There is no very high, very strict standard in order to obtain a gene sequence patterns in the U.S. tour in Europe they took a different turn early on and they can demonstrate if there are methods and incentives to make these variants the gene is obvious. In the U.S., the Patent Office is not allowed to represent evidence available to isolate this new Jean-Pierre approaching was unknown, genes and other species were isolated. That does not work in the U.S. Works very well in Europe and demonstrates clearly how in here and the U.S. went in very different directions. The Europeans are not happy in the direction we took and there's a lot of criticism in the academic literature about the direction that our court to appear in the essence of a patent right to is the right to exclude and the right to exclude which is the essence of a patent includes the right to an injunction. I can go to court and get the court to stop you from using, exporting, offering its sees I direct to extract damages if I have been heard had my marketing by your copy that infringes my claim and I can demonstrate I lost profits for the market is diluted I can I get my lost profits are get reasonable royalties. I can leverage the ability to get an injunction to be able to obtain licenses. The right to enjoin in the U.S. has historically been very strong. The interesting news for this group I think is that there has been a recent Supreme Court case where the right to enjoy and has been cut back from what it has been historically. Until very recently, until this case, this debate case, any any activity that for this the institutions business objectives is an arrangement and can be enjoined and this applied even shoot Duke University, those of you from Duke note this like the palm of your hand. He had a laser that he had patented what it was at another university he was using it to teach and he got unhappy and left Duke and found out that Duke was continuing to use this patented laser. He sued them. Duke said what are you talking about? On an academic institution. You cannot tell me to stop. The court said yes, against you. Sorry, Duke. As far as you are a business objectives are supported by this infringement, namely you teach, that is your objective. You're not a state university. You're not immune. Is an infringement and may have to stop. You can't imagine the brouhaha this cost. They went to Congress and they respond and still are paired when I talk to university officers still don't want to talk. It is something we don't want to deal with the experimental use defense is essentially nonexistent. That's another thing to note here. Clinical use of a drug that is generating data that will go to the FDA and to the statute and a Supreme Court case clinical research is in fact and a suspension of a patent. The pharmaceutical company is doing clinical work and they are using a patented drug, they are free to do so until the clinical work and and they go to the market. The question is how early does clinical work start. This preclinical work still cover it? Early experimental research still covered by this immunity. Now, the right to exclude has recently been cut back. It used to be if you proved there was an infringement and the patent was still valid at the end of litigation, an injunction came in and automatically you got an injunction. It is no longer automatic. It's pretty clear from the Supreme Court case and from lower court cases in the last six months to a year that for example a patent holder that does not manufacture, Norris, is not in the marketplace may not readily get readily get an injunction. Health is a major public policy concerns and the courts have noted over and over again in injunction litigation so the patent lawyers who does not want the invention has a patent, frames it, likes looking at the Patent and maybe a offers licenses every now and then, maybe not. That is not an antitrust violation to not licensed a patent right. Nowadays patent holders who are not working the invention who are not licensing the invention that's a test case has not yet come up, I not be able to get injunctions. That actually opens the door in the U.S. for the first time to serious thinking about compulsory licenses, licenses forced on the patent holder by order of the court. Compulsory licenses have been [ indiscernible ] for decades and decades. The East Bay case has opened the door and is not possible to at least right academic articles that compulsory licenses are coming and I have already seen a few cases.
I think we are running short on time and I want to make sure, this is so great, I want to make sure we get as much as possible from you, if you could within the next tennis or so finished up and what we will do is bring Doctor Goldstein back for questions.
Okay. The door has opened and I think the next few years are going to be interesting especially in health care patent litigation. I've already talked about full disclosure time limited expressivity capitol information for technologies are frisky outlook. The idea privatizing that would be in the public domain. Helps promote investment if the technology stays in the Commons, the basic idea is nobody would put money to protect it so maybe it might die and the comments and might not make it into the market. But there are patents and there are patents. The patent system is created as a one size fits all system. I think careful thinkers of the system and the long always distinguished, even though the law doesn't, between different industrial sectors through the [ indiscernible ] like the pharmaceutical industry is the classic poster child for a good, strong patent system. Major investments and long delays at high risk of failure and the products have a very long life. This is not what the consumer products industry no major investment necessary at the end of the spectrum is business methods and don't require high risk investments. The product life are relatively short trip a lot of the inventions and developing a new business methods like a computerized method of compiling fund balances at the end of the date don't need patents and the application is sort of an afterthought. As like the Supreme Court said we don't see why not is not like a patent is necessary to promote good smart Wall Street financiers from calculating balance funds. Where you can contrast that with the pharmaceutical industry and in the middle of it is usually placed the semiconductor industry, copying is still a risk, but there is a ticket problem in the semiconductor industry. It is estimated if you want to put to a new duty on the market or a CD player or and I-Pod, I-Pod is a registered trademark of Apple Computer grid I'm not trying to use it generically I'm so paranoid about using I-Pod. If you want to put DVD player or one of these a miniature and Goldstein players on the market is estimated indeed thousands of patented grid for a complicated high-definition television set you may need 19, 20,000 licenses. There's a real ticket and this is the industry or patent laws have come out from because people cannot move without patent rules. Our isolated the human genes like the synthetic drugs are are they like business methods? What role to patents play in genetic patterns? The answer, which is what lawyers always have as an answer is it depends. It depends on the function and the use of the gene and who are the potential defendants. Let's sort of think of gene patents and three different categories because I think it is useful at least to put some taxonomy and gene patents. There are DNA patents called protein drugs. They tend to be in the biopharmaceutical companies. At the other and our DNAs encoding targets, like molecular receptors used for drug screen. The potential defendants in this category tend to be institutions and small research companies that are doing screen for these receptors and in the middle just like the semiconductors are diagnostic probes through these are not DNase that our used for say. The potential defendants are mixed bag. They include diagnostic companies that are putting kits on the market and they include the medical community was doing political work, maybe research. If you think about gene patents and these three different categories, things become clearer are they more like synthetic drugs are more like business methods the PPA? Gene, if you said that they cannot get it patent on gene that impose a protein being used as a therapy, as a drug that need FDA approval of the house lot application time and high risk, they would probably not spend any money and it could very it will be that PPA gene would be the discovered and they're probably wouldn't be much in the pharmacies in the United States and therefore DNA in coding drugs, protein drugs are I think a lot more like synthetic drugs than business methods. Patenting the gene, not the protein words the innovator, the risk is high. I've mentioned this factor already and in fact there is case law that suggests that the patent has already been construed pretty nearly so that subsequent generations are not covered by the PPA original. At the other end is the receptor. If I isolate the DNA I can get a patent on it, but the research applications are the most important applications here. We're not talking about the receptor as a protein been sold as a drug in the marketplace. We're talked about it being used as a research tool. The commercial application is much lower. Development risks and costs are not high. These are used primarily as research tools and for stability is iffy, you can use it abroad, bring in the data, preclinical [ indiscernible ] as I described before. It's difficult to ascertain with the damage is. How much money can get from you if I take you to court? What is it worse for you to be doing research? Nine tie in ten years from now and say if you discover that Blockbuster because you use my receptor in vitro to do screening even though you are ten generations away I still want a cut of that blockbuster that is called a reach-through royalty and lots of controversy about this. Certainly, they put money into the research they don't like research patents being licensed exclusively and hold up research and there is a clear his sense that patents tend to impede the dissemination of research tools. Now, that is very important because big front steps into a debate that carried a lot of weight. Lot of people talk about patents and then they go where searchable patents are no good. I am fighting with them all the time in the middle sort of like semiconductors are genus are called diagnostic probes. There are still manufacturers who put kids on the market and they want patent protection. Indeed receiving and of these patents don't just included the manufacturers, but also end users. They're is a lot of debate in the literature and lots of evidence that developing improvements in genetic tests has led to large fragmentation of the patent field just like Sunday conductors and there is a clear sense who can perform the genetic tests may well interfere with good practice. In my taxonomy patents are like semiconductors and I think there is a problem with them. The perceived value depends a bit on who is talking. Academia which is sort of the middle one feels that as far as DNA encoding protein drugs they like patents. If they discover the gene you can be sure they want to have an exclusive right to license exclusively to some pharmaceutical company. On the other hand as far as DNA coating receptors they feel for research tools like to patent them but they're having a lot of trouble licensing they're not that many takers and reach-through royalties don't talk well and if you're talking to big-from what they love -- they hate receptor pectins they don't want to pay stock royalties. They're a small status. Everybody agrees that therapy drugs are good things to have, the biggest difference is in the IT research and of things and there are set ups that make their living from isolating research tool genes and patenting the minute you say to them that DNA patents should not exist they're not going to like it. In thinking about it and diagnostic patents I have [ indiscernible ] their number of academic research groups that fought about this in great detail, following the model of consumer electronics one could think of creating in the diagnostics field, not in the other field tools that use internationally recognized standards to define what tools publish what patents belong and which ones don't which are essential and which ones are not. You hear pools being discussed as the panacea for solving all of these problems. It is not. They have to be thought through very carefully and in the biotech industry, I will leave you with the final conclusions, no one other than you owns your genes. But they may own patents on the isolated version of your genes and provide commercial exclusivity. There are different categories and they need to be thought of in a different way and whenever you recommend did not throw the baby out with the bathwater. Post-eBay, I think there is real possibilities for compulsory licenses. Patent pools, I believe in the diagnostics field they can route but you may have to start working with international health organizations to create standards decide diagnostic standards are applied in the house, they could be applied in the health field. And define an experimental and clinical research without undermining all research tool pass. There was an issue of academic medicine years ago that had a lot of this that I'd recommend for an excellent survey on human gene patents, so much has happened that it is already out of date but as an introduction it's pretty good set of articles. Thank you.
