June 2002
AIPPI Journal
By David W. Hill
Authored by David W. Hill
Corporate sponsorship of university research is not a recent phenomenon.1 In fact, industry and academia have been collaborating for more than a century.2 Some of the earliest cooperative research efforts began at the Massachusetts Institute of Technology ("MIT"). Since its founding in 1861, MIT has pursued cooperative research relationships with industry.3 For example, some time after World War I, MIT developed a program designed to increase the incentive for corporations to cooperate with MIT by reducing the benefits for those who insisted on competing with it.4 MIT's efforts to collaborate with industry have been copied by almost all major universities, and have become commonplace in university research today.5
Though corporations have been sponsoring university research for quite some time, university licensing of intellectual property rights to corporations is a relatively new activity. Universities and corporations first entered into agreements allowing corporations to exploit intellectual property rights arising from university research in the 1920s, when scientists from the University of Wisconsin founded the Wisconsin Alumni Research Foundation (WARF).6 This foundation sought to protect university inventions through patent protection and to introduce discoveries to the public through the use of licensing arrangements with industry.7 Though WARF achieved early successes,8 the practice of patenting and licensing inventions to industry did not reach widespread use until the 1940s,9 when several other major universities began following the technology licensing methods developed by WARF.10
Though WARF was successful in overcoming many of the difficulties associated with bringing university technological advances to the public, negotiating licensing agreements with corporations having multiple priorities can be both a slow and inefficient manner to commercialize university technology.11 In an effort to address these problems inherent in WARF's approach, in the 1970s, Stanford University and the University of California, San Francisco modified the simplistic WARF patent-licensing model. The Stanford-California approach involved creating a corporation with the sole purpose of exploiting universities' technology.12 Creating a specialized corporation has the advantage of completely focusing the corporation's efforts on a single invention and thereby aligning the corporation's and the university's interests.
During the same period, Harvard University developed another approach derived from WARF. Under this approach, Harvard entered into a long-term, large-investment contract to develop a particular technology.13 This type of university-corporate agreement provided an additional model for commercializing university inventions by concentrating on a particular objective for a collaborative arrangement.14 The two additional approaches, i.e., the specialized technology corporation (Stanford/California) and the industry-university contract (Harvard), have proved to be complimentary to the WARF method of patenting and licensing inventions to industry.15
Today, new inventions are moving from university laboratories into the hands of consumers, via industry, faster and more efficiently than ever before.16 Presently, industry supports approximately 7% of total university research funding and up to 16% of research funding in the biotechnology field.17 Though industry currently plays a vital role in the funding and continued viability of university research, industry has not always played such a strong role.18 Over the years, corporate contributions to university research have experienced cyclic variations.19 However, with the present trend of universities engaging in capital intensive studies,20 and the federal government lowering its grants and funding of university projects,21 the corporate role in funding of expensive university research is expected to continue to rise.22
As research and technology progressively becomes more complex and expensive, the incentive for universities and corporations to combine resources and expertise continues to increase.23
One of the most significant factors motivating corporations and universities to combine resources and pursue technological research as a team is the synergy that results from the combination of university expertise and industry funding.24 That is, joint ventures between academia and industry can significantly increase technological productivity and efficiency beyond the capacity either could individually achieve.25 Both businesses and universities have a vested interest in combining to produce technological advances through university research.26 Universities view corporations as a source of substantial research funding, as well as commercial expertise, while corporations envision universities as a source of inventive talent waiting to be exploited.27 Thus, it is in the best interest of both industry and academia to cooperate with each other and exploit their respective talents to their fullest capacities.
In fact, the synergy that results from university-corporate combinations has produced advancements that were likely unachievable by either universities or corporations acting independently.28 Cooperation between universities and corporations is particularly effective in reducing the cost of producing technological breakthroughs.29 From a university's perspective, reduction of the cost of advancing technology not only allows the university to achieve more for each research dollar spent, but lower development costs encourage further industry funding of university programs.30 On the other hand, from a for-profit corporation's perspective, the lower the development cost of a product, the more the net profit will be after the product is eventually brought to market.
