Another “march-in petition” has been filed recently as part of the on-going implementation of the Bayh-Dole system. The attached web page provides access to the petition, cover letter, and broader context. Now, several groups are seeking march-in against a series of AIDS/HIV related drug patents. Funding for the underlying inventions was provided by the NIH.
No march-in petition has ever been granted during the 32 years of the Bayh-Dole system. If one were granted, the grant would likely have a major impact on the Bayh-Dole system, extending beyond the particular case at hand. Best I can tell, the last march-in petition was filed about two years ago, but the petition failed (see our prior blog entry).
Review of the patent literature confirms that many nanotechnology and clean tech inventions arise from federal funding and invoke the Bayh-Dole system. Funding comes from the NNI and Department of Energy, for example. However, it is not unusual to find investors and executives in these areas to be relatively unaware of the Bayh-Dole system and its legal implications.
I will note briefly that I found the petition dialog interesting for attempting to legally separate out what appears to be (1) a primary use of the patented invention, from (2) secondary uses of the patented invention, or what is called a “dependent technology.”
In our prior August 12, 2010 blog posting, we noted the Fabrazyme march-in rights controversy where the NIH was petitioned to "march-in" to more openly allow licensing of patent rights for Fabrazyme. The NIH ultimately rejected this petition in December, 2010, but requested monthly updates on the situation and an alert when certain licenses were requested. The nine page NIH decision, signed by Francis Collins, is available online.
Only time will tell the impact of this ongoing monitoring. The drugs have been promised for the first half of 2011. Perhaps the story is not yet finished, we will continue to monitor the updates.
Some colleagues and I just returned from the NanoBusiness Alliance’s annual conference in Chicago. We offer some quick thoughts from listening to speakers and pass on some anecdotes:
- What is the value of patenting? Should patents only be filed and pursued for actual products? Do they facilitate an exit strategy for a nanotech startup? What to do with existing patents and filings for which the technology is on a "back-burner." These are difficult issues to quantitate. However, one person provided some inside context about a nanotech company that had been purchased by a large, US-based company. The nanotech company was primarily bought for the patents and for blocking others in the market. So persons need to be very careful on valuation issues when they propose to cut spending on patents to only cover existing products.
- Altair Nanotechnologies: recently in a $50M deal, effectively "sold to China"? Is this how the next several decades will flow?
US leadership in nanotech not enough if limited to R&D leadership. Is there anything new here? I lived in Japan in 1992-1993, and recall all the discussions in the 80′s and 90′s about our R&D being economically exploited abroad. One new factor, of course: the emergence of S. Korea and China.
George Thompson, Intel, has some of the most interesting comments on the history of innovation and nanotech in the context of that history. See his web video at the NNI update meeting this summer (www.nano.gov). China and India led the world in GDP before the industrial revolution. Trending now? The invention of the transistor was not an accident: resulted from a methodical planning. Where is our cabinet level "secretary of innovation"?
Congressman Lipinsky: many things "stuck" in the senate, e.g., SBIR/STTR reauthorization! The president’s current budget does not do enough for nanotech. Spending on nanotech is an investment, not a mere cost.
Why can Morton salt charge an 18% premium for salt? IP
When President Clinton first proposed the NNI (National Nanotechnology Initiative), he spoke of technologies which take 20 years or more to develop. So why all the urgency in 2000-2010 to make a "fast buck" on nanotech?
Recently, a march-in right petition was filed to "crack" a Genzyme patent and expand supply of an important drug. The sense is it could succeed which would have a big impact on our Bayh-Dole system.
In any event, these are just a flavor of the many topics at issue at this conference which are critically important in the NNI’s second decade and nanotech’s future. We will continue to monitor these topics.
A potential "bombshell" is in the making which could ultimately impact nanotech and cleantech:
On August 2, 2010, several persons with Fabry disease petitioned the federal government (NIH) to effectively break an exclusive license held by Genzyme for the drug Fabrazyme®. To date, the government has only reviewed three of these march-in petitions and, to date, has not granted any of them.
However, this time, lives are at stake and threatened persons are petitioning their government.
This time, the administration in power may review the petition with greater sympathy to the petitioners. President Bush’s administration reviewed the last march-in petitions. What would Obama do? (Ok, what will the Obama administration do?)
If this petition is granted, important legal and policy implications will flow that influence all technical sectors like nanotech and cleantech which depend on federally funded inventions. At least ten percent of nanotech patents stem from federal funding.
Bayh-Dole "junkies" will follow these developments closely. Bayh-Dole is the legal system which controls the licensing of federally funded inventions to the private sector, and provides the legal context for the potential march-in.
Possible outcomes range from, for example, (i) some sort of settlement approved by the government, (ii) a narrow "breaking of the patent" which would not be too damaging to Genzyme and would be tailored to this fact pattern, (iii) a broad-based "breaking" of the patent with far-reaching implications to other situations, including nanotech and cleantech, or (iv) petition denied.
How should the NIH rule?
A related NPR story.
To read the petition to the NIH directly, read below:
Continue reading this entry
In the 09-742 GAO report addressing the government’s right to assert ownership over federal funded inventions, the government produced an important survey on the current understanding among leading federal research agencies about march-in rights under the Bayh-Dole system. This report has considerable implications for cutting edge nano and clean technologies, which often are based on cutting-edge research stemming from universities and federal agencies.
In a march-in situation, the government can force a compulsory license to a patent which stemmed from federally funded research dollars. However, a march-in had never been completed in the thirty or so years of Bayh-Dole, although several attempts have been started (three march-in petitions were filed with the NIH, one in 1997 and two in 2004). Organizations such as PUBPAT, which tend to attack the patent system for "undeserved patents," undoubtedly will continue to monitor the potential use of march-in rights.
Clearly, those associated with commercializing federally funded inventions should be aware of potential issues surrounding the march-in authority of the federal government. Their 09-742 report provides a useful update for consideration. Although a march-in right has never been exercised, organizations such as PUBPAT will consider its use in attacking patents they believe could harm the public. The ongoing controversial Myriad litigation, over gene patents, illustrates the potential outcomes.