Thank you. That was wonderful. [ APPLAUSE ]
That was a fantastic forever. We are going to wait for questions until the next two speakers have gone ahead and spoken. I wanted to turn now to Ms. Claire San Francisco. We're going to hear from two speakers representing the federal sector and the private sector. Claire San Francisco is from the technology office and will begin by describing the federal perspective and is responsible for the oversight licensee portfolio. Clare?
I will try to be fairly brief I know we have a long morning ahead of us. Today I'm trying to talk about how the NIH handles licensing not unlike many in the medical community NIH is concerned about certain licensing practices, brought expose of licensing of gene patents for a diagnostic application. The bottom line is if there are real problems and there do seem to be some examples of problems in this field, think the focus should be at the level of licensing and not at the level of patent. That will be might take-home message. Here's the reality. We are in the age of homo-economic. A little bit about the NIH. What I want to emphasize here is we are big. We spend 10% of our 26, $27 billion budget internally on campus. A lot of the policies I will be discussing only apply to the intramural program so some of my views I will say why are we doing this in the extramural Program and the simple answer is the grantees don't want us telling them what to do. The time has come to consider taking some of the policies and having the grantee community at least voluntarily adhere to it but there is no mandate they must follow some of these policies. I will start by discussing some of they NIH policies. The research tool is a great example if there is a low public health priority we don't patent. We will patent if there is a high public health priority even if there is no commercial interests. We every large portfolio and in neglected and rare diseases. We try to achieve a balancing act. If you have to much IT are restricted license the monopoly he will hinder future research. Inventions such as the genes that encode for proteins that could have therapeutic use you will not get appropriate commercialization. We try to achieve this balance. Here again here or intramural this is what we do on campus. We always focus on the public health benefits for this and financial benefit to us is our last concern. And that all sounds great. We can afford to be altruistic. We have a big budget. This is not the reality for the university. You have to be aware of that. We try hard to never give a license for more than the company realistically needs. We do preferential [ indiscernible ] are narrow exclusive licensing and try to optimize the number of new products that hit the market and the best way to do that is to do multiple licenses. We insist that the availability of technology for research and maybe extend it to research and clinical, but we [ indiscernible ] research ourselves but free also want other non profit.
So what are the mechanisms we use? We use a very standard mechanisms. Our one anomaly is the quarter of research and development agreement. We actually give our collaborator an option in this room. Most of the time we do not-exclusive but if you work with us to get an exclusive option. Even in that case we are careful to make sure the scope of the license matches the scope of the research plant. We don't give people more than they need to commercialize. We to the opposite of academia. We give up mostly of non-exclusive, and occasionally co-exclusive. If you exclusives when it comes to their critics are vaccines. Even those can be quite by disease indication by technology platform we try to parse it out so we can give multiple licenses. We're very really give a a broad license. Here are statistics prepared by met separately opposite of what academic desperate 80 percent of our licenses are non-exclusive if you look at the Association of technology manager survey data UC and academia is mostly exclusive licenses. We don't really know the nature, some of them maybe there'll but the way bottom does the survey you can't tell. I want to emphasize that difference.
The difference is extra mural votes are grantees can do what they wish under patent and licensing they can control their own invention commercialize them. They're is a famous research tool policy NIH put in place with sometimes ask for acceptable profit-sharing plan. And we have a new guidance document that came out a few years ago called "NIH best practices for the license of genomics practices." We asked grantees to adhere to but it's not a requirement. This document came out of the genome Institute, Francis Collins idea. We were actually doing all of these practices for over a decade but nobody on the outside New that's how we read having the license and and gene patent. We tried to put it down in writing and distributing it to the community. We do a declaration of an exceptional circumstances where we tell our grantees you have no by Bill rights. As he can imagine, the university's head of these and fight against this, but in some project it's necessary that the and product such as full length and D and a's of all available or in the case of create a library of knocked out mice. There were a patent attached, but couldn't really get them out there. Occasionally we will completely take that away but that is Terry rare. The academic research enterprise really is the source of many of the platform technology of the new products commercialized by industry. The companies are and licensing from academia that means to controls the licenses? Who is writing the license agreements? Universities. The companies can ask, but is the universities of control how the licensing is done. So if genetic inventions were no longer patentsable had to sublicense or give aid license to interested parties but would affect the industry. It would be in no one's interest to put diagnostic companies of business. There is probably wheys to be more thoughtful and careful and licensing so you don't create monopolies or problems with pricing because one company has a lot. Other than genetics probably the most hated and diagnostic company is a scene appeared here is a list of patents just from off the mob ' is website. They have created a large collection of patents for various no logical disease conditions. But if you take a closer look and say where these patents come from, what you will see -- this slide is from my friend David Ledbetter. If you look at the patent come take a look, I those mostly companies? No. They are academic institutions. There is one for Athena. Keep going down the patent. Mostly academic entities. Keep going. Academic entities. There is another one from Athena. One more from Athena, everybody else universities and so on. A few companies, Mostly University spirit of those dozens of patents licensed by Athena only three today develop and-house. The rest day in-license. Nobody else can do these genetic tests except Athena. That policy of not sub-licensing. If you want that tests done you have to go to Athena. Then, I'm going to use some data from Bob Cook deacon and his colleagues. The Duke group published a couple of years ago, they did a licensing survey and specifically looking at DNA patents and who owns them. University of California is number one. A number two is the U.S. government, NIH. NIH owns the second number of gene patents. The one circle in red our universities for Top 30 DNA patent holders but they also signed a new white paper that has come out from the premier technology transfer organization. The Association of University technology manager came out for weeks ago a very nice white paper which is Technology neutral but does mention gene patent and diagnostic and a number of the universities will hold the largest number have signed on. It is kind of like in the future, you can't do anything about the legacy patents, but I think it is a good start on the doing this because they are altruistic? They're doing this because universities are getting terrible press. There's a lot of push to change and criticism for how university's art licensing patents. They thought let's voluntarily do something proactive before the NIH are pieces of legislation will force us to change how we do business. On a should also mention that 4 0 to 65% of all of the DNA paste patents filed by universities were made using government funding. By their own disclosure in their patents, over half of the DNA patents discovered by universities were founded by government funds. What does that mean? That means the NIH or government had a policy telling them how to license he would catch about half of these. Is evidence of the issue jean taxes have gone mainstream. I'm embarrassed to admit I some time reading this flimsy publication called parade magazine and I choked on my coffee back in November gene patents are putting your health at risk. Parade magazine. We have to have an intelligent discussion and has already been mentioned, Michael Crichton's book for he has in the back of the book author notes. Awful. Stop patenting of human genes. Number five [ indiscernible ] by Dole back to 1980 legislation that gave universities to own a their own inventions. That is extreme. That would put a complete halt on many industries basing their businesses on inventions coming from universities. I will go click through some of this. Just to point out that gene patenting came to the floor once the human genome project got going. There has been a lot of reports, I want to point them out, how $0.6 a it is the tech industry is to perceptions or concerns about not being able to have sufficient patent protection. When Bill Clinton and Tony Blair announced the working draft of the human genome project one of their spokes people have answered a question that made it sound like there would be no longer and the ability to patent genes. And the stock market that day to.