As noted above, the increasing cost of supporting fundamental research, particularly in the biotechnology field,31 along with the decrease in federal funding available to universities,32 has made corporate sponsorship a necessary component of the university budget.33 Development of many of today's cutting-edge technologies requires laboratory resources that only universities can afford to supply.34 Further, developing marketable products from university technology is a capital intensive project that has become unduly risky and inefficient for either industry or academia to undertake alone.35
A corporate-university partnership allows industry to benefit from academia's massive investment in fundamental research, while, by the same token, the partnership provides universities with large capital expenditures necessary to purchase high technology facilities, as well as fund the enormous operating costs of such facilities and their associated personnel.36 Thus, a marriage between academia and industry has become extremely desirable, if not necessary, to spread the costs and risks inherent in the development of new technology.37
Through the use of legislation, the federal government has made a concerted effort to provide additional motivation for universities and corporations to collaborate.38 The federal government has increased both the incentives for academia to cooperate with industry, as well as the incentives for industry to seek out relationships with academia. Specifically, by lowering federal funding for university research,39 enacting legislation which allows universities to own and license intellectual property,40 and increasing tax incentives for corporations who engage in joint research efforts with universities,41 the federal government has altered the payoffs for cooperation and successfully encouraged academia and industry to behave altruistically towards each other.42 That is, academia and industry are encouraged to cooperate because of the mutual benefit gained by each through a joint effort.
1. Legislation Motivating Technology Transfer
According to many commentators, the most significant legislative actions Congress has taken to encourage academia and industry to cooperate are the Bayh-Dole Act and the Federal Technology Transfer Act.43 As discussed below, prior to enactment of the Bayh-Dole Act, all intellectual property that arose from university research that was funded wholly or in part by federal funds was retained by the federal government.44 As almost all university research was at least partially funded by the federal government, universities did not have the ability to license intellectual property arising from their inventions, since they did not own the rights relating to the inventions. Unable to secure a license or assignment of intellectual property rights arising from university inventions, corporations were much less willing to fund university research.
The Bayh-Dole Act mitigated this dilemma. It allows nonprofit organizations to take title to inventions developed by its researchers. As a result, universities are free to enter into agreements with industry to license or assign the inventions produced by the research, in exchange for funding. The Bayh-Dole Act has been a large success. Since the passage of this act, university patenting and licensing of inventions resulting from research has drastically increased.45
Another significant legislative action promoting corporations to sponsor research was the Federal Technology Transfer Act of 1986 (FTTA).46 This act, discussed in more detail below, allows federally funded and operated laboratories to accept funding from non-federal parties (i.e., industry and academia) in exchange for rights in intellectual property that is subsequently developed.47 Under the FTTA, universities and corporations can utilize the facilities at government funded and operated research facilities to further develop and commercialize inventions owned by universities, while not relinquishing any of the intellectual property rights that arise through the developments.48 Thus, through both the Bayh-Dole Act and the FTTA, the federal government has made a substantial effort to facilitate cooperation between industry and the academy.
2. Corporate Tax Incentives
In addition to the legislation facilitating corporate-university allegiances discussed above, Congress has passed a series of laws giving corporations tax credits for investing in university research.49 For example, Congress has granted a fifty-percent tax credit for companies investing in research and development of orphan drugs which treat rare diseases.50 Since these orphan drugs will not be purchased in large enough quantities to recoup their large investment costs, government incentives are necessary to facilitate their development. This significant tax break creates incentive for industry to sponsor university research by lowering investment costs which would otherwise be prohibitively high.51
Another motivating factor for universities to engage corporations in research arrangements is the potential for universities to negotiate licensing agreements which grant product royalties back to the universities for each product that is eventually sold based on the patented technology. Royalty income has the advantage of not being restricted to any particular use.52 That is, a university may use royalty income from licensed patents for any purpose that it sees fit.