Jorge, 30% plunge in one de just based on that statement. There has been some proposed pieces of legislation trim this one from 2000 to was pretty good, there was also a [ indiscernible ] report and in 2003 we finished the human genome project. By the time we figure this all out there is no gene for us to patent and all of the early genes have become off patent. Trees and the problem will take care of itself but it will take another five or ten years. And then we have the NIH best practices which is a good document. We didn't for with OECD needed essentially, the recommendations are identical. Emphasize non-exclusive licensing, making sure you retain a research use provision for everybody, not just yourself. Very much in line with the was a convergence of opinion. And then the autumn came up with a white paper this month which is not specifically about gene patents but the recommendations are almost identical to some of the other reports. My bottom line, stop worrying about gene patents. Focus on taxes. Is the licensee and that really matters to this unlikely that patents will be revoked even though there is a bill to try to do just that the figure would be very important to develop alternative feasible strategy to ensure maximum access including clinical labs and research labs as Dr. Gold stain already pointed out pretty tough to get a gene patent. Very tough in Europe and Japan there is at least I hire brought for getting these patents and they tend to be more narrow the focus on a licensing to do a lot better. I will take a minute on this old bill because I think it is a far better proposal then Dr. Weldon who is from Florida. His new bill proposes a complete ban on human gene patenting but it's not retro active. His previous Bill was nice. What they did is they did an analogy to the surgical technique from ten years ago. They proposed to exempt from patent infringement individuals will use [ indiscernible ]. If it added political in here you would pretty much cover everything and they said he should exempt medical practitioners. This was kind of a good idea. I thought the concept was good. Unfortunately, Dr. Wilson decided to propose a new bill in 2007 that would prohibit the patented of human genetic material. This is silly because there's really nothing left. It would be very hard to find a new human genes that hasn't been published and it doesn't address the key public health concerns of what has been license. People are concerned about the same example. In my ten or 15 years of doing this I hear the same five examples repeated. Hemochromatosis, can advance disease. It is the same ones. I there any new ones? Is it just these few to get exceptional. I think it is the same ones over and over and we have to look at that. If 99 percent of the people are played by the rules that's a good thing. Again, this is to show you society's come along Kinmen Bordon '99 on this issue all in line with all the other policy documents I mentioned. Here's our strategy in summary. We publish a lot execute non-exclusive licenses, give limited fields of use, mandatory sub-licensing and we have developed this Best practices Guide for use by ourselves and by our grantees, again not required by our grantees. Our grantees are not required to follow these. We always include provisions to ensure continuing unavailability for all others for research purposes, not just ourselves. Here is a summary. I won't go through it in detail. It is the same concepts over and over again and all of these documents. The one thing they do emphasize is commercial development and to monitor and enforce terms. Was the licence is signed everybody is happy. You have to go back, follow, if a company's not appropriately using ID you need to take back the license. This also requires staff but it is very important. The NIH is doing this in a rigorous way, many universities are not. Here is the white paper from autumn. I think it is sensible and the balance. It is Technology neutral. It deals with licensing of inventions in general. How to serve the public and make sure you're still encouraging [ indiscernible ]. It is signed by big-name universities. They're not afraid to lose money. It is being endorsed by several different groups and are hoping to get more folks in there and is in response to negative press but so what, it's silly goods thing. In this document they emphasize should not hinder clinical research, professional education and training and you should be able to do independent validation of the test even if there is patent coverage through licensing of a single gene for diagnostic may be counterproductive. They're finally saying it and putting it out there. And I will finish off with proposed remedies. We can pass legislation to have compulsory licensing. Not a terrible idea. We can all some work on a [ indiscernible ] redemption. He can also tie and non-infringement benefit. Patent pools I think these are difficult but it's also an option, there is antitrust issues that could be hard to sell, encourage Class licensing and a new open source movement which are kind of interesting as well. I think the best possible remedy and I want to emphasize this is my personal view is I think as a start it U.S. government grantees to follow some of these guidelines and if they have a chance to renegotiate licenses that come up for renewal they should think about it. We're going to get a lot of letters, but it's not a bad idea. He needed data to see how big the problem is. If the problem is there he mights have to have the grantees at least adhere to some of these practice which now a large number of entities agree is the way to go. But he do need some data. I was a problem of NIH. Here are your options you to follow our best practices or the autumn white paper, they are nearly identical and I think we will go very far trip to conclude, there has been policy development which has been removed in and had the bad news is this is taken about 20 years. It's great start. I like the idea of being broader but I do grid by the time this policy or legislative fix are put in place many of the gene practices will have expired on the proposals are only granted be for licensing going forward and not retro active with the legacy problem which is probably where the problems lie. I will stop there. It thank-you. [ APPLAUSE ]
That was wonderful. The extraordinarily practical kinds of things you need to hear and consider. Next I would like to introduce Lin Sun-Hoffman, Ph.D. J.D., she is a Senior patent Attorney from Applera file systems. Previously she worked at some Applera Managing Captain preparation and prosecution on gene patents as those other gene related diagnostics. She also worked as a patent at USPTO examiner. She's here to enlighten us about the private sector side of this equation. It's great to hear from you.
Think you. Can you hear me? I am from the industry. I guess like most of you and work with academic NIH government. I spent last seven years as in-house counsel. First I work for [ indiscernible ] which is a Jim nomack company and did a lot of a gene patent filing. Recently a move to another division applied file system which is a research tool company. I see both of the gene patents. Before I start and there is a little disclaimer here my personal view does not represent the company view. First from my aspects the typical Jim patent claim you click method for making of a protein and for screening and also you claim antibody based on this gene. And also in addition, with the gene patent you have a method for diagnosing a disease by monitoring a gene expression or a protein expression and also a method for treatment of the disease by targeting that gene was antibody a small molecule. That was typical claims in the patent. Why do company uses gene patent. He probably know this background many needing a target to screen they have libraries adjust to screen the compound. For biotech company is developing the podium like platform using a target to develop an antibody treatment. He would have the different proteins that expressed in different disease stage so you develop target for the treatment by antibody. Here there is a couple of example in the treatment, protein and an testing and these are all target to specific protein. Ford diagnostic company Applera also has the diagnostic with mutations associated with certain genes. This is another type of use for the gene. And also both Speaker talk about [ indiscernible ] is also for diagnostic purposes. For the research company we use them as friends, primers and putting race for using. And the gene patent holder this academic and U.S. patent there the majority holder and there is some industry. People probably familiar with inside and HGS Applera, these have a lot of patent issue assigned to them. And I use Claires side, that's the survey to reiterate that the majority patent are academics and government from a company's point of view, we want access to a patent especially like a research tool company. What we do a big search, whether those of Jean has patent issue. And Majority and patent are in the public domain. The earlier one in the public domain, no one can patent. Once you did a search there is no freedom to offer its that is patent counsel. We just license or design around or try to negotiate some kind of other deal with other patent owners. Here, again, the academic and the U.S. The government they are the majority owner sys of the gene patent. So companies, the licensee are [ indiscernible ] developers they try to obtain the license, just like Clare stated the, the majority research company getting their first research information from the academic NIH. From my experience seen how we usually get the license that those are not exclusive from academic and from U.S. But as clear stated, now more and more academic, they want to have exclusive license so they can make more money off that because we are in more research area so that more tend to be non-exclusive license. But they had [ indiscernible ] company as a patent owner a is owned a company [ indiscernible ], vague license them where they develop them self our license is right inside an internal develop those genes themselves. Some of those only develop exclusively, I was told they do license to the academic for steady [ indiscernible ]. The type of agreement we have is straight license agreement. From industry point of view [ indiscernible ] target has some huge development value. In the early stages is really not exclusive. Or is there is some internal development we have a collaboration our agreement with a pharmaceutical company.
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It is free easy for somebody to say this kind of institution is just a research. Merck is just outsourcing their research. So lets sue them as well. So I think a lot of these lines we are hoping to draw between academic researchers versus non academic research are all very busy anyway. I think my view that I described it a little bit in the talk is that ultimately if you are dealing with micro array diagnostics or if you are dealing with multiple mutations or multiple snips for a particular disease the of the solution is not just any old patent polls which have problems because of [ indiscernible ] issues as Clare mentioned and other problems and other such issues, but carefully defined patent polls where international health organizations like WH0, APHO or the SNC, the American College of Medical Genetics [ indiscernible ] ethnic panel for cystic fibrosis is to have the following seven mutations. These petitions the to meet every universal test that works for cystic fibrosis. I'm sorry?
[ indiscernible ]
Then the patent owners, which in our fields -- the patent owners and the Consumer Product electronics know that they cannot put the product on the market unless the talk to each other. It is impossible. They depend on each other. One has the patent on the chips and the other has the patent on the CDs and the other has the patent on electronics. There is no product unless they talk to each other and they are used to talking to each other. In our fields companies don't talk to each other. There is this long history and tradition of exclusivity in the pharmaceutical industry. And I find this over and over and over again. So for them to sit down and start talking about cross licensing are forming a pool for diagnostics, it is played out in left field. It some international association was to come in and say this is the test. You need these by [ indiscernible ] and this too bad that three patented by three different people, but any one of those is not the standard of care. It is going to force, I think -- that is my proposal. It is going to force people in this industry that don't talk to each other to start talking to each other and to start to cooperative the more. That is my view.
And the other solution is either compulsory licensing or exempting, you know, clinical practitioners from a patent infringement. There is a dichotomy because the very same universities that have a clinical lab at the half of the market in these troubled their transfer offices busy transferring these things and by two licenses. So you can't say don't suit our lab but by the way we would like a lot of money. It is bill problem. The other thing with cystic fibrosis is you have some people who actually said to the tech transfer office, please license this not explicitly and that is how it was handled. I have seen the presentation and if every did it the way [ indiscernible ] handled we would not be here.
The other point I want to make it is probably easier at NIH to suggest that academic institutions follow the NIH guidance document. And that is a the a bit disingenuous because the NIH place by a different set of rules. You don't have a mandate to try to make money and your bills are paid by the taxpayers. Private institutions especially live under these, perhaps come on realistic but nonetheless expectation that tech transfer will potentially make money for the institution. And that is the motivation for doing this. And so you cannot tell them to adopt a different set of standards that says, don't worry about the profit motive. Simply give everything away as much as you can and be reasonable about it because it is just a different game.
But to be fair, the University of California, exquisitely licenses the [ indiscernible ] patent and make a fortune because they did hundreds of licenses. So it is not always unprofitable to lessons in this manner. A lot of people to don't realize that and it is unrealistic for every tech transfer office to cover its costs are to be a profit center. Universities must learn that.
These are not controlled experiments. Reasonable minds and regional institutions differ on strategy.
Absolutely.
Okay. We have a little bit of time left with three people on the list. Andrea, Julia, then Sherry.
Mine are more comments because mine were basically raised. I am a though skeptical of patent pools. Because there is that were voluntary in there. An academic does not know how to play nice in the sandbox. Industry cooperating with each other because they need each other, academia tends to be this all for me and all for me. So I am a little skeptical of the patent pools and how long it would take to get a patent pool together for one diseased even if you eventually could. The second point is what was raised by Andrea. This is not going to be a problem that goes away. It is not that everything is out there and it is going to go away because I am aware of the older ones that you were mentioning. The last two and a half years I have moved up to a higher level and not the rookie running a laboratory. Andrea mentioned in the last six months there have been three cease and desist letters. It is not stopping in is having it very large impact on diagnostics. While we talked here and we have -- you have a mandate to look at research issues related to genomics, this task force has decided to look at clinical access and patient access. And so I think you need to focus the discussions on those aspects of the impact of gene patents on clinical access and patient access to the use of this information for health care. And the conclusion of the evaluation of the NAS report was that much of the research issues have been addressed. So I think maybe we should not continue -- we should focus the discussion more on the clinical and patient access issues.
Okay. Julia and then Sherry.
I have a comment about the micro array that's because when you do those to put all the scenes there and many of the heart many covered by existing and to -- patents. If you do a micro array you cannot possibly could to every single gene and like every single patent application. So how do you -- how are people balancing these two things, they need to do things and all existing patents that are behind all of the genes that are in a micro array?
I can put two cents in there. With those micro array we to a freedom to offer search and then go to the company to talk to them. Usually the license is pretty low, but sometimes we cannot find the genes that -- it is impossible to search every scene. So far we get letters from universities where they have time to go through all of these websites to find out which genes are there, but it is hard to detect most of the time. [ indiscernible ]. That is not a big issue in the industry at this time.
But you are right in the sense that everyone up the gene sequences needs to be cleared to be used commercially. You have a million different sequences up there, and if even one of them is patented, I would take it out out that the NRA or go get a license or stop the whole project. And all three of those have happened. People many times well proceed towards developing Micro array and find out that two or three of the genes they want to use our are licensed somewhere else and either they take them out for the whole project stops.
You mentioned earlier that one suggestion is for the NIH guidelines for liberal licensing to be made mandatory for grantees. I wondered if you could explain the legal authority that NIH has to do that and what mechanism would be used, like a regulation. And let me just tell you but I am struggling with. By using a parallel example, in the area of research with animals NIH clearly has the authority to regulate what happens with animals while the research is being conducted. But what if there was a lucrative market for post research animal petting or something, how could NIH control that after the research is financed and is a great commercial activity that no longer convulsive research?
That is an excellent question. Essentially we make a condition to grant. In other words we say you cannot make the money unless you will say that you will at least to narrow is this is or nonexclusive and we probably have to write in some reasonable exceptions are some sort of a venting process so that we don't to be up to much. But as far as legal authority we probably don't really have -- it would need to be changed to be really able to do it, but we could make it a condition of the grant. So essentially we are not making you do it. Is just if you want our money you have to do it.
Has had the analysis being done to answer the question of whether you have the authority or not?
I think we can get the authority but we don't have it right now, but I don't know that definitively.
As far as the research tools policy, we were able to make that a policy and did not have to change in the laws. We were able to answer to that is a condition of grant. That was the analogy I was thinking of. Unpopular though it would be.
Okay. We are already behind a bit and I am going to pull a read on you and curtail part of the break. That's me back in five minutes. I want to thank the speakers.
Reed would never do that. I don't understand.
[ applause ]
[ break ]
If you want a ride to the airport or need transportation you need to go to Abby or you will be walking. Because they do not care. Like I did not get any lunch yesterday, I'm telling you, man. They don't care. Secondly -- I am just teasing. Now she feels bad. I am just teasing. They care. They love everybody. I'm sorry. Number two -- they are going to take my money away. Congratulations. She is not here now. I have waited all this time. Okay. We will do it later. Debra Leonard, would you please to -- we are so pleased you are here and you are going to do public testimony. Because you have to go to the trained people to public testimony. Because one of the things you are going to publicly testimony on is the topic dejoir among other things we are happy to have you public testimony.
Okay.
I forgot my hat.
For those that do not know depending upon what see is talking a lot put on one hand or another and she has a whole collection of them.