Unrestricted income is particularly attractive to universities, since most federal grants and contracts require universities to demonstrate that the funds were used in accord with the stated purposes of the grant.53 With unrestricted royalties, universities are able to explore areas of fundamental research that may otherwise be abandoned due to a lack of funding and achieve academic goals that would be otherwise unattainable.
In fact, royalty income from university patents, though far from a major source of university research funding in general, has become one of the more significant sources of unrestricted income for universities. For example, in 1994, MIT received $4.56 million in royalty income. Further, Stanford University received $23.5 million from its patent for recombinant DNA, while Michigan State University received $60 million from one of its patents.54
In sum, as government funding continues to decline, university projects will require outside funding from industry. As discussed above, the synergy of corporate-university combinations, and government incentives should continue to encourage this efficient combination.
Though universities and corporations may both have an interest in combining efforts to pursue common research goals, they often disagree about how the resulting intellectual property rights should be divided. Such agreements must reconcile these conflicting interests and provide a distribution satisfactory to both parties. Further, licensing programs at universities must operate within the universities' fundamental mission, i.e., creating and disseminating technology and knowledge for the benefit of society.55 Most cooperative research arrangements begin with a written agreement which explicitly determines the distribution of subsequent intellectual property rights. Generally, research contracts give the corporate sponsor an option to negotiate a license or assignment of inventions produced from sponsored research. If the corporation decides not to exercise the option, the university may license the technology to other corporations who may be interested in developing it. As a further consideration, unexpected inventions resulting from the research must generally be negotiated separately.56
Within the spectrum of technology transfer agreements, there are three main types of arrangements that a university and a corporation may implement. First, a university may agree to assign all rights, title, and interests in an invention to a sponsoring corporation. Second, a university may retain title to the intellectual property rights, but grant the corporation an exclusive license to develop and exploit the invention for a designated time period. Lastly, a university could grant several corporations a non-exclusive license to utilize the technology.57
Ideally, a corporation would prefer an assignment of all intellectual property rights arising from research which that corporation sponsored, that is, a transfer of all rights, title, and interests in the invention. However, in keeping with its mission to disseminate technology, a university would prefer to grant a non-exclusive license to many different members of industry.58 In order to facilitate corporate-sponsored research, a compromise between the respective parties positions must be reached.
As with any contract negotiation, the end result depends upon the perceived value that both parties will receive from the bargain. Specifically, bargaining power is determined by both the potential of the university's research to produce valuable technology and the amount of funding and research support which the corporation is willing to grant that university.59 For example, funding of research that is likely to produce inventions in the early stages of development provide corporations with substantial bargaining power. Indeed, university inventions are often licensed in the early stages of development.60 These early stage inventions often require large capital investments to create marketable products. Thus, corporations generally demand at least an exclusive license to enable them to recover their initial investment.61
Though a corporation can often bargain for an exclusive license, particularly where that corporation is funding a substantial portion of a given research project, as a standard policy, universities generally refuse to grant assignments of all rights in an invention.62 There are several rationales for this policy. One rationale is to ensure that inventions are disseminated for the benefit of the public.63 By retaining title, a university can prevent a corporation from patenting a university invention in an attempt to suppress an area of technology that may be valuable to its competitors.64
Retaining title also allows universities to allocate inventions in the most efficient manner. If universities have title to the intellectual property, they can license the individual inventions resulting from corporate-sponsored research to corporations who can utilize them best, rather than licensing all resulting intellectual property to one individual who may choose not to develop a significant portion of the resulting inventions.65 Lastly, if a university retains title to resulting inventions, it does not risk future infringement if university researchers elect to pursue further research on the subject matter of the invention.
However, under some circumstances, universities may be convinced to transfer title to a sponsor. If an invention is a "narrowly focused application" that may be developed by a single firm, a university may be willing to assign the rights in the invention.66 Also, if the patents may be challenged, or if royalties from the invention will be small, the university may be willing to part with title.67 Further, some universities have a flexible policy that allows corporations to negotiate assignment of intellectual property rights.68
As patent prosecution and litigation can be extremely costly undertakings, most research agreements determine which party must bear these costs. Though most non-exclusive licensees do not shoulder patent related expenses, for exclusive license agreements, generally, all expenses related to obtaining the patents must be paid by the licensee.69 Some typical expenses include: prosecution costs, payment of filing fees, and payment of issue and maintenance fees for the patent. Though exclusive licensees may pay patent expenses, universities generally retain the final decision making power on matters concerning prosecution of the patent.70
Moreover, most exclusive licenses also require the licensees to shoulder the costs of defending the patent. Though patent litigation can be quite onerous, requiring a licensee to fund the litigation expense is a standard term in an exclusive license agreement.71 License agreements generally allow a university to cancel an exclusive license for a licensee who refuses to pay patent enforcement costs, as a patent becomes meaningless if it is not enforced.
With the rapid increase in university technology transfer, most universities have opened specialized offices to handle the dissemination of intellectual property rights arising from university research. These technology transfer offices serve as an intermediary between industry and researchers to assist them in developing successful cooperative relationships.
Stanford's Office of Technology Licensing, which was originally organized in 1970,72 is considered a template for other large technology transfer offices.73 Stanford's Office of Technology Licensing was founded with two main purposes. The first, and most important, is to bring technology developed from university research to public use and benefit, as rapidly as possible. The second is to bring the university extra unrestricted income to support further research and education, where it does not conflict with the first purpose.74 Some of the standard functions that Stanford's technology office provides includes: negotiation of corporate-sponsored research agreements, marketing of inventions,75 license agreement monitoring,76 evaluation and analysis of new disclosures,77 patent related activities,78 and professional development.79
Though there are many advantages to corporate-sponsored university research, some commentators express concern that profit-minded industry will corrupt the ideals that academia has long sought to exemplify. The short-term financial objective of corporations could lead to potential conflicts of interest between academia ideals and a profit-maximizing corporation's desire to exploit university inventions.
According to many commentators, a conflict of interest exists when the university researcher is faced with the choice of either favoring his own interests or those of the university as a whole.80 Most members of the academy consider it improper for university researchers to accept sponsored projects that limit their choice of research topics or research strategies.81 Further, most universities prefer not to conduct product development. Rather, they believe their role is to promote sponsored projects that focus on fundamental research.82
Another common problem encountered by university researchers is corporate sponsors requesting researchers to indefinitely postpone publication of research results to satisfy the secrecy needs of the corporation. Though most members of the academy consider indefinite postponement of publications to be improper,83 they generally permit a university to wait a period of time to allow the sponsors to review the inventions for patentable elements, and to file appropriate patents.84 Some further examples of activities by university researchers that the academy considers violative of university ethics includes: (1) starting up their own companies with their inventions; (2) accepting director or managing positions in companies which were licensees to their inventions; (3) accepting positions in scientific advisory boards of companies which were licensees of their inventions; (4) accepting substantial equity in companies which were licensees of their inventions; (5) accepting research projects sponsored by companies in which they held equity positions and which were licensees to their inventions; and (6) directing dissertations and postdoctoral projects on topics of interest to companies in which they held equity positions.85
Endnotes
1 Gina A. Kuhlman, Alliances for the Future, Cultivating a Cooperative Environment for Biotech Success, 11 BERKELEY TECH. L.J. 311, 319 (1996); see also David E. Korn, Patent and Trade Secret Protection in University-Industry Research Relationships in Biotechnology, 24 HARV. J. ON LEGIS 191, 192 (1987) (noting that industry sponsorship of university research is not a recent development).