And just in case you are confused, I am not Bob Cook. Dear Dr R., number -- members of the committee, good morning. I am a [ indiscernible ] and I am speaking to you now as a member of the Association for molecular pathology. I will forgo the a coalition of the mission. The purpose of these comments is to provide the perspective on three issues relevant to the stars to the [ indiscernible ] and the concerns of AMP. The first is the proposed federal legislation is to oversight of genetic testing. As you have heard in other public cost estimate recently two bills have been entries into the U.S. Senate liting to the regulation of laboratory developed test. Senator Kennedy has introduced a bill entitled the laboratory testing permits Act and Senator Obama as introduced a bill until the to genomics and personalized Medicine act. AMP agrees with the intended goals of these bills which is to protect public health by entering saved diagnostic tests. However, we are deeply concerned that these bills if enacted into law which have unintended negative consequences including some really restricted access to genetic testing services by the public as well as decreased innovation and implementation of novel to the test. As in other areas of medical practice laboratory medical advances by implementation steps as defamation becomes available. And we started believe that the same the tentacles can be achieved by strengthening mechanisms and a strong collaboration with the power sector. The purpose of raising these issues with us is to ensure that this advisory committee is aware of these bills and the potential negative impact that may result for genetic testing services. Furthermore AMP asks to request that the Secretary of Health and Human Services convene a meeting to engage key stakeholders to maybe affected by these bills with members of Congress and relevant regulatory officials to reach a common understanding of the purpose of the legislation and the best ways of achieving these goals without unintended harmfull outcomes. The second point of concern is the assessment of reimbursement for testing testing Services and I feel like a broken record here. That was not in the official comments. AMP members performed genetic tests and other type of molecular tests for the best and the patient care and continue to struggle with the economic reality that the reimbursement levels set for the CP T codes used for genetic testing are less than the cost to perform these tests. Report uncovers and reimburse the issues and made recommendations to the Secretary that we can develop a plan to address this issue, AMP is not aware of any action taken today. We applies -- to plot report and recommendation and asks that they follow up to determine if action betaken to correct the inadequate payment levels for these codes. And finally the third point is on gene patents and patient access. We ask that you continue to give full consideration to the negative impact of appendixes of licensing and enforcement practices on genetic testing. We are encouraged by the approach that they're taking to investigate the impact of gene patents on patient access to genetic testing. We want to assure that scene patent enforcement continues to limit the test, molecular policy levers can perform [ indiscernible ] their patience. We encourage you to carefully consider and develop recommendations to the Secretary of Health and Human Services, but will address the clinical impact of these practices. We remain available to assist with or provide additional information for your thoughtful deliberation and important work. On behalf of AMP I think the committee for your time and for listening to the concerns.
Thank you very much and those comments are well received. I to -- we have one comment. Let me just say people and the it CMS comment. So I am pretty confident that that will be added to the list of things that CMS will be responding to, and I feel their is a pretty good pathway to try to get CMS comments back to us on your matter as well as the other ones that came up yesterday.
Let me bring the microphone closer so I can project. Anyway. One thing that strikes me about today's comments and actually to comments from yesterday, there are different organizations that represent not only the laboratory, but also aggregate groups and individuals that brought to our attention the legislation but be -- that is being introduced at the Senate right now. We also have received key charge from the secretary to look at this oversight and I heard yesterday that the secretary's office is looking at issues of oversight. So it seems to me that with these groups they're asking us to look at this issue and ask the Secretary to engage the stakeholders in some kind of coordination among the different groups to make sure that [ speaker unclear - audio low ]. And we hear from the stakeholders. So what I think that maybe we want to consider at this committee is writing a letter to the secretary asking this specific question [ speaker unclear - audio low ].
I think we had Chris yesterday who was representing the office of legislation. He could not be on the call with us. Craig Burton. In so I think that what we might want to do was say, if you could take back to Craig Burton this point. Can I get a sense from the committee that is to see what we are looking at is -- and correct us. We want to be assured that the administration is doing everything that it possibly can in terms of its coordinated activity between the various bills that are in play to try to give us the best calculus for success.
And make sure the stakeholders are involved in the discussions to make sure that there is -- that the consequences to this development are a flotation of this.
So I think that just because -- and unless the committee would like to guide me in a different way, given that we had a conference call yesterday with the senior person representing the office of HHS for legislation with the two key congressional staff people who clearly all knew each other and we're all talking, if we could get a strong sense that what you heard here, I think that would be faster than trying to read the letter and have it go through whatever the heck the process is that it has to go through.
Would it drive the message stronger if we write a letter?
I -- I say we follow up with the letter. Andrea will draft the first draft of the letter. And get the draft to Sarah who will then expeditiously get it to me and we will forward it to whom? [ indiscernible ]. No, you don't have time. Yes, if you want in on this you better get to Andrea and help her draft it.
Look what you sparked.
Preliminary to having a meeting of the various stakeholders on the bills, do you have somewhere your specific questions or concerns about the two bills?
The Kennedy bill has very broad implications for all of the clinical laboratory practice. So they don't restricted to genetic tests. Any laboratory developed test is included in this process. So what you need to understand is that is far reaching way beyond genetic testing. So the breadth of that is very scary to clinical practice. The other bill actually incorporates much of what this committee has been deliberating on in the various sections. It does -- it is much more reasonable in allowing a process to be developed on oversight of laboratory developed test, specifically, but there are many other sections. But looking at the laboratory developed test process for oversight of those tests it is much more to look and develop a process which would allow stockholders input. So that Bill is probably more reasonable up teetoo. I think that was AMP analysis.
So I think that is important, and your comments are respected. I want to make sure that we don't -- I want to be clear about the committees sense of expectations. As I understand it I think that what the Andrea recommendation is is that we are encouraging the secretary's office to be in -- to continue their process of collaboration between the two bills, sponsors and stakeholders so as to address the chances of a bill going by. I think we are being studied in not trying to get into which bill is better or the other bill. Although Kevin's question is for the inappropriate. I just want to make sure that there is no sense in the committee that you would be disappointed if we did not way as to which Bill had greater merit. I think that is not our role as an advisory committee to the secretary. Good. Thank you.
Turned it over to me.
With glee. Hand to the committee's credibility.
Well, I want to introduce now Bob Cook-Deegan. It is really a pleasure. The secretary's committee is rare fortunate to have [ indiscernible ] and the services of Bob and his group and try to help us grapple with these issues. His team is working on the patient access study. Bob is the director of the Center for genome, epics, Law and Policy at the Duke University Institute for genome Sciences and policy. Previously he was director of the Robert Wood Johnson Foundation Health Policy at the Institute of medicine. And I will turn things over to Bob.