2 Kuhlman, supra note 1 at 319 (noting that corporations have been strong supporters of university research prior to World War II); see also Korn, supra note 1 at 192.
3 Kuhlman, supra note 1 at 319-20, 362 n.32.
4 MIT developed the "Industrial Associates Program" to provide inherent incentives for industry to cooperate with MIT. Id. at 362 n.33.
5 See id., supra note 2 at 319-20; see also Korn, supra note 2 at 192.
6 Stephen H. Atkinson, University Affiliated Venture Capital Funds, Health Affairs I Summer 1994, p. 160; see also David Blumenthal, Growing Pains for New Academic/Industry Relationships, Health Affairs I Summer 1994, p.178 (noting that the "[a]cademic/industry relationships in the life sciences first appeared in the early twentieth century"); see also Kuhlman, supra note 1 at 320.
7 Prior to the organization of the patenting and licensing of university inventions under WARF, universities were having a difficult time bringing inventions to the market where they could be utilized by the public at large. Id. at 320; Atkinson, supra note 6 at 160 (noting that the approach of WARF "was aimed at achieving a logical and optimal division of labor by exploiting the traditional roles of both academia and industry. Universities would pursue exploratory research, and, in cases where discoveries of potential benefit to the public resulted from that research, they would seek patents and offer licenses to industry, where the innovations would be developed into useful technologies").
8 Id. at 160 (noting that “[s]everal of the first inventions patented and licensed by WARF achieved widespread public use and returned significant revenues to the foundation, enabling it to expand its activities”); see also Kuhlman, supra note 1 at 320 (noting that WARF returned over $100 million to the university as a result of patent royalties).
9 Atkinson, supra note 6 at 160.
10 Id. (acknowledging that the Massachusetts Institute of Technology, the California Institute of Technology and Cornell University were among the first academic institutions to imitate the successful patenting and licensing program of the University of Wisconsin).
11 Id. at 161.
12 The Stanford and University of California, San Francisco approach involved combining scientists, a management team and venture capitalist to create a new company with the sole purpose of marketing the associated invention. The major impetus for developing this approach was to overcome the development time lag associated with licensing an invention to a corporation with diverse interests and priorities. In this instance, the inventions and associated patents were involving fundamental methods of genetic engineering and related products developed by Stanley Cohen and Herbert Boyer. Atkinson, supra note 6 at 161; see also Blumenthal, supra note 6 at 180 (noting that the Cohen-Boyer research discovering recombinant deoxyribonucleic acid (DNA) technology resulted, inter alia, in the formation of Genetech, a biotechnological company); see also Michael J. Malinowski & Maureen A. O'Rourke, A False Start? The Impact of Federal Policy on the Genotechnology Industry, 13 YALE J. ON REG. 163, 181-82 (1996) (noting that Boyer's combination with venture capitalist Robert Swanson was the beginning of many university researchers entering the private sector and the further entangling of the web between academia and industry).
13 Atkinson, supra note 6 at 161 (noting that Harvard Medical School and Monsanto Company entered into a twelve-year, $40 million research agreement to develop new approaches for diagnosing and treating cancer).
14 Id.
15 Id.
16 AUTM, Technology Transfer Adds $21 Billion to Economy and Supports 180,000 Jobs a Year, (Feb. 20, 1996) http://autm.rice.edu/autm/survey/autmrel2.html
17 Steve L. Bertha, Intellectual Property Activities in U.S. Research Universities, 36 IDEA 513, 520 (1996); cf. Floyd Bloom, M.D., Science and Technology Policy: A Scientist's View, 33 Cal. W. L. Rev. 63, 65-66 (1996) (acknowledging that of the total funds spent by health-related industries (approximately $700 billion), only slightly more than 10% are spent funding university or private research institutes); Kuhlman, supra note 2 at 326.
18 Bertha, supra note 6 at 514 (noting that industry funding of university research has grown from 2-4% in the 1960's to approximately 7% at present). Until recently, U.S. universities believed that the study of science was a "pure activity that should not be stained with he profit motive" and therefore, the universities sought to publish all research to benefit the public good. Id. at 527.
19 Pat K. Chew, Faculty-Generated Inventions: Who Owns the Golden Egg?, 1992 WIS. L. REV. 259, 272 n.50 (1992) (noting that industry funding of university research is a reemerging trend that was near present level in 1960, fell to below 3% in the late 1960's and subsequently has gradually increased to the present level); see also, Korn, supra note 2 at 192 (noting that the amounts of industrial and federal funding of university research has vacillated over the past four decades).
20 Kuhlman, supra note 2 at 316 (noting that the capital intensive nature of biotechnology research necessitates cooperation between universities and industry).
21 Id. at 333 (noting that declining federal funding has increased the negative incentives for universities and industry to enter into cooperative arrangements).
22 Id. at 319, 334 (recognizing that the "inherent risks and long-term nature do not favor non-cooperative vehicles for technology transfer in biotechnology," and that history demonstrates that industry-university combinations can achieve more progress together, than either can independently).
23 See Chew, supra note 6 at 272 (noting that universities view corporations as new sources for research funding, as government funding of university research continues to diminish); see also Korn, supra note 2 at 200 (arguing that academia's primary incentives for entering into joint ventures with industry are: securing a new source of research funding, improving the quality of science and increasing the technology transferred to the public at large); see id. at 199 (arguing that though industry's motivations for engaging in joint research with universities may be based on a number of factors, including financial reward, gaining access to new technology and promoting fundamental research in and of itself, the primary motivation for any corporate decision is based on profit margin). Particularly in the biotechnology field, the research talent is primarily located in the academic arena. Kuhlman, supra note 2 at 325.
24 AUTM, supra note 5 (quoting Daniel E. Massing, the Chair of AUTM's Survey, Statistics, and Metrics Committee, "[t]he increase in academia-industry partnerships has created a win-win situation: universities are able to attract additional research dollars to develop their technologies and gain access to expertise of industrial scientists while industry extends the scope of its research and development").
25 Chew, supra note 6 at 261 & 262 n.4.
26 Id. at 272.
27 Id.
28 Kuhlman, supra note 2 at 312.
29 A survey of biotechnology companies performed in the 1980's indicated that corporations that collaborated with university research institutions realized four times as many patent applications per dollar invested as compared to investing solely in their own research facilities. Blumenthal, supra note 3 at 187.
30 Kuhlman, supra note 2 at 319.
31 Korn, supra note 2 at 200 (arguing that industry support of university research has become increasing important as federal funding continues to decline); see also Kuhlman, supra note 2 at 316.
32 Peter D. Blumberg, From "Publish or Perish" to "Profit or Perish": Revenues From University Technology Transfer and the § 501(C)(3) Tax Exemption, 145 U. PA. L. REV. 89, 99 (1996) (recognizing the curtailing of federal funding in recent years and the unfavorable climate on Capital Hill for funding of university research).
33 Id. at 99-100 (noting that income coming from industry is not "found money," rather such income is necessary to off-set the declining federal funds and the increasing cost of research).
34 Cooperation between industry and academia allows industry to avoid the prohibitively high costs of developing their own fundamental research department and investing in the highly sophisticated equipment and materials necessary for such research. Kuhlman, supra at note 2 325-26.
35 Malinowski & O'Rourke, supra note 4 at 184 (noting that progressing a genetic discovery through the development, testing and FDA approval stages can cost as much as $300-400 million, and take from ten to twelve years).
36 Blumberg, supra note 9 at 90 (recognizing that universities offer corporations access to technologies that would be prohibitively expensive to independently develop).