Thanks, Jim. Is my microphone on? Can you hear me in the back? There. I can hear it is making noise now. I am going to make the walk you through a premiere on intellectual property. I am going to try because Jorge and Karen others have covered a lot of this territory. I would just pulled out some lessons. Before I do that I wanted to and all assistance to do so much work. They gave a presentation to a subset of your task force last night. Julie as a postdoc / legal scholar. Chris is the actual teacher of the course that presented last night. The students on the left and the Julia and I have been helping out with that project. Shuba is the posts doctor had to the early this morning. She is running the class tonight. Basically what we were asked to do by your committee is to turn the data and the resources that we have at Duke on the question that is facing your committee which is about access. And I think one reason that Sarah and your committee turn to us is that we have a research group that has been funded by the National institutes of Health, national genome Research Institute and the Department of Energy to study the role of intellectual property and informational flow in the innovation process into genomics. It is the Center for genomics. It is called that because we are in particular he had what is the distinctive role for having lots of information about genetics and to number is available to large numbers of people all over the planet to the Internet at relatively low cost. What does that do for the innovation system and how does that interact with the intellectual property system. This is subclass of things that we have been looking at although we have really not looked specifically at [ indiscernible ]. Here are the factors you are contending with. What are the meeting variables that affect access that much relates to intellectual property? One is prize. The whole idea of a patent is that you get more control over your prize because you can prevent other people from using and most important selling the thing that you made, your invention, on the market. It can also be associated with control of the invention. You will see some examples of that in the diagnostics arena. You can actually impose conditions of the people testing because you had sold control over that intention. For example, in diagnostic testing for Alzheimer's disease there was a big controversy. Well, as in the diagnostics said, we will only do the test if the condition says a signed statement that says, this person as far as I am concerned has dementia and therefore this is a diagnostic test. That was to prevent screening. They could do that because they had exclusive rights to the 32p that govern testing for Alzheimer's disease. Another factor that entrenches regulatory approval. If we get heavier into this game of other testing in mending test or for these more complex Micro array and multiplex tests then obviously that has an influence on the overall market to end this contract with the FDA in ways I will explain. And finally reimbursement is a big deal. You just heard about that. Who pays how much a pair pace for a service matters a lot. And some of these examples I will work through depending upon how the rules fall out, if those developing tests are expected to approve the equivalent of safety and efficacy Ford said the test before they get paid, that is if CMS says they aren't going to pay for tests until yet proven clinical utility and you have to pay for it and it will cost more to develop these tests and there will be a higher demand for having intellectual property protection before take the step down the road toward getting any new test on that particular condition. This is not data available to you yet. These are the cases -- and I really am not going to good too deeply into them, but we are doing a comparison of breast and colon cancer testing because they are clinically similar. The patent landscape is different because the married of genetics has control over breast cancer and the patents that are relevant to bracket testing were as the intellectual property for colon cancer testing is more diffuse and it is mainly owned by academic institutions. It is being -- it is available through a much larger number of laboratories. I will go to each of these cases but we will some information on describes the condition and chemical decision tree and would exclusively at the role of the intellectual property on access to the degree of we can find it. I will say one summary is a will be very hard to give you crisp clean information that keys in only on the question of access. The best we can do in some cases is to look at utilization which is how many people actually use a test which is only used -- this proxy for access. What you want to know is how many people who should be getting access to something are as a fraction and how many people who should not be using a test are. Is for it hard to do that, but people go as far as we can with these case studies. I will now shift gears and I really want cover those case studies because you will get more information. This is the team does pull together a lot of the teeten. There'll be a lot of data and I apologize for that, but these supplies will be available to you and we have preferences for most of the data. You can recover and look at it at greater length when you need to. Just to reiterate some of what happened in this morning, basically a patent is this ability to prevent others from making, using or selling your invention. You have to disclose your invention in sufficient detail that somebody else can use it, and the patent system works because the court system of national governments becomes a tool for defending your rights. You get the patent rights and the courts will defend your right. So they are subsidizing your exercise of that right. Why are patents called patents? It is because the idea is you must disclose a lot of information. That was the tit-for-tat that was set up in the Constitution of the United States. So we have in our project in the been looking at technologies. None of the things that you see on this list here, these are things where we are trying to pull together what the story is. I have carted them into things that are unpainted, things that are patented by academic institutions and things that are patented by private-sector interests like firms. Most of these are patented [ speaker unclear - audio low ]. Some of these we are just getting started on a summer yet better stories for. So -- let me step back. And let me step back even one step beyond that which is what are we doing in the first place? Everything you have heard about this morning is all the hassles and transaction costs and price increases associated with patenting. So why are we doing this in the first place? There are two justifications for having [ indiscernible ]. One is because if he just do something useful for the world you should get a reward. Therefore if you are contrary to to viable to society he should make it a bit of money. This is the idea that actually goes back to Robert Locke and it was his idea that Thomas Jefferson stole and put into our U.S. constitution. And that is where the idea of progress and science and useful arts came from. It was a very straightforward translation of Lockean [ indiscernible ]. In the area that we are talking about, one is it does what we just said. There examples of that are in our stories. Terri is working at Cetus and discovered PCR. The patented it of the budget which related. They made about $300 million of the intention when it was sold. It was sold in parts and the rest of it went to come around. At deal went through in part because of the $300 million which enabled it. And then they made about $2 billion of a PCR. How have they done that? Because your read as for doing PCR are a little more expensive. Every time you buy one of the Terra cycling machines you are paying people feeding money back to host an interest in directing. Why are we doing that? Does somebody did something awfully useful. It is a piece of analytical -- is a fantastic method and everyone uses it ever. $2billion sounds like a lot, but if he you spread it out over many years and bundle it with sorts of other things the system, that's it. The same thing for. I know you have heard about that, but that was the discovery at Stanford University. They made about a cover to the quarter of a billion dollars the that the but it had any impact on the in price of any of the price that generated most of the income. That is one thing that the patent system test. He do something useful and get money out. There is another thing that the courts have tended to focus on more recently which is that if you have patents or you have the prospect of getting patents in the future, that induces a investment in companies. For example when investors were deciding back in 1985 excuse me, 1991 and '92, should we invest in this thing called myriad Genetics you think those investors were thinking, if they can get patents on some useful commercially a voluble things then be broken some money back from our investment. This is a theory that is contingent upon be able to carve out a collection of property and sell it for profit. The same thing was going on his human genome Sciences with this order during sequencing. We have stories like that going on. In the chart that Clare showed you will see that in sentiment geosciences have a highly disproportionate share of the gene patents that are held. The reason for that is they did this sequencing. In part they were expecting to get patents that they could sell on the market. Either they would make products or they would get ravenous when the people bit product based upon the stuff that they discovered. There is the third thing that the patents to the does a lot of work in drugs in particular. We have case examples of that in biotech. That is if a product after you have discovered it and made an important discovery if it still costs a lot of money to take to the market, say you have to prove safety and efficacy of your product you have to patent the thing up front, but then you have to prove that it works and that it is safe which costs tens of millions of dollars and sometimes hundreds of millions of dollars. If you will make that at best and improving his sick before you get on the market you need something to protect your investment in the discovery in the first place this is the work that the pad and distilling. The solving what the Cowboys called the free rider problem. What happens if he did not have patents and the situations? He spent the money to prove something is safe and effective in a generic manufacturer walks in and says the did you put this thing on the market taken remanufacture your parking -- your product at a cost of production without having to do the R and D expenditure to prove it is safe and effective and therefore those price are in theory not ever to happen unless there is some other way to pay for safety and efficacy testing. The baby have construct the system where those costs are borne by the inventor or by the company who will market the product, and that is the way it will be. You need something that will protect that investment. Patents are not the only way to do that. [ indiscernible ] is another way see that. Some background numbers and then I will shoot through a bunch of did decide to give you a flavor. I want me to memorize quizzes at the end, but here are some numbers. These numbers are as current as I can make them. There are about 44,000 U.S. DNA patents. I'm sure you understand this, but hasn't lot is national law. You can get a broad white patent, but that means you have to go country by country. In places like Europe you can get a Europe white patent, but it you ever have to defend it you have to go country by country. It is litigated in each national patent system. Said the U.S., as you will see, as a whole lot more activity than other systems. There are about 44,000 DNA patterns. What do I mean by that? That is something that at least mentions DNA or RNA in its claims. You describe your invention and then say claims. The claims are what Jorge was talking about. The picket fences that define the boundaries of your invention. It you walk onto my territory we are going to hit you. And the claims are what define that boundaries on. If you mention this than we are pulling it into a data set that is called the DNA patents database and that is just a collection of terms that are specific to nucleic acids. It is about 25 or 30 terms that we tested one at a time for sensitivity and specificity and we think it works pretty well for capturing DNA patents. There is a subset of those patents that are sequence patents that mention DNA sequence specifically. And the number drops from 44,000 down to something on the order of 16,000. These numbers are very inexact, but it gives you as least an order. So what is the difference? The difference is things like [ indiscernible ]. Like PCR, like butter [ indiscernible ] patents. Promoters and in answers might be sequence base were they might be too short strip sequence. And then finally within six patents is a subset that is a gene patent. In the gene patent is usually for a complete DNA that is full length, the messenger RNA. The picture that contains the DNA in the cell line that would produce the things that that team makes. Said that is usually a package. And that is the protecting patents. There is it a bit of wobble in these terms. You have heard the figure of 4,000 state from the tense and worried paper. Actually, of those 4,000 about 1,000 of them are only on my progress and things like that. Sir your classic tin pans actually account for 3,000 of those. The thing to notice on this side is of the 16,000 sequence patents that exist worldwide most of those are only in the United States. Show you a graph any minute but here are the raw numbers. There are only got 750 that have been issued in Europe, and only 500 of those have issued in Japan. Those are the three big markets. So this is actually kind of real strange situation.
Do you have any idea how many of those gene patents are diseased genes Association patents?