37 Malinowski & O'Rourke, supra note 12 at 181 (noting that private corporations have recently been assuming many of the economic risks and costs of developing genotechnological inventions). Cooperation between universities and industry involves funding fundamental research necessary for the development of new technological inventions that may otherwise go unfunded. Further, relatively new sciences, such as biotechnology, require enormous capital investments to purchase the sophisticated equipment necessary to perform such research. Kuhlman, supra note 2 at 316.
38 Id. at 312 (arguing that the federal government can play a strong role in encouraging cooperation between industry and academia by increasing economic incentives for industry-academia combinations and not imposing strict regulatory mechanisms, such as price controls on biotechnology products).
39 Korn, supra note 2 at 200.
40 See The Bayh-Dole Act of 1980, Pub. L. No. 96-517, 94 Stat. 3018 (1980) (codified at 35 U.S.C. §§ 200-12 (1994)) and The Federal Technology Transfer Act, Pub. L. No. 99-502, 100 Stat. 1785 (1986) (codified at 15 U.S.C. §§ 3701, 3711-14, 3710(a) (1994)).
41 Kuhlman, supra note 2 at 333 (noting that Congress has provided significant tax breaks to companies investing in academic research).
42 One author defined altruistically as a phenomenon whereby one person's utility is positively affected by another person's well-being. In this case, academia and industry are encouraged to cooperate since each will receive a greater benefit than if either attempted to proceed alone. Id. at 330.
43 Blumberg, supra note 9 at 97-98 (arguing that "the most important catalyst for the expansion of university technology transfer was the enactment of the Bayh-Dole Act of 1980"); see also Kuhlman, supra note 2 at 329 (noting that the Bayh-Dole Act and the Federal Technology Transfer Act "have provided significant federal incentives for university-industry cooperation in general;" also noting that though the Bayh-Dole Act was primarily designed to benefit business and industry, the Act also enhanced the revenue available to universities for research).
44 Blumberg, supra note 9 at 97-98 (noting that prior to passage of the Bayh-Dole Act in 1980, more than two-thirds of all academic research was funded by the federal government).
45 Prior to 1980, fewer than 250 patents per year were issued to universities. Subsequent to passage of the Bayh-Dole Act. In 1992, 2,700 patents were filed by universities and 1,500 licenses were granted to industry by universities. Id. at 98.
46 Pub. L. No. 99-502, 100 Stat. 1785 (1986) (codified at 15 U.S.C. §§ 3701, 3711-14, 3710(a)).
47 Suzanne T. Michel, The Experimental Use Exception to Infringement Applied to Federally Funded Inventions, 7 HIGH TECH. L.J. 369 (1992); see also Association of University Technology Managers, AUTM Technology Transfer Manual, § IX-8, at 2-4 (1993) (effective February 1994).
48 Though the FTTA allows industry, academia, and government controlled research institutions to enter into a collaborative agreement, such agreements have been sparse in practice. Id. at 2-4.
49 Kuhlman, supra note 2 at 333.
50 See Orphan Drug Act, Pub. L. No. 97-114, 96 Stat. 2049 (1983) (codified as amended in scattered sections at 21 U.S.C.A. (West Supp. 1993), 26 U.S.C.A. (West 1988 & Supp. 1993), and 42 U.S.C.A. (West 1991 & Supp. 1993)). Orphan drugs are drugs for diseases afflicting less than 200,000 people. Kuhlman, supra note 2 at 333.
51 Note that Canada has also created tax credits for investment in research and development. Particularly, Canada has sought to attract research and development from foreign firms. See Jules Charette, R&D Tax Incentives Make Quebec a Prime Location for Foreign Firms, 6 J. INT'L TAX'N 82 (1995).
52 Blumberg, supra note 9 at 94-95 (comparing royalty income to traditional grant income, and noting that unlike traditional income, subsequent use of royalty income is unrestricted).