No. Nobody has looked at that. Nobody has looked at actually maybe I will come back to that at the very end get it is one of the [ indiscernible ] think about doing as a tactical step. To summarize what I think is a fair summary of but most scholars -- and we our academic. But here are some things that most people who study this business would save the kind of agree that these are generally true. We think the peasants to induce investment and private sector activity. That is, there is more R and D going on because of the prospect of having a patent. These companies exist precisely because they expect to make money. One of the ways is by having patented things. It does create assets for startup firms. It does solve the free rider problem, at least in some situations. And we have many examples. The patent system generates income for universities like the contents or the actual pence generated $790 million for Columbia. So the universities are making streams of revenue of of the patented materials. There are some other things that we agree are inherent in having a patent system. They make it more expensive because you are charging more and because there are a hassle costs and transaction costs associated. There is more of a bureaucracy. If you're going to keep track of things and account for them it will cost more money and create friction in the system because any time you're counting things and have to account for them there is going to be friction. In a way it is tax on innovation. And the request and I think that has been building and the service of a lot of the exchange this morning is does it really come up the efficiency of the R and D system if you have too much clutter if you have to clear up the press before you can do any real work. And we have a problem and it is an efficiency problem. There are some things that do not happen in the real world because of these encumbrances. So in the example of PCR it seems pretty clear that some environmental uses did not happen because EPA and the enormous or researchers don't have NIH but it's and could not afford to go out and use PCR for looking into zillions of plants in many many ecosystems. They just could not do it and the difference between a patented and patented technology may have meant that certain areas of research just did not happen. That said which happens if you look at some inventions that are patented for some that were not? What we have here is three examples of a preliminary chain reaction which was patented by Cetus. This is PPR322, the contractor that was a second generation which was developed at the University of California San Francisco. On patented but absolutely could have been. It was a beautiful piece of engineering. Then we have Maxim and Gilbert sequencing that absolutely could have been patented. Had we know that? Because there was a DNA sequencing method that was patented in 73 that was a lot less coverage than this. So it could have been patented. It wasn't. This was by a guy who went on to form teenine corporation, not a guy who headed patents. Also at the time this was discovered dates is to not think about doing things that way. The question here is does the fact that something is on patented like these two dimensions affect the adoption curve? To a first approximation you will see that the curse look pretty similar. So what can we conclude from that? Not a whole lot because we don't know how much use of PCR there would have been. What we can say is at least it was not catastrophic. There was a lot going on. It was little more expensive than it otherwise would have been but does not seem to have completely driven the innovations system to a halt. Now, one of the things that is distinct to genomics is that it was a very compressed period of very rapid investment in a lot of companies, and this is their market capitalization. So these are publicly traded firms that not only get started but actually went to public markets and put their start up for trade. So you can count what they do. One of the things you can count is how much they are worth and you can see here is the 20002001 public speech about three months after the announcement of the draft sequence in June of 2000. And then it went down by a factor of five and is beginning to build back up. You will see at one point there was almost $100 billion in value in these companies. That is what investors thought they were worth, but in fact that dropped precipitously and it shows you the volatility. This shows you the Big 15 firms on that list. There are about 75, 77 firms on that list. Of the Big 15 have continued to increase their R and D despite these fluctuations in their overall market value. You will see they are spending their money on R and D, but they are also spending their money on plants and equipment. And the fact that the trend is going up faster suggest they are also spending money grabbing new talent from the from pharmaceutical industry. They are pulling people to their businesses that get paid more. So the curve is a little steeper. This is the general landscape. This is the most general category I gave you and it shows you the very rapid slow rise from [ indiscernible ] right here. This is when it became okay to patented living thing. You will see there are some patents that happened before then without any controversy. It really took off at a steady rise during the early 90's, the East and then it took off exponentially for a while from 94 to 99. For three years in a row it dropped and then last year it went back up again. I have not shown you those figures. The figures on for this year are it a bit ahead of last year. This is not a permanent drop-off and looks like it is beginning to reverse. This is a striking slide. This is how many sequence patents, the subcategory of those patents are for sequences that have been issued by the different panting offices around the world at different times. The U. S was always it will hire. There were a fair number not been issued. Japan is black and Europe is white. They always where the white hats in the Penn came, it would you see here though is since 96, after that exponential rise that you saw in the previous draft there are a lot of patents being issued in the United States and no place else. This is what that looks like year by year. You see the slow and steady increase. The reason they are dropping at the end is not because it is going away but rather because those things are counted. Those are probably things that are still under examination in the patent offices around the world and therefore those curves will probably come up some level that is higher than right now but it just has not happened. The only definitive data on this camp from reading all over the patents that were issued and the United States from 1980 to '93. And Steve McCormack and I read these by hand and could them in one of the things because did was to haunt them. What you see here is a very anomalous pattern. A the a bit over half are owned by for-profit firms of one sort or another. Usually it is 3% academic ownership or less. Tele-Communications, widgets, as France. This is an anonymous the high representation but here is the data from the European group, a really Nasby's of analysis that came out last November by the Science Policy Research at the University of Sussex. What you see is the fraction of patents going to private sector interest, that is private firms has been going up with each successive time. Which is what you expect to happen. If you add these things at the bottom which are the private sector interests you see that their function of these patents going up. Now, this is slide taken from the Jensen and Murray paper. I apologized for the low quality. It is from Science magazine and I just pulled it right out. The news here is that this fraction that clear alluded to, these are Gene patents. How did they define that? They found all the patents the confined that it's a confirmation and then they married it to the database if the NIH that is the best curated Jean database. So this is the stuff that biologists to to characterize their chain. They dump the information at the National Library of Medicine and compared the sequences and patents to the sequences and will characterize jeans and asked where they massed? That is how they came up with this collection of 4,000 some teams that are patented and the 82% or so that are not patented. So now that on patented set is a combination of things that will never be done to it and things that are not yet patented. And we don't know the relative proportion of those. Nobody on the planet knows that. Academic institutions on the most DNA patterns and this shows you what to do with those. These first two, we did not know what was going on. The university's actually don't administer a certain number of patents that the on. They give them to somebody else. So we don't have any data on those. The zero licenses for about 30 percent of the patents which means somebody pay to get a patent and the never licensed it. That happens about 30% on average. Most of the patents were licensed once. Does that mean is exclusive? No. You can have a non this is license to a single licensee but that has a lot of overlap with not excessive licensing and there are really interesting patents and this collection, these 45p that have been licensed more than nine times which are the actual patents on code transformation come on production of the protein on the base sell, it is the common border patterns and being able to detect forcibly label cells that to the registrar developed at Stanford. Those our classic pants that had been nonissues of the licensed, usually as a source of income that has not really gotten in the way of the innovation process very much like the PCR story except a little cheaper. So now what Sarah asked me to do is to say, okay, what are peasants during and then what could governments or other stakeholders to about this? What are the policy papers that are at your disposal to make terrible walk through some things going on, some things you might think about that you could do and just to give you an idea of what is going on in the real world that your report is going to interact with. One is there is patent reform being contemplated in both the house and Senate, a bill that made it, there were hearings in both the house and Senate last year. It sounds like there is even more energy behind this because the intellectual property interest of Telecom computing and supper businesses are fed up and are putting a lot of muscle behind trying to get patent reform which is really what is driving the patent reform. The biotech and pharmaceutical constituencies have, for the most part been three happy with the way things are. It is oversimplification to say that they -- I think it would be happy if there was no reform but I think they may have accepted that there might be reform and therefore if there's going to be reform there are certain things they want to see happen. But this patent bill is going to probably be going through with the next year were to during the hundred and send Congress and this is something where there might be provisions that would be relevant to your work. A bill was dropped in about a month ago by heavier the Sara from Los Los Angeles and represent the will and who is a physician from Florida. This is bill that would say from here forward there will be no sequence based Patten's. So that Bill has been introduced. There is one co-sponsor, Pete Stark, and we don't know what is going to happen with that beyond what I just said. He saw mention in Paris talk of the rivers bill, plunders run from this in. She was squeezed out because she was forced into the same district but John Dingell who run the same primary. So her bills died with her candidacy. And nothing happened in the 108th Congress, but that idea is still perking in the background and could be brought to life again. There are also the commission practices and that is doing a lot of work. That is stirring a lot of work. If you look at the difference between the U.S. and Europe and most of that is not the rules because we have the same patent criteria for the most part in both sides of the Atlantic. So something is going on in the way the patent office's are handling these inventions that is quite remarkable and tells you that there are levers to pull. You heard mention of a research exemption which does not exist under U.S. law. The Duke started is history about 100 yards from where I parked my car every day. That case is now over and we give him back his pre electron laser. So this case you won't be hearing about any more. We have done our damage. But there is talk in the wake of this of creating a statutory research exemption under U.S. law. There were some proposals and it is not currently on the table. But you will see that in Belgium and France they actually passed Research exemptions that are pretty substantial. And there are many research exemptions and other countries that allow you to do research on the invention. These are actually exceptions that allow you to use the invention. As well as do research on it, much broader exemptions. Finally you heard Jorge and clear both alluding to compulsory licensing. What does that look like? Basically in Belgium the king of Belgium decides to with the better off -- our house would be better off if we could use this wonderful invention that somebody made. It does not take away all the rides, but it takes the exclusive right away from the patent holder and basically says as the king of Belgium I am acting on behalf of the people and we are better off. People pay you but we demo please and not what you want. It reduces the press coverage that a patent holder has. So patent holders tend not to let this stuff but that is what has happened in Belgium and France. And it is under hot to speak because India passed a new patent law that went into effect last January. It is being actively to get it right now. Many to helping countries that have to adopt the new Western rules of patenting have built compulsory licensing into their statutes precisely because they want to keep public health at the forefront.
That compulsory licensing you are implying comes with reasonable royalties?
Yes. It is supposed to come with reasonable royalties. That is one of the issues. I don't know if you are covering it, but the Thai government to step in on AIDS drugs and says we are going to force compulsory license. Thereof to rate was .5% which most of these colors in this field think is too low. And if it is challenged -- it is going to be challenged in the broad court system and it may be too low, but if it was 5% there would not have been much of a squabble. So it is supposed to be fair and reasonable, but what that means to the court system depends. But, yes, it is not an absolute right to override the patent rights. Rather you are supposed to still give the investor some return for their invention. In the patent reform system, this is probably more detail than you believe need to know but these are the two things that have gotten the most attention in the patent reform bill in the U.S. The most -- one is the U.S. is the only major country in the world that has this rule that in the you as if there is a dispute between two people that have Kropotkin's at the same time the courts are supposed to figure out what we call an interference proceeding to actually invented it first. Whereas in other countries the patent office just says, okay. You have to prove that you invented it which is much easier to do. You can't steal something and then patented, but if you invented it yourself and prove that you did not steal the idea, meaning they can't prove that you did, then it is the first person to file a patent application, just an administrative simplification. So for the sulfur and computer people that this is driving the budget because they have patens all of the world and they want the U.S. to shift to the same rules as other countries. The interference proceedings are extremely expensive and you have to hire a very very special lawyer and there are only a few people in the borough to do this stuff. If you break any of the rules about evidence for case blows up in your face so you hire these people at very high prices. Everybody was like to get rid of those transaction costs except for the lawyers. So the U.S. might switch to a first investor to file. Interestingly universities are kind of in love with the first inventor criteria and let the U.S. law as it is. So there has been hostility with to this change within The University community. Probably most importantly as illustrated in the case study that Julie will be presenting, there is an opposition process that does not exist in the U.S. You guys and the patent up the spread to consider this other stuff when you gave up those claims, and that means that if you have to do that within a certain time, and once that has happened it stars a proceeding to basically look at the patent again in light of the new information that has been contributed by outside parties, and this is what happened to the bracket patents and led to the dramatic narrowing of the Parker won patent from the entire team to just the mutation that is highly prevalent in some Jewish families. That is how it was discovered and that is how its claim is structured in the European union. It is a narrow path and compared to the patents in the net States. One little sidebar here is that the coin Boyer patent kind of went through this kind of process and is not completely unprecedented but was because Stanford brought that on itself by openly prosecuting their own patent. What they did that? They thought they were going to get sued and would have trouble keeping the cats heard it and therefore they openly prosecuted the patent. So a lot of prior art was but to the attention by a flurry of articles that happened just before the decision was going to be made and the Patent Office issued the patent anyway. So the court looking at that case would say they did consider this stuff and this is not just a patent, this is pattern that busted some scrutiny that is much more serious than normal. So what are the tools at your disposal? There are all sorts of stories in the scientific community of things being patented and Santos not liking it and beginning to push back and say we are just not going to get those licenses. Initially PCR licenses came with restrictions and scientists would not sign up. They made a lot of noise and complained. They wrote nasty articles. They would yell at the officers and you know what, it's changed. The policy change sent a this is up their licensing restrictions. The director of NIH took an active interest and negotiated a much more liberal licensing strategy which then became the template for other universities to use as their licensing strategy. It gave the scientific community access to very valuable technologies and it didn't require a lot being passed. It just requires some of the negotiation and some people yelling at each other in public and low and behold the policy changes. Moreover Harold farmers and Francis Collins as well as Bruce Alberts when he was the head of the National Academy of letters to the patent office sink you guys are being too sloppy. Stop it. They made a lot of noise and lo and behold in conjunction with a very important court decision the patent office began to increase the level of scrutiny of gene patents specifically. He would not know that from the patent numbers. But the fact is that there are a lot of patents that might have come through Linda otherwise that did not. Finally there are all sorts of rules that had been alluded to. These are where most of these guidelines Clair is alluding to, the OECD licensing guidelines. The autumn guidelines, the NIH best practices guidelines and the residual guidelines are all in this practice is but there are also some rules that the site security has imposed on itself about sharing of data and materials that interact with intellectual property. So the large sequencing centers agreed in '96 when we have a -- when the sequence the think of DNA of more than a thousand base pairs beat-up that on the Internet. They just count themselves to an informal contract saying they would do that. That matter. What does that to? It means that if permission is up there and if you discover a gene based on the sequence and that is the only thing you have done be you're going to have a hard time getting a patent because that is that in the public domain. It does not make it impossible but the have to do something beyond to sequencing. The consortium, this is the group was trying to find variations in the human genome. They sat down and said the only way we can make sure this stage in the public domain is people file patent applications and characterize each spelling difference in the human genome long enough of we are sure nobody else can patent it and then people walk away from the pack. So it was expensive, laborious but crafted as a strategy for keeping things in the public domain. So if you get a grant now from NIH you say you will play by those rules. There is the best practices document that came out a couple years ago and the licensing guidelines were just officially sanctioned last year. There is the University statement that Clare directed towards and was in your packet for the meeting here. This came out mainly from Stanford. A lot of the problems that you are addressing would not exist of those guidelines were being followed. It is really that simple. And if you could get practices to adopt those guidelines you have a legacy problem. You have all these patterns and buses that had been signed that won't go away, but moving toward a lot of the problems would be solved at the skies were being followed. Finally when you get a grant you have to have a data sharing plan. We had to have one for our grant. Well, we make certain promises. The sign a piece of paper that if we don't do it somebody could do something about it. That is a tool that could, in theory, be used to make sure that information is out there and flowing freely and that it is being used for the purposes for which it was generated. The problem with that is enforcement. How does anybody actually know? Well, they don't, but that is a tool that is out there. Right now we only have informal mechanisms. How would we know? We do know if somebody is a bad actor or if they are stupid enough to say in public what they are doing which sometimes they do, but most of the time you don't know unless you have a systematic way for monitoring what information is being shared. So Sarah did ask me to review some of the empirical data. You have one of the experts, probably the single most important study on this list is the survey that their colleagues to it. What clinical labs for doing and what it demonstrated is that some folks have stopped offering tests that they used to offer or have decided never to offer in the first bus test that they might otherwise have agreed to offer but for the patent situation. That tells you that the provider level there are certain to have backed away from certain kinds of diagnostic testing. It does not necessarily tell you about access because if somebody then goes -- in the case of married for example if the same patients that would have sent their samples to U Penn or the idea of clinic in Virginia or to encore bed when it was operating if instead they are sending them to marry there might not be an access problem. It might just be they are paying more money. We don't know that and it is very very hard to get data that is sufficiently refined to be able to tell. There are two poster children that to almost all the work and is probably the reason this committee excess. In the survey of the literature that was done by the upper to group, Julie as colleagues at the University of Alberta have done a valley nice servant of who said what about the Bronco and all these other cases on the poster Children of the behavior and D in a licensing. Reckitt is way way way far and had the case that matters to most and have the most negative publicity and is mentioned in almost every policy report. You saw some of those from the U.K. and U.S. and Ontario. They're is a report from the Australian law reform commission. They all mentioned record. They me mention can the. They may mention Alzheimer's testing, but they all mention the practice case. Now a key things that will come out in the case study is the think you need to understand is the pet story is would carry the day. Essentially it is only offered as a genetic test by myriad and the reason for that is because they had a ver