53 Id. at 95 n.27.
54 Id. at 94-95.
55 See Bertha, supra note 6 at 525.
56 Id. at 520.
57 In addition to the three types of transfer arrangements discussed in this article, universities and corporations may choose to enter into different variations of these standard agreements. For example, co-exclusive licenses are non-exclusive licenses limited to two or three licensees. See id. at 529.
58 See id. (arguing that universities prefer non-exclusive licenses).
59 See id. (noting that universities often zealously bargain for research support for the inventors).
60 See id. (noting that exclusive licenses are awarded more often than non-exclusive licenses because university inventions are generally in the early stages of development).
61 See id.
62 See Korn, supra note 2 at 223 (noting that "[s]ince 1977, there has been a trend toward universities retaining title to patented inventions resulting from industry-sponsored research"). However, actual policies vary for each university.
63 Id. at 224.
64 Id.
65 Id. at 225. In fact, many universities bargain for a due diligence clause in license agreements which terminates any rights that a corporation may have if it fails to develop the technology. See Association of University Technology Managers, supra note 13, § VII-2.1 at 12; see also Bertha, supra note 6 at 529.
66 Korn, supra note 2 at 225.
67 Id.
68 Id.
69 Bertha, supra note 6 at 530; see, e.g., Association of Technology Managers, supra note 13, § VIII-4.2 at 9 (sample exclusive license agreement from Harvard University).
70 Bertha, supra note 6 at 530 (noting that this avoids dilution of the value of the patent by special interests of the corporation).
71 Id.
72 Association of University Technology Managers, supra note 13, § II-2 at 9.
73 The AUTM Manual includes the Stanford University Office of Technology Licensing to illustrate organization of a licensing office. Id.
74 Id.
75 E.g., identifying potential licensees; initiating contact; preparation and distribution of promotional materials; coordinating meetings/presentations; negotiating terms/preparing draft agreements; and closing deals. Id.
76 E.g., ensuring compliance with due diligence terms, preparing and executing amendments; processing terminations; and meetings with licensees to monitor progress in licensed product development. Id.
77 E.g., meeting with the inventors; identifying industry reviewers; and making decisions and providing necessary notifications. Id.
78 E.g., selecting a patent attorney; performing a prior art search; and monitoring prosecution in the U.S. and foreign countries. Id.
79 E.g., participating in professional associations. Id.
80 Bertha, supra note 6 at 537.
81 Id.
82 Id. at 520. Many commentators believe that universities should force industry to fund their share of fundamental researchers. They believe that continuing fundamental research is vital to future development of innovative technologies. See Bloom, supra note 6 at 72 (noting that "industry needs to bear its share of continuing to provide funding for basic scientific discovery"); see also Helen Leskovac, Academic Freedom and the Quality of Sponsored Research on Campus, 13 REV. LITIG. 401, 418 (1994) (arguing that industry will not adequately fund basic research since it is motivated solely by profit).
83 Bertha, supra note 6 at 537.
84 Id. at 520 (noting that members of the academy generally accept three months as a reasonable amount of time to postpone publication).
85 Id. at 537.
Copyright © Finnegan, Henderson, Farabow, Garrett & Dunner, LLP. This article is for informational purposes and is not intended to constitute legal advice. This memorandum may be considered advertising under applicable state laws.
June 10-12, 2024
San Francisco
Lecture
Patent Protection for Software-Related Inventions in Europe and the USA Training Course
June 5, 2024
Hybrid
10th Annual Georgia Asian Pacific American Bar Association Gala
May 29, 2024
Atlanta
Due to international data regulations, we’ve updated our privacy policy. Click here to read our privacy policy in full.
We use cookies on this website to provide you with the best user experience. By accepting cookies, you agree to our use of cookies. Please note that if you opt not to accept or if you disable cookies, the “Your Finnegan” feature on this website will be disabled as well. For more information on how we use cookies, please see our Privacy Policy.
Finnegan is thrilled to announce the launch of our new blog, Ad Law Buzz, devoted solely to breaking news, developments, trends, and analysis in advertising law.